The Brazilian industry underutilizes the neighboring Uruguayan Free Zones, while Argentina makes extensive use of all the advantages that the neighboring country offers for imports, storage, manufacturing and services, distribution, all free of taxes.
In order to encourage the use of Uruguayan Free Zones by Brazilian companies, large groups in the private free zone invest in expanding their warehouse logistics spaces, precisely to receive new customers.
About the free zone
Seen from afar, the green gardens and modern buildings, surrounded by cafeterias, hotels and restaurants, seem to compose the landscape of a university campus. What differentiates the scenario from an academic environment are the logos of multinationals that print the corners of buildings and show the diversity of companies installed there in the first private free zone in Uruguay, in operation for over 25 years. The undertaking, the result of the law that implemented the regime of total tax exemptions in the country in the late 1980s.
The Uruguayan free zone regime, adopted as a way of leveraging the country’s economy, allows companies to settle in a private area and receive exemption from taxes on income and wealth, in addition to remaining exempt from all taxes and customs fees and being able to repatriate 100% of capital and profits. The site is managed by a private entity, which receives the concession through analysis by the government and is responsible for the administration of the free zone and services provided to companies – these companies cannot provide services or sell products to Uruguay.
Bet on Brazil
Currently, there are 12 private free zones in the country, with Zonamerica being the largest, with 28 buildings and 92 hectares of area, and the oldest. Despite the proximity to Brazil, there is no yellow-green company installed on the site. The expectation is that the arrival of a first Brazilian company may encourage the arrival of others, in the same movement observed in the financial area, with the arrival of Merrill Lynch in 1998 – today, 60 companies in the financial sector are installed there.
The RAS Group, a giant in Uruguayan logistics and the private free trade zone, has invested more than U$S 30 million in new warehouses, trucks, forklifts, the warehouse of the Punta de Sayago Logistics Pole (free port) and the Industrial and Logistics Park Route 5.
It is impossible to imagine that all this expansion is not being prepared to receive Brazilians, when the country finally decides to look at Montevideo as the biggest and cheapest logistics solution for its imports, storage, and regional distribution.
Meanwhile, in the current scenario of economic and political crisis in Brazil, the industry suffers from a fall in production and an increase in the cost of imports and, consequently, of inputs. Concomitantly, retailers bleed their margins without seeing a recovery. Regardless of the sector, innovative and safe alternatives for the short- and long-term investment strategy must be evaluated. This apparent dichotomy experienced by the industrial and retail sectors can be resolved precisely by focusing directly on logistics. It does not matter if the products are imported from Asia, Europe or other markets, the reduction of bureaucracy in the logistics chain is a clear path for the success of many companies.
I have separated in this article some advantages to look at neighboring Uruguay with a new vision of opportunity:
- Geographic location
The warehouses in the Free Zone of Montevideo are 15 km from the port of Montevideo and 5 km from the International Airport. Since the arrival of ships at the Port of Montevideo has no bureaucracy and cargoes are released within 8 hours.
- Activities that add value to the product without tax
If the company does not import the finished product and it needs to be handled and / or assembled in Uruguay, there is no additional tax.
- There is no restriction on the length of time the cargo remains in Uruguay
In Uruguay’s Free Zones, there is no restriction on the length of stay.
- Foreign companies operate freely
In Uruguay, foreign companies operate without having to pay any tax in the country as long as they are installed in a free zone.
- Total tax exemption
The Uruguayan Free Zone is totally exempt from taxes created or to be created.
- World-class infrastructure
The Free Trade Zone offers an advanced, highly technological structure, with state-of-the-art infrastructure and warehouses.