Tax reduction is already in force: ISD dropped to 3.75%

The reduction in tax rates began to take effect on February 1, 2023. Thus, the Internal Revenue Service (SRI) reported that the Foreign Currency Outflow Tax (ISD) is already at 3.75%, it is the first reduction set for this year.

President Guillermo Lasso -through Decree 643- ordered that this tax be lowered in three parts during this year: this February 1 the rate dropped 0.25% and for five months the ISD will be 3.75%. As of July 1, it will drop another 0.25% to remain at 3.50% and on December 31, the largest reduction of 1.50% will be given so that this tax remains at 2%.

Executive formalizes, via decree, the progressive reduction of the ISD

This tax had already been falling since 2022, since during that year a reduction of 0.25% was applied each quarter, so this tax was reduced from 5% to 4% per year.

The director of the SRI, Francisco Briones, indicated that the president’s commitment will continue to be fulfilled and on the way to increase competitiveness.

The Special Consumption Tax (ICE) of various segments is also reduced, “which will allow us to continue fighting against smuggling and informality,” said Briones.

Industrial beer reduces the ICE fee from $13.56 to $13.08 per liter of pure alcohol. Craft beer from $1.55 to $1.50 per liter of pure alcohol.

Non-alcoholic and soft drinks with a sugar content greater than 25 grams per liter lower their ICE from $0.19 to $0.18 per 100 grams of added sugar.

Plastic covers from $0.10 to $0.08 per unit.

Firearms from 300% to 30%.

Cigarettes from $0.17 to $0.16.

Decree 645 published the table with the new ICE rates and also includes the decrease in tobacco rates for heated tobacco consumables and liquids that contain nicotine to be administered through the nicotine administration system with a rate of fifty %. Also alcohol (use other than alcoholic beverages and pharmaceuticals) and alcoholic beverages at a rate of $10 per liter of pure alcohol. And airplanes, small planes and helicopters, except those intended for the commercial transport of passengers, cargo and services; jet skis, tricars, quadroons, yachts and recreational boats, with a 10% rate.

President Guillermo Lasso announced the reduction of rates of various taxes

The SRI recalled that ICE had already been eliminated for electric and hybrid vehicles, telephone plans, video games, among others.

From the Government it is indicated that these efforts are possible due to the fiscal order and reorganization of the State budget. “Efforts that return resources to the microeconomy: families, entrepreneurs and the productive sector,” said the director of the SRI.

In this month of February, the value added tax (VAT) rate will also be reduced from 12% to 8% in all services defined as tourist activities during the carnival holiday: Saturday 18, Sunday 19, Monday 20 and Tuesday 21 February 2023.

This discount will also be applied in the tourism sector in Easter Week (Friday 7, Saturday 8 and Sunday 9 April 2023) and in November: Thursday 2, Friday 3, Saturday 4 and Sunday 5 corresponding to the holiday for the Day of the Deceased and the Independence of Cuenca. (YO)