The government of President Tabare Vazquez approved Monday a plan to rebate a substantial amount of value added tax (VAT) paid by foreign visitors during their stay in Uruguay.

The government also decided to maintain a 10.5 percent income tax credit for individuals who rent accommodations to foreign visitors, Economy and Finance Minister Danilo Astori and Tourism Minister Liliam Kechichian told the press.

Both measures will be in effect from October until April, the officials said.

The tax incentives are expected to cost the Treasury $20 million in lost revenue, Astori said, adding that the measures were intended to prevent a decline in arrivals from neighboring Argentina, the main source of foreign visitors to Uruguay.

With Argentina experiencing an economic crisis, "the volatility in the exchange rate affects prices and purchasing power parity" between the nations, Astori said.

Uruguay welcomed more than 2.1 million visitors during the first half of 2018, up 1.7 percent from the same period last year, Tourism Ministry figures show.

Spending by international tourists, however, declined 1.8 percent to $1.41 billion.

The majority of tourists - 1.5 million - were from Argentina.