The survey just presented by Uruguay XXI, based on responses from 244 US-based companies operating in the country, leaves no room for doubt. 79% say they are “satisfied or very satisfied” with the investment climate. But when asked what is actually holding back the growth of their businesses, the verdict is devastating: 40.3% point to the time taken by administrative procedures as the main obstacle. It is followed, remotely, by access to markets, a shortage of qualified talent and the rigidity of the labor market.
In other words, Uruguay offers a good macro framework... but then it ties you up your hands and feet with a bureaucracy that devours time and money. And that red tape is no accident. It is the visible face of a much deeper problem: an obese, very expensive and increasingly voracious State that, in the name of “protecting” and “regulating”, ends up destroying the conditions that allow
real wealth to be created.The trap of high taxes
Uruguay maintains one of the highest tax burdens in Latin America: around 27.4% of GDP in total revenue (according to the latest OECD data) and a gross revenue of the DGI of around 20% of the product. VAT at 22%, Income Tax from Economic Activities (IRAE) at 25%, personal income tax that reaches 36% in the highest brackets, retirement contributions and health care that exceed 20% of the gross salary... All of this is not “solidarity”. It is a tax on productive effort
.Every peso that the businessman pays in taxes is a peso that he does not invest in machinery, training, research or expansion. Every peso that the State collects is spent on maintaining a public apparatus that grows faster than the economy. The structural fiscal result closed 2025 at around -3.9% of GDP (and the global result close to 4.8-5% according to different sources), driven by public spending that continues to rise. The government spends more than it earns and, instead of cutting back, it continues to increase transfers, supplies and state payrolls.
Hazlitt would explain it with crystal clarity: you see the public employee who receives his salary, you see the retiree who receives his liabilities, you see the subsidy that “helps” this or that sector. What you can't see is the private employment that was never created, the company that chose to settle in Paraguay or the Dominican Republic, the talented young man who emigrated because here the State takes more than half of
what it produces.Fragmented and inefficient public spending
The Uruguayan State isn't just big: it's inefficient by design. It has ministries, autonomous bodies, directorates, commissions and councils that overlap in functions. The “archeology of tasks” that some analysts have done with artificial intelligence reveals dozens of dependencies that do exactly the same thing. Real public spending (including public companies, BPS, municipalities and autonomous communities) far exceeds 30% of GDP when all the items are added together
