1. Definition and purpose of free trade zones
In Uruguay, free trade zones (FTZ) are areas specifically designated by the Executive Power to promote a variety of industrial, commercial, or service activities. The main appeal of the FTZs lies in the total exemption from national taxes for operations carried out within these areas for foreign markets. This policy has been declared of national interest, with the aim of stimulating investment, diversifying the economy, generating employment, and promoting technological innovation and economic decentralization, thereby contributing to Uruguay’s competitive insertion into global markets.
At present, Uruguay is home to 12 FTZs:
- Zonamerica: https://web.zonamerica.com/
- Aguada Park Free Zone: https://www.aguadapark.com/contacto/
- WTC Montevideo Free Zone: https://wtcmontevideofreezone.com
- Parque de las ciencias: https://www.zonafrancapdlc.com/
- Zona Franca Libertad: https://www.zonafranca.com.uy/
- Zona Nueva Palmira
- Zona Franca Punta Pereira
- Zona Franca Colonia Suiza
- Zona Franca Florida
- Grupo Continental Zona Franca
- UPM Fray Bentos
- CUECAR SA
Several zones are located near the Montevideo metropolitan area, each specializing in activities that strengthen key sectors of the economy.
2. Permitted activities within FTZs
The regulatory framework allows for a wide range of economic activities within the FTZs: Commercial and Industrial: They include the purchase and sale of goods, as well as logistics operations such as packaging, classification, and product assembly. Industrial activities also allow the installation of manufacturing plants. Services: There are no restrictions on the nature of the services that can be offered, as long as they are performed within the FTZ. This ranges from technological to education and communication services, always taking into account regulations on monopolies and state concessions.
Likewise, the regulations allow users to carry out exceptional activities of an auxiliary and/or complementary nature in the national territory outside FTZs, subject to prior authorization. The latest amendments to the regime also allow users to provide services within the zone to non-free territory, to taxpayers of the Tax on Income from Economic Activities (IRAE), provided that such services are linked to the obtainment of income taxed by such tax for the service provider.
3. Requirements for operating in FTZs
- FTZ developers These may be state or private entities that provide the necessary infrastructure. Authorization to develop an FTZ is granted through a rigorous process that includes submitting an investment project to the Ministry of Economy and Finance.
- FTZs users Companies that wish to operate within an FTZ must obtain authorization and are classified as direct or indirect users. The process includes approving contracts and business plans that demonstrate the viability and economic benefits of the proposed activities. To obtain authorization to operate, the contract between the users (direct/indirect) and those who have the right to exploit the FTZs must be submitted to the General Directorate of Commerce – Free Trade Zones Area, so that this body can authorize the performance of the activity. The application must include the contract between the parties, as well as the investment project and business plan detailing the human resources to be employed, activities, investments, etc.
4. Requirements regarding human resources to be employed
The free trade zones regime requires that at least 75 % of the staff be Uruguayan nationals, with a minimum of 1 person. However, this percentage may be adjusted according to the specific needs of each activity. For specific services, the percentage may be reduced to 50 %.
5. Competitive advantages of operating in an FTZ
Tax benefits: FTZ users are exempt from all national taxes in most cases, which represents a significant competitive advantage for companies located within the FTZ. Flexible labor regulations: Foreign workers may opt out of the Uruguayan social security system by means of a written request. This means that these workers will not be subject to social security taxes (collected by the Bank of Social Welfare), and their income will be taxed in the country only by the Non-Resident Income Tax (IRNR). Additional incentives: FTZ users can benefit from promotional rates on public services and unrestricted circulation of currency and financial securities within the zones.
In conclusion, Uruguay’s free trade zones represent a unique framework for companies seeking operational efficiency, tax benefits, and access to international markets. Our firm is prepared to guide your company through every step of the process, ensuring compliance and optimization of operations under this special regime.
