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.
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 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.