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CHANGES IN TAX REGULATIONS OF ECUADOR

After the severe earthquake that occurred last April 16th, which affected several provinces of the Ecuadorian coast, mainly Manabi and Esmeraldas, the government of Ecuador has proposed several measures, lasting one year with the aim of collaborating with the reconstruction of these provinces.

To do this, the Government will establish a contribution of two additional points on VAT from 12% to 14%; a contribution, for once, of an additional 3% on profits; and a contribution, for once, of the 0.9% on individuals with more than $1 million USD assets.

It establishes also a contribution of one day’s wages for those earning more than $1000; as well as a contribution of a day for two months for those earning $2000; and up to five months for those earning more than $5000.

Also, from April 26th, 2016 in the ORGANIC LAW OF BALANCE OF THE PUBLIC FINANCE, the following taxes are established:

1. Increase to gaseous, USD 0.18 per 100 grams of sugar per liter of sugary drinks. Exempted from this tribute: energy drinks, milk, mineral water and juices with more than 50% natural content.
2. Telephony, 15% for services of telephony for companies.
3. Cigarettes, Cigarette ICE goes from 0.1310 to 0.16 per unit.
4. Beers, ICE up from USD 7.24 per liter of pure alcohol at USD 12 per liter of pure alcohol.
5. Electronic money, return of 2% VAT for those who use electronic money on their purchases. In addition, companies will have a significant reduction by excluding from the calculation formula of advance income tax of its costs and expenses all values related to payments and withdrawals with electronic money.
6. Transfers abroad, the maximum amount for shipments or transfers abroad exempt from ISD is up to three base salaries, ie USD 1,098.
7. Maximum amounts for benefits under the agreements to avoid double taxation. SRI fixed maximum amounts and other formal general or by type of income to automatically apply the benefits provided for in the agreements to avoid double taxation requirements. In the case of exceeding the amounts or failure to observe the requirements, the application of profit will be made by the tax refund mechanisms.

Finally, it was exempt from income tax over the next five years, all new investment in Manabi, Esmeraldas southern or some of the areas affected by the earthquake.

2017-09-18T16:22:34+00:00 28/06/2016|Latest news|