Uruguay to exempt tourists from paying VAT in hotels to encourage domestic tourism

RIO DE JANEIRO, BRAZIL – The Uruguayan government announced that it would exempt Uruguayans in the hotel industry from paying VAT tax. After granting the benefit to international tourists before the summer season, the authorities of Tourism and Economy intend to support the sector by promoting domestic tourism.

The measure will be applied from March 1 to April 17 and was taken by the Ministry of Economy and Finance (MEF). It was announced last Friday by the Minister of Tourism, Tabaré Viera, through Twitter. He also communicated that the Ministry of Public Health authorized entry to Uruguay with a negative antigen test, instead of a PCR test which, in Uruguay, are around the cost of US$100.

“Good news for the hotel sector and Uruguayan tourists. From the MEF, they confirm that the government will grant the VAT assimilated to exporters (rate 0) for the hotel industry from March 1 to April 17″, wrote Viera. Currently, the reduced VAT rate in Uruguay is 10%, and the general rate is 22%.

Marina Cantera, the president of the Uruguayan Chamber of Tourism, positively valued both decisions. “They are two interesting measures. Not asking for PCR is important to generate fluidity in the entry of tourists. It is excellent news,” Cantera said.

At the three border crossing points between Uruguay and Argentina, the antigen test has already started to be requested for entry. However, a PCR is also accepted in case of having it.

With a high vaccination coverage, where more than 76% of the population is fully vaccinated, and 53% has a third dose against covid-19, Uruguayan borders are open to citizens, residents, and foreigners. Those vaccinated will be able to move freely by presenting a recent test, and those who are not will have to comply with 14 days of mandatory quarantine.

“The VAT zero rate is also critical; it helps mitigate costs for hotels and is a benefit for Uruguayan tourists,” he continued. He added that both measures could favor “weekend tourism in March and April”.

With a summer season described as “disastrous” by Jorge González, president of the Uruguayan Gastronomic and Hotel Union (Sughu), and as “mediocre” by Francisco Rodríguez, president of the Association of Hotels and Restaurants of Uruguay (AHRU), solutions are being sought that includes the extension of unemployment insurance (total and partial) in the gastronomy, hotel, and transport sectors.

The measure proposed as fundamental by the unions was the “VAT zero rate so that the companies can face costs that they cannot afford today” and the continuity of the unemployment insurance, which expires on March 30, and the exemption of employer’s contributions.

In destinations such as Punta del Este, the coastal city with the highest tourist reception in the country, there was a weekly occupancy in January of between 60% and 65%.

Rodríguez added that “with the increase of contagions and uncertainty” and due to the wave of the omicron variant in Uruguay, there was “a significant drop and in some destinations almost a standstill” in the sector.