You are here://THIRTEEN SECTORS, TAX BREAKS 2016

THIRTEEN SECTORS, TAX BREAKS 2016

This year thirteen productive sectors will be exempt from Corporate Income Tax prepayment for being in crisis or for reporting low sales.

The list includes activities focused on export: tuna, shrimp, coffee, palm, flowers and pineapple. The companies of Sucumbíos will be also exempt; accommodation and food services, in El Oro; agroindustry, silviculture and fishing in Loja; accommodation and food services in Cotopaxi; heavy loads transportation in several provinces; and Manabi and Esmeraldas, affected by the earthquake. All these sectors already have executive decrees, according to deputy Director of the Internal Revenue Service (SRI), Paola Hidalgo. The official explained that the benefit applies for one year. The application depends on the date of issue.

If the sectors have already paid the advance, this will be returned to them, she said. And in property times, the payment of the advance to the IR is not a major problem for companies, but in recession times it is a headache. Napoleon Santamaria, tax expert, said that since 2008 the advance is not tied to the net profit of the firms but to the assets, income, equity and expenses; thereby to the financial statement.

With this, for example, a firm that had sales of USD 300 000 and expenses of USD 290 000, has to pay in advance USD 4128, representing 41% of its profits. If you pay your rent only on the IR, it would be USD 2 200. The overpayment does not return to the firm. “When sales were good, the advance was not a problem, but in crisis it turns complicated.”

Several sectors, including the commercial and productive ones, requested the elimination of the Advance Income Tax which is included in the draft of Law Project Tax Benefits. The Assembly did not accept the order, but included the possibility that the IRS can return the overpayment. The project, which was approved in a second debate, is awaiting a review by the Executive. The deputy director of the SRI said refunds will be made prior to review. “The company that overpaid will have to pay at least the average effective rate of the taxpayers. If that company is below that average, we are not going to return it. If the company is above the average, then yes, we are going to return it,” She said.

2017-09-18T16:43:31+00:00 31/10/2016|Latest news|