Export sector asks the Government to review the tax burden that affects its costs and competitiveness

Non-oil and non-mining exports experienced a year-on-year growth of 20% until September 2022. In export value, this item reached $13,717 million and represented 55% of total exports, according to the latest figures from the Central Bank of Ecuador (BCE). ). However, there is concern in the export sector about the loss of competitiveness of Ecuadorian products pushed by a scenario of global recession in the world economy.

Mechanism to apply the automatic drawback for exporters is included in the draft executive decree

To counteract this loss of competitiveness, the Corporation of Exporting Guilds of Ecuador (Cordex), which represents more than 70% of the non-oil exportable supply and generates more than $11,000 million in foreign currency, insists that the Government urgently review the structure of production costs with regard to the tax burden, taxes, fees, service fees and other contributions and charges that have been transferred to the export sector.

“They require making the tariff reduction viable, like the one carried out more than a year ago, and applying compensation mechanisms such as the drawback”, indicated the union, which warns that if there is no reduction in the excessive burden of its expenses, it will be very difficult to compete internationally and Ecuadorian products would run the risk of losing market share in their main destinations.

“It is important to clarify that the current conditions do not allow the export sector to be competitive, as there has been a slowdown in the export of Ecuadorian products due to the conflict between Russia and Ukraine and other external factors to which is added the acute shortage of raw materials, in addition to the fall in international prices and uncertainty in the placement of products”, said Cordex.

One of the main export products experiencing a drop in its exports is bananas. According to figures from the Association of Banana Exporters of Ecuador (AEBE), banana exports from January to October of this year were 292.01 million boxes of bananas, which represented a fall of 7.50%, that is, , a reduction of 23.69 million boxes of bananas compared to the same period in 2021, when exports were 315.70 million boxes of bananas.

The Ecuadorian export sector stopped placing $797 million in 2021 due to the increase in maritime freight

Regarding the destinations, of the 292.01 million boxes of bananas exported, the European Union covers 26.32% of the participation of global exports, positioning itself as the main export destination, although a reduction is also evident in this market, since In 2022, a total of 76.86 million boxes were shipped, in contrast to 2021, exports were 85.31 million boxes, which represents a reduction of 9.72%.

The second destination for banana exports was Russia with 22.97%, representing a shipment of 67.07 million boxes. By 2021, accumulated exports to this same destination reached around 68.93 million boxes, which represents a drop of 2.70%, a decrease of 1.86 million boxes.

In what has to do with the drawback, The mechanism is included in the Tax Simplification and Progressivity Law, published on December 31, 2019 through the First Supplement to Official Gazette No. 111, and in force since January 1, 2020, but to date there is no regulation For your application. However, this system had already been presented in June 2015 and according to the Government at the time, it was planned to deliver $250 million to exporters in twelve months.

Meanwhile, the representatives of Cordex clarified that the export sector is always willing to promote the development of the country, for which they called on the Government to join efforts to face the problem.

They propose promoting a State policy that underpins the efficient, competitive and sustainable production of Ecuadorian products. (YO)