Drawbacks to doing business in Uruguay include: its small market size (3.5 million inhabitants, approximately 40 percent of which reside in Montevideo Metropolitan Area); lack of trade financing; inflexible labor laws; limited flexibility in setting wages; and a tripartite salary council influenced wage inflation. Other challenges include Uruguay’s high duties and tariffs. 

Uruguay’s market price structure reflects world market prices plus import tariffs, taxes, and transportation costs. Local taxes, like the value-added tax (VAT) and excise tax (IMESI) apply to retail sales prices. VAT and IMESI can significantly increase the prices on certain imported products. Products that are subject to IMESI rates include alcoholic beverages, tobacco, refined petroleum, cosmetics, and cars. Rates vary according to the item. In addition to the mentioned tariffs, Uruguay applies an additional charge known as the consular fee, which acts as an extra importing cost. This fee is set at 3 percent for intra-zone (MERCOSUR) imports and 5 percent for extra-zone imports, further increasing the cost of both productive inputs and final consumer goods.

Beyond the difference in the consular fee, most products from Mercosur countries, including Argentina, Brazil, and Paraguay, enjoy the advantage of no import tariffs. Most Mercosur products also enjoy significantly lower transportation costs due to their relative proximity. For these reasons, Mercosur’s products often enjoy a comparative advantage over products from the United States, Europe, and Asia. However, in many cases, MERCOSUR does not fully function as a free trade zone, with non-tariff barriers such as licensing requirements, and unplanned customs controls. In some cases, companies have reported paying multiple unexpected tariffs, such as requirements to pay a tariff after already paying at another border.

Public procurement processes in Uruguay can be a challenge for many companies, with companies often reporting long timelines and delays. Formal competitor complaints are a common practice and can slow the process significantly. Companies interested in participating in Uruguay’s public procurement processes should seek competent legal advice prior to submitting an offer. Companies with over 51 percent U.S. content may apply for support through the Advocacy Center. Please contact CS Uruguay for more information at Office.Montevideo@trade.gov.