Uruguay Updates Tax Incentives for Investment Projects

Uruguay recently transitioned to a performance-driven system for its investment promotion regime under Decree No. 329/025. This update shifts how the government grants tax benefits, moving toward a scoring matrix that rewards projects based on their contribution to the local economy. Businesses can now secure corporate income tax (IRAE) exemptions for up to 100% of their eligible investment, along with wealth tax relief and VAT refunds on imports.

The system prioritizes projects that drive employment, innovation, and sustainability. While the regime targets large-scale investments of approximately USD 30 million or more, it also includes specific bonuses for small and medium-sized enterprises (SMEs). Micro-businesses, for instance, can receive an additional 15% IRAE credit. The new rules officially took effect on February 1, though a transition period allows some projects to choose between the old and new frameworks until April 30.

Who it affects

These changes primarily impact nomad entrepreneurs and expats who operate local businesses or plan to start IRAE-taxable ventures in Uruguay. If you are a remote freelancer working for clients abroad without a local corporate presence, these updates likely won't change your daily life. However, for those pivoting to local startups or physical investments like non-residential construction, the incentives are significant.

What to do

If you are planning a local investment, you must submit your project to the Commission for the Application of the Investment Promotion Regime (COMAP) through their digital portal. The evaluation process typically takes about 90 business days. To maximize your score, focus your project plan on:

• Job creation for vulnerable groups
• Technological innovation or R&D
• Geographic decentralization (investing outside Montevideo)
• Sustainable practices and environmental protection

Investments generally need to be executed within 5 years of submission. Check the latest nomad news for further regulatory shifts.

Read our full Uruguay guide for the complete picture.