Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

September 11, 2023

Uruguay enacts new initiative to attract IT professionals using tax incentives

  • A new law makes it easier for certain information technology (IT) professionals with IT activities in Uruguay to pay nonresident income tax and to be exempted from making social security contributions.
  • The law also makes employers responsible for withholding nonresident income tax on behalf of the IT professionals under contract.
  • This Alert outlines the eligibility requirements.

Uruguay continues to demonstrate its commitment to fostering the growth of its information technology (IT) sector through the enactment of Law No. 20,191 on 23 August 2023. Under this law, the government provides IT professionals with the option to pay the Non-Resident Income Tax (IRNR) for income obtained in Uruguayan territory under employment contracts entered into between 30 August 2023 and 28 February 2025. Furthermore, these professionals can opt not to be included in the social security system, thus exempting them from making corresponding contributions.

To be eligible for these benefits, certain conditions must be met simultaneously:

  • The professional must either be a foreigner or a national who has not established fiscal residence in Uruguay in the last five fiscal years.
  • The professional must be actively engaged in activities within Uruguay and physically present in the country for at least two-thirds of the calendar year or the duration of their employment contract.
  • The professional's income must solely come from a dependent working relationship in Uruguay, specifically within the IT sector, as defined in Article 52 (S) of Title 4.

Conditions B and C should be evaluated annually — if they are not met, the IT professional will be subject to taxation under the regular tax regime.

This option must be exercised at the outset of the first relevant employment arrangement and remains applicable for the year it is chosen and the subsequent four years.

Lastly, Law No. 20,191 designates employers as responsible for withholding IRNR on behalf of the IT professionals under contract.

IT professionals and their tax advisors will want to become familiar with the new law. Access the full text of the law here (only in Spanish).


For additional information with respect to this Alert, please contact the following:

EY Uruguay, Montevideo

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

Published by NTD's Tax Technical Knowledge Services group; Carolyn Wright, legal editor


The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


Copyright © 2024, Ernst & Young LLP.


All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.


Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.


Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more