In July 2020, the Investment Committee recommended to Council to invite Uruguay to become the 50th adherent to the OECD Declaration on International Investment and Multinational Enterprises. This OECD Investment Policy Review of Uruguay documents the progress made in recent years to align investment policies with the national development strategy in pursuit of the Sustainable Development Goals (SDGs). The Review also assesses remaining challenges in improving the business climate, in particular the actions needed to establish an enabling responsible business environment and ensure full application of the Declaration. Uruguay’s success in attracting more and better investment will make its economy more resilient and better prepared to accelerate the recovery after COVID-19. Find out more at: https://www.oecd.org/investment/oecd-investment-policy-reviews-uruguay-1135f88e-en.htm

1. Monika Sztajerowska, OECD Investment Division
Virtual Launch
12 July 2021
OECD INVESTMENT POLICY
REVIEW OF URUGUAY
KEY FINDINGS

2. Context
2
Scope
Public
governance &
SOEs
Business
establishment
and operation
Investment
protection
Investment
promotion
and
facilitation
Tax policy
Responsible
business
conduct

3. SNAPSHOT OF RELEVANT
TRENDS
3

4. FDI performance has overall been strong
4
Inward FDI flows as a share of GDP in Uruguay and selected LAC countries
In %
Source: OECD Investment Policy Review of Uruguay
Note: Shares shown are an average for five latest available years presented in the report (2012-2018).
0
1
2
3
4
5
6
7
Chile Costa Rica* Uruguay Colombia* Peru* LAC Argentina*

5. 0
50
100
150
200
250
300
350
2020 Q1 2020 Q2 2020 Q3 2020 Q4
World OECD
COVID-19 is posing challanges
5
Annual FDI Inflows
bln USD
Note: *Preliminary estimates.
Source: OECD and IMF data, presented in FDI in Figures (April 2021)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2018 2019 2020*
World OECD
Quaterly FDI Inflows
bln USD

6. FDI can contribute positively to
sustainable growth and development
6
OECD FDI Qualities Indicators for Uruguay
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Productivity
Prod
growth
Prod
inno
Proc
inno
R&D
Fgn
tech
Skilled
Training
Empl
growth
Wages
Per
workers
Empl
length
Fem
empl
Fem
mgmt
Fem
owner
Ener
eff
Source: OECD FDI Qualities Indicators
Note: 16 manufacturing sectors are included in the analysis.
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
Productivity
Prod
growth
Prod
inno
Proc
inno
R&D
Fgn
tech
Skilled
Training
Empl
growth
Wages
Per
workers
Empl
length
Fem
empl
Fem
mgmt
Fem
owner
Ener
eff
Panel B. Do foreign manufacturers report
higher sustainability outcomes?
(yes if score > 0; no if score < 0)
Panel A. Is FDI concentrated in
manufacturing sectors with higher
sustainability outcomes?

7. KEY FINDINGS
7

8. 1. Uruguay is a highly open economy
overall...
8
OECD average
NON-OECD average
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
Philippines
Saudi
Arabia
Indonesia
Rus
sia
Malaysia
China
Jordan
New
Zealand
India
Lao
Pdr
Mexico
Tunisia
Iceland
Canada
Australia
Korea
Viet
Nam
Ukraine
Israel
Myanmar
Kazakhstan
Austria
Egypt
United
States
Brazil
Norway
Ky
rgyz
Republic
Switz
erland
Peru
Mongolia
Poland
Morocco
Turkey
Sweden
Chile
South
Africa
Cambodia
Japan
Italy
Slovak
Republic
Albania
Uruguay
France
Ireland
Serbia
Belgium
United
Kingdom
Croatia
Cos
ta
Ric
a
Denmark
Greece
Argentina
Hungary
Bosnia
and
Herzegovina
Montenegro
Colombia
Germany
Macedonia,
FYR
Spain
Latv
ia
Lithuania
Finland
Es
tonia
Netherlands
Czech
Republic
Romania
Slovenia
Portugal
Luxembourg
Kosovo*
OECD FDIRegulatory Restrictiveness Index(open = 0;closed=1)
OECD FDI Regulatory Restrictiveness Index
(yes if score > 0; no if score < 0)
Note: Data reflect regulatory restrictions as of September 2019 for Uruguay, as provided by the authorities, and as of end-year 2018 for all other economies.
Source: OECD Investment Policy Review of Uruguay and OECD FDI Regulatory Restrictiveness Index, www.oecd.org/investment/fdiindex.htm.

9. ...and few restrictions remain in specific
(albeit important) sectors
9
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
OECD URUGUAY
OECD FDI Regulatory Restrictiveness Index (open = 0; closed=1)
OECD FDI Regulatory Restrictiveness Index, by sector
(yes if score > 0; no if score < 0)
Note: Data reflect regulatory restrictions as of September 2019 for Uruguay, as provided by the authorities, and as of end-year 2018 for all other economies.
Source: OECD Investment Policy Review of Uruguay (2021) and OECD FDI Regulatory Restrictiveness Index, www.oecd.org/investment/fdiindex.htm.

10. 2. Uruguay offers high standards of
protection to investors
10
0
5
10
15
20
25
30
35
40
0
1
2
3
4
5
New BITs Total BITs
Source: OECD Investment Policy Review of Uruguay (2021) based on Barómetro de las Américas (2017)
Bilateral Investment Treaties
signed by Uruguay over time
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Chile Colombia Argentina Mexico Brazil Uruguay
Confidence in the judicial system in
Uruguay and selected LAC
countries
In %

11. 3. Uruguay has undertaken significant
tax reforms in recent years.
11
Source: OECD Investment Policy Review of Uruguay (2021) based on the OECD Global Revenue Statistics Database
0
5
10
15
20
25
30
35
40
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Uruguay LAC average OECD average
Total tax revenue as share of GDP in Uruguay compared to OECD and LAC averages
In %
Note: LAC = Latin America and the Caribbean countries; The LAC average represents the unweighted average of 24 Latin American and Caribbean countries
included in the OECD Global Revenue Statistics Database (OECD, 2018). (Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa
Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Trinidad and
Tobago and Uruguay). It excludes Venezuela due to data availability. The OECD average represents the unweighted average for OECD member countries.

12. 4. The country also offers generous tax
incentives for investment...
12
Tax expenditure from CIT tax incentives for investment
0
0.5
1
1.5
2
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0%
20%
40%
60%
80%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: OECD Investment Policy Review of Uruguay (2021) based on data from DGI.
Panel A. % of GDP Panel B. % CIT tax revenue
Note: Tax expenditure data based on annual reports by the General Directorate of Taxation (Dirección General Impositiva, DGI).
Type of tax Standard rate
Corporate income tax (CIT) 25%
Withholding tax 12%
Net wealth tax 1.50%
Corporate tax system in Uruguay

13. 5. ... that may require further review and
rationalisation in the future.
13
Source: OECD Investment Policy Review of Uruguay (2021) based on data from the Ministry of Economy and Finance
Evolution of legal regimes for investment incentives in Uruguay over time

14. 6. Further progress in reforming state
owned enterprises is needed
Overview of state-owned enterprises (SOEs) in Uruguay
Source: OECD Investment Policy Review of Uruguay (2021) based on data from OPP (2019), www.transparenciapresupuestaria.opp.gub.uy
0
2
4
6
8
10
12
14
1980-89 1990-99 2000-2009 2010-present
Panel A. Number of New SOEs
14
Panel B. Structure of Key SOEs

15. Econometric studies have shown important
positive effects of trade and investment
promotion activities of Uruguay’s trade and
investment promotion agency (Uruguay XXI)
on:
• Establishment of new MNEs in the local
economy (Volpe Martincus et al., 2019)
• Export spillovers (Carballo et al., 2019)
• Time spent at the border (Volpe
Martincus, 2016)
• Trade diversification outcomes (Carballo
and Volpe Martincus, 2010)
7. Uruguay has a strong track record on
trade and investment promotion...
15
78%
25%
Source: OECD Investment Policy Review of Uruguay (2021) based on data from Volpe Martincus et al., 2019, Carballo et al., 2019, Volpe Martincus, 2016;
Carballo and Volpe Martincus, 2010, and Uruguay XXI.
of trade processes in Uruguay
can be realised via a Single
Window for Trade (Ventanilla
Única de Comercio Exterior,
VUCE), managed by Uruguay XXI*
Note: *Single Window for Trade in Uruguay has been implemented with the technical and financial support of the Inter-American Development Bank (IDB).
of all locally established foreign-
owned firms are assisted by
Uruguay XXI to facilitate their
local investments

16. 8. ... that requires continuity and
coordination on horizontal projects.
16
Note: The figure is presented for illustrative purposes only; it is not exhaustive and does not imply a hierarchical structure or relationship between the institutions.
Source: OECD Investment Policy Review of Uruguay (2021)

17. 9. Investment facilitation and improved
regulatory quality can reduce admin. burdens
17
0
50
100
150
200
250
300
Starting business Dealing with construction
permits
Registering property
Uruguay Latin America & Caribbean OECD high income
Source: OECD Investment Policy Review of Uruguay (2021) based on data from World Bank Doing Business Indicators (2020) and World Bank’s World
Governance Indicators database (2019)
Total number of days required to
complete a given administrative
procedure in Uruguay, LAC and
OECD countries
0
0.5
1
1.5
Voice and Accountability Political Stability and No Violence
Government Effectiveness Regulatory Quality
Rule of Law Control of corruption
World Governance Indicators for
Uruguay
Note: Estimates of governance according to the World Governance Indicators range from approximately -2.5 (weak) to 2.5 (strong) governance performance.

18. • The legal framework to support
RBC is well-developed
• There is a high interest in RBC from
the private sector, the public sector
and the civil society
• Greater engagement in this area
can help faciltate constructive
dialogue and mitigate conflicts
• Uruguay’s Adherence to the OECD
Guidelines for Multinational
Enterprises and the creation of the
OECD National Contact Point
(NCP) can assist in the process
10. Uruguay has a strong framework for
responsible business conduct (RBC)
18

19. Investment protection and regulation
 Engage in international efforts to balance treaty-based investor protection
and the right to regulate in the public interest.
 Consider reducing restrictions on FDI in transport, fisheries and media.
Investment attraction and facilitation
 Strengthen action to support firms’ internationalisation, including through
long-term strategic planning and execution of horizontal projects and further
bolstering of the national investment and trade promotion agency.
 Focus government efforts to reduce the administrative burden, including by
effectively streamlining administrative procedures and addressing specific
regulatory bottlenecks.
 Consider a wider reform to improve the overall regulatory quality, including
by better oversight of implementing agencies and the introduction of ex ante
and ex post regulatory impact assessment (RIA).
State-owned enterprises
 Strengthen the corporate governance framework for state-owned
enterprises to improve their integrity, transparency and professionalism, and
broaden the use of performance indicators. Fill future managerial and board
vacancies through merit-based open competitions.
Highlights of key recommendations
19

20. Tax policy
 Enhance the transparency and coherence of the tax incentives’ framework,
including through further streamlining and phasing out of some schemes.
 Improve the system of incentives’ allocation, including through rationalising
the scoring under the COMAP regime, introducing clear criteria for receiving a
Free Zone tax holiday, reducing the use of decrees and ex post monitoring.
 Monitor the operations and the outcome of the tax incentive framework to
verify the integrity of the tax system and review and adjust policy or practice.
 Continue efforts to protect the domestic tax base from cross-border tax
minimisation strategies and monitor the effectiveness of recent measures
Responsible Business Conduct (RBC)
 Establish an NCP in accordance with the Decision of the Council on the
OECD Guidelines for Multinational Enterprises, and ensure that it is fully
functional as soon as possible after the issuance of the Executive Decree
 Promote the use of the OECD Due Diligence Guidances by enterprises
operating in or from Uruguay, actively support the use of due diligence by
these enterprises, and ensure the widest possible dissemination of the
various sector guidance and their use by various stakeholders.
Highlights of key recommendations
20

21. • Uruguay has an overall conducive business climate
• The Review has highlighted key achievements and
remaining policy priorities, in particular in regards to
further progress on investment facilitation, tax and RBC
• Uruguay has become 50th Adherent to the OECD
Declaration on International Investment and
Multinational Enterprises and has acquired the
associated right and benefits
• The OECD stands ready to support Uruguay is its future
reform agenda
Conclusions
21

22. THANK YOU
Contacts:
Ana Novik, Head of OECD Investment Division,
ana.novik@oecd.org
Stephen Thomsen, Head of Investment and Sustainable
Development Unit, stephen.thomsen@oecd.org
Monika Sztajerowska, Lead for IPR of Uruguay,
monika.sztajerowska@oecd.org
Andea Marin Odio, Coordinator of LAC Investment Initiative,
andrea.marinodio@oecd.org