◼ ECONOMICS Bloomberg Businessweek February 10, 202031ArgentinaandBrazil,it’soneofSouthAmerica’s
wealthiestnations.Thecoastislinedwithstun-
ningbeaches,thecountrysidedottedwithpictur-
esquefarmsandvineyards.Plus,Uruguayhasso
faravoidedthesocialunrestthatconvulsedother
nationsintheregionlastyear.Ontheeconomic
front,theviewis lesspleasing.Growthhasaver-
ageda meager1.3%thepastfiveyears,andunem-
ploymentstandsabove9%.Thepublic-sectordeficit
is approaching5%ofgrossdomesticproduct.
Attractingresidentswouldn’tbea miraclecure,
butit couldn’thurt.“Aspeoplewithhighdispos-
ableincomesettlehere,thatwillhaveanimmedi-
ateimpactontheeconomy,”saysincomingTourism
MinisterGermánCardoso,becausethey’llbuy
homes,enrolltheirchildreninprivateschools,and
employdomestichelp.
Longa haven fortax-dodgingArgentines,
Uruguayhastakenstepstocurbmoneylaunder-
ingandhasbeensharingmoreinformationinrecentyearsaboutArgentineresidentswiththat
country’staxagency.LacallePou’stax-residency
plan hasn’t gone down well with Argentina’s new
leadership. In a recent TV interview, President
Alberto Fernández urged his counterpart to “think
twice” before undoing years’ worth of efforts by
predecessors to shed Uruguay’s reputation as a
“fiscal paradise.”
The governing coalition will hold majorities in
both chambers of congress, so getting legislation
approved shouldn’t be difficult. Even so, success
isn’t assured. “We have to see how many people
participate and what is the economic result of the
activities they undertake,” says Julio de Brun, a for-
mer head of the central bank. But, in general, “I see
it assomethingpositive.”�KenParksMARK
JOHANSON/TNS/ZUMA
PRESS.
DATA:
RUSSIAN
FEDERAL
STATE
STATISTICS
SERVICE
THE BOTTOM LINE Uruguay’s president-elect wants to follow in
the footsteps of Greece and Portugal and change tax-residency
rules to make it easier for affluent foreigners to settle there.THEBOTTOMLINE ManyRussianbusinesseshavebecome
dependentonmigrantworkersfromCentralAsia.ButPutin’s
governmentis intentonreducingthoseworkers’numbers.non-Slaviccultures integrate successfully.But
nothing has been done despite a mass outbreak
of nationalist riots targeting Muslim immigrants in
Moscow six years ago. “Migrants still live in a par-
allel universe,” he says. �Henry Meyer and Ilya
Khrennikov, with Naubet Bisenov, Ilya Arkhipov,
Stepan Kravchenko, and Zoya Shilova▲ Punta del EsteSurf, Turf, and
Low Taxes
● Uruguay’s incoming government wants to lure
rich foreigners to help shore up the economyThewayUruguay’spresident-electseesit,his
country faces a couple of pressing problems: too
few residents and too little investment. Why not
solve both in one stroke by making the South
American nation of 3.5 million people so attractive
to well-heeled foreigners that they’ll pack up and
move there? “It’s generally accepted that Uruguay
would benefit from 100,000 or 200,000 more peo-
ple,” said Luis Lacalle Pou during a Jan. 22 radio
interview, explaining changes he wants to make to
the country’s tax-residency rules.
Greece, Spain, and Portugal have gone down
this road, wooing the wealthy with relatively
loose requirements for official residency status.
In Portugal, you can invest as little as €350,000
($387,000) in property to qualify. To be eligible for
tax residency under Uruguay’s current rules, a for-
eigner must spend more than 183 days a year there,
as well as purchase real estate worth more than
$1.8 million or invest more than $5.4 million in a
business. Expats pay a flat 12% tax on income earned
from offshore assets after a five-year grace period.
Destino Punta del Este, a nonprofit that pro-
motes the resort city, has asked the incoming gov-
ernment to reduce the residency requirements to
90 days and $500,000. “Not many people are going
to come way down here to a small country like
Uruguay if it’s not competitive,” says Juan Carlos
Sorhobigarat, the group’s chairman. Lacalle Pou,
who takes office on March 1, hasn’t said how low
he wants to go.
Uruguay has lots going for it. Nestled between