In April, Uruguay’s Law No. 20.124 introduced some important changes to the Personal Income Tax (IRPF), which applies (among other taxable events) to labor income earned by individuals with tax residence in Uruguay.1  Decree No. 118/023, published in the country’s Official Gazette (Diario Oficial) on 20 April 2023, contains certain regulations which implement Law 20.124 and other amendments.

The new rules take effect form 31 December 2023.


The changes described in this newsletter could have a favorable impact on the tax liability of Uruguayan assignees abroad still subject to Uruguayan tax and Uruguay-inbound assignees subject to Uruguayan tax as of fiscal year 2023.  Due to the modifications to the dependent child deduction, the enhanced credit around mortgage loans, and the increase in deductible amounts against annual income subject to the IRPF, in many cases, a taxpayer’s tax liability may be lower and therefore employers’ international assignment costs may be lower.  Each taxpayer’s liability under the new rules will depend on his particular facts and circumstances.

Details in Brief

The main changes introduced by the new law are the following:

1. Increase in the deduction per child: Taxpayers may deduct a notional annual amount for each dependent minor child, which the new law increased from 13 BPC2 (approximately US$1,840) to 20 BPC (approximately US$2,830).

2. Housing credit: Taxpayers are granted a tax credit for the amounts paid for mortgage loans for the acquisition of their homes3, provided the property does not exceed a certain value.  The new regulation changed the indicated value for the property, increasing it from 794,000 UI4 (approximately US$115,000) to 1,000,000 UI (approximately US$145,000).

3. Deductions for taxpayers with annual income up to 180 BPC: The new rule provides that those taxpayers with annual incomes not exceeding 180 BPC (currently approximately US$25,470) can claim certain deductions (e.g., dependent child allowance and social contributions) up to a stipulated percentage of their value, which the new law increases from 10 percent to 14 percent (8 percent rate applies in all other cases).

4. Tax credit for housing rental: Under certain conditions, a credit is granted against Personal Income Tax for a percentage of a rental/lease that is destined to housing of the taxpayer (the taxpayer must be the tenant and pay rent to the landlord).  The tax credit is set as a percentage of the rental, which is increased by the new law from 6 percent to 8 percent of the annual rental/lease price.


Should taxpayers have any concerns about how the changes may impact them, how they may avail of the changes to effect a more favorable tax outcome, and any related issues around compliance, they are advised to speak with their qualified tax professional or a member of the GMS team with KPMG in Uruguay (see the Contacts section).


1  See the law in the official website of the National Directorate of Official Printings and Publications (IMPO) and the Regulatory Decree published on the official webpage of the Presidency of the Republic (in Spanish) :

Ley N° 20124 : .

Decreto 118/023 Reglamentación de la Ley N° 20.124 de 24 de marzo de 2023 : .

2  BPC is the benefits and contributions base (Base Prestaciones y Contribuciones), which varies every year.  For 2023, 1 BPC = UYU 5,660.

3  Taxpayer has a credit for the mortgage loan amount (with a maximum annual amount allowed of 36 BPC = UYU 5,004).

4  UI is the indexed unit (Unidad Indexada). 1 UI = UYU 5.7422.

*      *      *      *

[UYU 1 = USD 0.025 | UYU 1 = GBP 0.0205 | UYU 1 = -EUR 0.0236 | UYU 1 = ARS 5.88 (Source:]

The information contained in this newsletter was submitted by the KPMG International member firm in Uruguay.


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GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.