VAT rates in Uruguay: 22% basic and 10% reduced

Uruguay's VAT (IVA) has two rates: the basic rate is 22% and the minimum rate is 10%. The basic rate applies to most goods and services; the minimum rate applies to a closed list set by law (basic foodstuffs, medicines, hotels, health services, among others). Beyond those two rates there are exempt operations — no VAT at all — and exports, which are zero-rated.

The rates, in the law

Both rates are set in Título 10 (IVA) of the 2023 Texto Ordenado, article 34:

Título 10 (IVA), article 34 'Tasas':

«Fíjanse las siguientes tasas: A) Básica del 22% (veintidós por ciento). B) Mínima del 10% (diez por ciento).»

In English: The following rates are set: A) Basic, 22% (twenty-two per cent). B) Minimum, 10% (ten per cent).

The 10% rate: what it covers

The minimum rate isn't the seller's choice: the law lists exhaustively which goods and services sit at 10%. Article 36 opens like this:

Título 10 (IVA), article 36 'Tasa mínima', item A:

«Estarán sujetos a esta tasa la circulación de los siguientes bienes y servicios: A) Pan blanco común y galleta de campaña, pescado, carne y menudencias, frescos, congelados o enfriados; aceites comestibles y crudos para su elaboración; arroz; harina de cereales y subproductos de su molienda; pastas y fideos; sal para uso doméstico; azúcar; yerba; café; té; jabón común; grasas comestibles; transporte de leche.»

In English: The circulation of the following goods and services shall be subject to this rate: A) Common white bread and galleta de campaña, fish, meat and offal, fresh, frozen or chilled; edible oils and crude oils for their production; rice; cereal flour and the by-products of its milling; pasta and noodles; salt for domestic use; sugar; yerba; coffee; tea; common soap; edible fats; milk transport.

The same article continues with further categories: medicines and pharmaceutical products, hotel services related to lodging, health services provided outside an employment relationship, local tourist packages, diesel and land passenger transport, among others. If your activity isn't on that list, it's taxed at 22%.

Exempt is not the same as zero-rated

Some operations carry no VAT at all: these are the exemptions in article 38. One concrete example:

Título 10 (IVA), article 38 'Exoneraciones', item F:

«Leche pasterizada, ultrapasterizada, vitaminizada, descremada, en polvo, excepto la saborizada y la UHT o UAT (ultra alta temperatura).»

In English: Pasteurised, ultra-pasteurised, vitaminised, skimmed or powdered milk, except flavoured milk and UHT or UAT (ultra high temperature) milk.

The same article also exempts newspapers, magazines and books, property rentals, and interest on deposits and banking operations, among other things. The practical difference from 'zero-rated' is this: if you sell exempt, you charge no VAT but you also cannot recover the VAT on your purchases (it becomes a cost). If you sell zero-rated, you charge no VAT either, but you can recover the VAT you paid.

The classic zero-rated case is exporting. The law says so when it defines the tax's territory:

Título 10 (IVA), article 5 'Territorialidad':

«Estarán gravadas las entregas de bienes y las prestaciones de servicios realizadas en el territorio nacional y la introducción efectiva de bienes, independientemente del lugar en que se haya celebrado el contrato y del domicilio, residencia o nacionalidad de quienes intervengan en las operaciones y no lo estarán las exportaciones de bienes. Tampoco estarán gravadas aquellas exportaciones de servicios que determine el Poder Ejecutivo.»

In English: Deliveries of goods and supplies of services carried out in the national territory and the effective introduction of goods shall be taxed, regardless of where the contract was concluded and of the domicile, residence or nationality of those involved in the operations, and exports of goods shall not be taxed. Nor shall those exports of services determined by the Executive Branch be taxed.

Article 14 adds the other half: on exports you may deduct the VAT on the goods and services that make up the cost of what you exported, and if that leaves a credit in the exporter's favour, the credit is refunded or set against other taxes or social security contributions. That's why we call it 'zero-rated' rather than exempt: the sale carries no VAT and the VAT on purchases comes back.

How your business works out its VAT

The maths is simple: output VAT (what you charge clients on your invoices) minus input VAT (what you paid on purchases linked to your taxed activity) equals what you pay the DGI. If the credit exceeds the debit, the balance carries over to the next month.

There's an important exception for the smallest businesses: companies under the small-business regime (Literal E) don't settle VAT that way — they pay a fixed monthly amount, the IVA mínimo. We cover it in detail in the article linked below.

• What VAT is in Uruguay and how it works
• Literal E and the IVA mínimo: the small-business regime

Frequently asked questions

• What's the standard VAT rate in Uruguay? The basic rate of 22%, set in article 34 of Título 10.
• When does the 10% apply? Only to the goods and services the law lists in article 36: basic foodstuffs, medicines, hotels, health services, tourist packages, diesel, passenger transport, among others.
• Is there a zero rate in Uruguay? In practice, yes: exports of goods aren't taxed and the exporter recovers the VAT on its purchases.
• Are exempt and zero-rated the same? No. In both cases you charge no VAT, but only under zero rating can you recover the VAT on your purchases.
• Can the 22% come down? The law empowers the Executive to gradually reduce the basic rate to 20%, but the rate in force today is still 22%.
• I'm a small sole trader — do I charge 22%? If you're on Literal E you pay the IVA mínimo, a fixed monthly amount, instead of settling by rates.

In short: 22% is the basic rate, 10% the minimum rate for the article 36 list, exempt operations carry no VAT and no right to recover input VAT, and exports are zero-rated with recovery. Before applying anything other than 22%, check that your good or service is actually on the law's list.