1. URUGUAY

2. Presentation Schedule Country Profile Uruguayan Free Trade Zones Tax and Corporate Regimes

3. Uruguay General Overview Population – 3,314 million Population – 3,314 million Area – 173.215 km2 Area – 173.215 km2 GDP 2006 – US$ 18,590 millions GDP 2006 – US$ 18,590 millions GDP per capita 2006 – US$ 5,812 GDP per capita 2006 – US$ 5,812 Annual growth rate – 7,0% Annual growth rate – 7,0% Unemployment (Sept. 2007) – 8,5% Unemployment (Sept. 2007) – 8,5% Common external tariff – 0 to 20% Common external tariff – 0 to 20% Exports 2006 - US$ 3,985 millions Exports 2006 - US$ 3,985 millions Exports 2007 – US$ 4,496 millions Exports 2007 – US$ 4,496 millions Imports 2006 – US$ 4,775 millions Imports 2006 – US$ 4,775 millions Imports 2007 – US$ 5,588 millions Imports 2007 – US$ 5,588 millions

4. Uruguay = Switzerland of the Americas…

5. Social and Political Background Quality of Life Quality of Life Security Security Distances Distances Pollution Pollution Close contact among people Close contact among people Social Characteristics of our Community Social Characteristics of our Community Small sized and homogenous population Small sized and homogenous population Sophisticated, trained and qualified workforce Sophisticated, trained and qualified workforce High literacy levels High literacy levels One child, one PC One child, one PC Political Reasons Political Reasons Tradition of democracy Tradition of democracy Stability Stability

6. Economic Policy of the Uruguayan Governments over the Last Three Decades Market economy Market economy Free inflow and outflow of foreign currency Free inflow and outflow of foreign currency No exchange rate controls No exchange rate controls Bank secrecy protection Bank secrecy protection No foreign investment registry No foreign investment registry Equal treatment to foreign investors guaranteed by law Equal treatment to foreign investors guaranteed by law

7. Legal Perspective Sophisticated legal system Independent judicial system Enforceability of foreign rulings and awards Enforceability of contracts on foreign currency No taxes on foreign sourced income MERCOSUR Investment Promotion Act

8. Investment climate: B+ grade (Standard and Poors - 3 March 2008)

9. Currently Growing Sectors Pulp projects (BOTNIA, ENCE) Pulp projects (BOTNIA, ENCE) Forestry Forestry Agribusiness (meat, wool and soybean) Agribusiness (meat, wool and soybean) Real Estate Real Estate Call Centers Call Centers

10. Transparency International 2006 Source: www.transparency.org www.transparency.org

11. Economic Freedom Index 2007 Source: Heritage Foundation Factors considered: -Corruption -Non Tariff Barriers imposed on trade -Tax burden from the government -Respect for the law -Regulatory burden -Restrictions on banks -Job Market regulations -Black Market activities

12. Democracy Index Source: The Economist The Economist – “The World in 2007” Survey on Democracy around the world Full Democracies Flawed Democracies 5 Categories : 1.Electoral process and pluralism 2.Functioning of government 3.Political participation 4.Political culture 5.Civil liberties 5 Categories : 1.Electoral process and pluralism 2.Functioning of government 3.Political participation 4.Political culture 5.Civil liberties

13. Highlights – Major Business Opportunities Distribution and logistics center for the region Distribution and logistics center for the region MERCOSUR: Headquarters MERCOSUR: Headquarters Multiple tax incentives: Multiple tax incentives: - Free ports - Industrial parks - Software - Free trade zones

14. URUGUAYAN FREE TRADE ZONES (FZ)

15. Uruguayan Free Zones I. Concept Areas excluded of customs territory

16. Uruguayan Free Zones II. Location RIVERA MONTEVIDEO RIO NEGRO NUEVAHELVECIA COLONIA

17. Uruguayan Free Zones III. Pulp Projects BOTNIA and ENCE are FZ

18. Uruguayan Free Zones IV. Activities Trading hub in the region: - Financial services - Bank Rep. Offices - Logistic providers - Trading operators - Call centers - Software development industries

19. Uruguayan Free Zones V. FZ Users Concept Concept Special bylaws Special bylaws Agreement with a FZ operator Agreement with a FZ operator Filing with FZ Bureau Filing with FZ Bureau Customer practice: acquisition of a shelf corporation Customer practice: acquisition of a shelf corporation

20. Uruguayan Free Zones VI. Tax Treatment Entrance and exit of goods abroad are tax exempted. Entrance and exit of goods abroad are tax exempted. Circulation of goods and services within the FZ is exempted from sales taxes. Circulation of goods and services within the FZ is exempted from sales taxes. Sale of products into Uruguayan territory = import transaction. Sale of products into Uruguayan territory = import transaction.

21. Uruguayan Free Zones VI. Tax Treatment Remittance of dividends abroad (by Users) is untaxed (as opposed to companies who are not FZ operators). Remittance of dividends abroad (by Users) is untaxed (as opposed to companies who are not FZ operators). Payment of technical assistance fee exempted. Payment of technical assistance fee exempted. Payment of interests to foreign entities exempted. Payment of interests to foreign entities exempted. Payment of royalties abroad exempted. Payment of royalties abroad exempted.

22. Uruguayan Free Zones VII. Requirement At least 75% of the personnel employed by the FZ Users must be native or legal Uruguayan citizen

23. TAX AND CORPORATE REGIMES

24. Tax and Corporate Regimes I. Tax Aspects Only locally sourced income is taxed. Only locally sourced income is taxed. Corporations with no activity and assets in Uruguay are subject to no taxation in Uruguay except for an annual fixed duty of US$ 400 per year. Corporations with no activity and assets in Uruguay are subject to no taxation in Uruguay except for an annual fixed duty of US$ 400 per year. Remittance of dividends abroad is exempted when the local company has no locally sourced income. Remittance of dividends abroad is exempted when the local company has no locally sourced income. Transfer of shares of an Uruguayan bearer share corporation is exempted from non residents income tax. Transfer of shares of an Uruguayan bearer share corporation is exempted from non residents income tax.

25. Tax and Corporate Regimes II. Corporate Aspects Bearer shares corporations admitted. Bearer shares corporations admitted. Single shareholder admitted. Single shareholder admitted. Shareholders may be all foreign non residents, individuals or legal entities. Shareholders may be all foreign non residents, individuals or legal entities. Directors may be nationals or foreigners, individuals or legal entities. One is sufficient. Directors may be nationals or foreigners, individuals or legal entities. One is sufficient.

26. Other Tax Structures II. Corporate Aspects Transfer of the stock is effected by means of the physical delivery of the stock certificate. Transfer of the stock is effected by means of the physical delivery of the stock certificate. Shareholders Meetings may be gathered per proxy. Shareholders Meetings may be gathered per proxy. Re-domiciliation is possible (into Uruguay or abroad). Re-domiciliation is possible (into Uruguay or abroad). Holding companies expressly contemplated under local legislation. Holding companies expressly contemplated under local legislation.

27. Thank you ESTUDIO BERGSTEIN