Uruguay’s Decree 329/025, effective 1 February 2026, updates the investment incentive regime under Law 16,906, introducing a merit-based system that rewards companies for job creation, export growth, sustainability, and innovation. The decree provides tailored benefits for SMEs and large projects, outlines eligible investments and beneficiaries, and sets out significant tax exemptions and specialised incentives to promote strategic economic development. 

RF Report

Uruguay issued Decree 329/025 on 13 January 2026, introducing updated rules for the investment incentive regime established under Law 16,906 of 1998 for promoted sectoral activities.

The regulation establishes a merit-based system where companies earn tax exemptions by meeting specific goals, such as creating jobs, increasing exports, and adopting sustainable technologies. It introduces specialised benefits for small and medium-sized enterprises (SMEs) and provides significant relief for large-scale industrial projects that drive national growth. The decree also aims to accelerate economic growth by prioritising strategic investments that impact employment, decentralisation, and technological innovation.

Key highlights of the decree are summarised below:

Strategic objectives and evaluation criteria

The evaluation of investment projects is based on a matrix of indicators designed to measure their contribution to national development. Key indicators include:

  • Generation of employment, with a focus on populations with difficulties accessing the labour market.
  • Decentralisation, prioritising territories with higher levels of poverty and unemployment.
  • Increase in exports and environmental sustainability.
  • Technological adaptation, research, development, and innovation (R+D+i).
  • Strategic indicators are defined by the investor’s activity.

Eligible beneficiaries and exclusions 

Beneficiaries include cooperatives and IRAE (economic activities income tax) taxpayers whose projects are declared “promoted” by the Executive Branch. Agricultural producers can also access these benefits if they pay IRAE. However, the decree specifically excludes state-owned commercial and industrial entities (Entes Autónomos and Servicios Descentralizados) and the tobacco industry.

Scope of eligible investments 

Eligible investments consist of fixed or intangible assets directly essential to the project’s goals. These include:

  • Movable corporate goods with a minimum unit value of UI 1,500 (Unidades Indexadas), excluding non-utility vehicles and home furniture.
  • Real estate construction and improvements, including those on third-party properties with a remaining lease of at least three years.
  • Biological assets, such as perennial fruit trees and high-genetic-value livestock.
  • Electric vehicles for car rental or tourism services, provided they meet specific energy density requirements.

Fiscal benefits and exonerations 

Promoted companies receive significant tax relief across several areas:

  • IRAE exoneration: A percentage of the eligible investment is exonerated from IRAE based on the project’s score in the indicator matrix. The exonerated amount cannot exceed 100% of the investment or 90% of the tax payable in a given year. The exemption period is set by the application commission and must be at least four years, with the option to suspend benefits for up to two years.
  • Wealth tax (IP): Exoneration for movable goods for their entire useful life and for civil works for 8 to 10 years, depending on the location.
  • Import duties: Full exoneration of taxes and VAT on the import of movable assets and materials for civil works, provided they do not compete with the national industry.
  • VAT refund: Recovery of VAT paid on local purchases of materials and services for construction and movable assets.

Specialised Incentives 

The decree introduces specific tiers of support for different company sizes and types:

  • Micro and small enterprises: Receive an additional 15 percentage points of IRAE exoneration and two extra years to use the benefit.
  • Medium enterprises (up to 50 employees): Receive an additional 10 percentage points of IRAE exoneration and one extra year.
  • Large projects: Projects above UI 180 million or UI 300 million can secure 100% IRAE exemption if they meet submission and completion deadlines.
  • Industrial and science parks: Users of these parks receive an extra 5% to 15% increase in their IRAE benefit and potential credits for employer social security contributions.

For reference, the Unidad Indexada (UI), used to calculate investment thresholds, was valued at UYU 6.4232 on 14 January 2026.

Decree 329/025 will take effect on 1 February 2026. Companies that submitted investment project applications between 1 August 2025 and 31 January 2026 can choose to follow the new rules set out in the Decree. Additionally, businesses may continue to file applications under the previous regulations until 30 April 2026.