Uruguay: Fiscal incentives for tourism sector development

Over the last decade, the tourism sector has increased its share within service activities in the country. Sector revenues exceeding USD 600 million per year have offset part of the current account deficit carried by Uruguay.

Each year the country is host to more than 2 million tourists, of which 75% come from neighboring countries Argentina and Brazil.

Tourists and their per-capital consumption are factors that contribute to the growth of the Uruguayan economy and have led officials to provide fiscal benefit incentives to improve the supply of the local tourism infrastructure.

Regulatory background

While the application of fiscal incentives for the tourism sector was established years ago (Decree-Law 14,335 of 23 December 1974 afforded the tourism business the status of activity of national interest), the recent Decree 124/01 was passed with the objective of “adapting current regulations to promote and facilitate investments” in the sector.

Potential beneficiaries of incentives

In accordance with Article 1 of Decree 124/01, the procedures and benefits of the decree are applicable to:

a) Tourism projects aimed at offering lodging, cultural, commercial, conferences, sports, recreational, entertainment and health service facilities, organized as a complex unit structured to capture tourist demand, provided they are declared as promoted by the government.
b) Hotels, apart-hotels, hostels and motels, currently existing or to be built.


For tourism projects qualified for government promotion, the following benefits apply:

  • Projects receive Value Added Tax (IVA) credit on local acquisitions of fixed assets for equipping or refurbishing of equipment, and on goods and services for construction, improvement or expansion of the tourist investment project.
  • Such projects also enjoy IVA exemptions for imports of the aforementioned goods and services for the purposes indicated in the preceding paragraph.
  • Regarding business income tax, accelerated depreciation is provided for investments made: Expenditures in construction, improvement or expansion of tourism projects may be depreciated over a 15-year period. Investments in equipment may be depreciated over five years.
  • Regarding capital tax, investments in infrastructure and civil projects for the construction, improvement or expansion of the tourism project are computed as exempt assets at the close of the fiscal year when construction starts and in the 10 succeeding fiscal years. The exemption also applies to the construction site property. Investments made in fixed assets for equipment are treated as exempt assets at the close of the year of incorporation and in the four succeeding fiscal years.

Projects also enjoy a 50% exemption of all taxes imposed on imports of materials and goods for the construction, improvement or expansion of the project and on imports of fixed assets destined for the furnishing of the project.

Hotels, apart-hotels, hostels and motels can only enjoy the aforementioned benefits in the case of goods destined for furnishing or refurbishing equipment, but not for the construction or expansion of existing structures.

They likewise do not qualify for the accelerated depreciation incentive for acquired equipment.