The tourism sector considers that these are positive changes that favor it, although they pose certain adjustments in the VAT issue.
If the Economic Development and Fiscal Sustainability Law, the Executive will establish 12 days a year to apply a VAT reduction from 12% to 8%. The idea is to promote economic reactivation in the tourism sector. This measure would be implemented through the issuance of an executive decree by the President of the Republic, and on a multiannual basis These days will be established so that the respective changes can be made in advance.
Further, these days may vary regionally, according to high and low seasons, where consumption and travel of tourist flows are encouraged.
This was explained by the Ministry of Tourism when asked about this measure that already attracts the attention of potential national tourists.
Over the fiscal impacts that this measure could bring to the treasury, the institution said they are low, since they are displacements that currently do not exist, and what is being sought is precisely to motivate them and the consumption that is made to move sales, taxes and bring development.
This punctual reduction of the VAT is one of the five incentives that are proposed in the Economic Development Law, that in a few days will be dealt with in a second debate.
It is that the law establishes measures that seek, according to the Government, the recovery of the sector through two angles: the first consists of supporting the recovery of companies with effective measures such as compensation for their losses and the restructuring of their debts with public entities such as the SRI and the IESS, and additionally through other creative measures to increase sales volume of companies by reducing taxes and promoting internal and external consumption, enabling greater movement. The measurements are as follows:
Loss compensation
Tourism companies may offset the tax losses suffered in fiscal years 2020 and 2021, with the taxable profits they obtain within the following tax periods, up to 100% for a maximum of ten (10) years in the manner in which they do so. estimate.
Deductible tourism expenses
National tourism expenses incurred by individuals in registered establishments with a single annual operating license will be considered part of their personal expenses deductible from income tax on a permanent basis. What is spent on travel within Ecuador is used to pay less income tax.
Payment facilities with IESS and SRI
A financial break is provided for tourism companies by providing payment facilities with the IESS and the SRI for up to 48 months without interest, avoiding coercive processes.
VAT 0% in hotels for foreigners
A 0% VAT rate is established for services provided by tourist accommodation establishments to foreign tourists. These establishments must be registered in the National Tourism Registry and have the Single Annual Operating License. For these purposes, any foreign citizen who legally enters Ecuador, stays in the country for less than 90 days and does not have temporary or permanent residence in the country, will be considered a foreign tourist.
VAT reduction in 12 days
As mentioned, VAT can be lowered from 12% to 8% in tourist establishments of all kinds.
In accordance with Holbach Muñeton, president of the Federation of Ecuadorian Chambers of Tourism, the proposals of the law they are positive. For example, the ability to deduct losses for 2020 and 2021 taxes is important for companies.
However, he thinks that there is still room to improve the VAT reduction proposal throughout the year on twelve days chosen by the Treasury. He explains that it would be difficult for companies to make changes in billing and ensures that every time the VAT rate must be changed in billing, the cost is $ 400. Therefore, he suggests that, for example, this measure could be applied to everything the month of January and thus they would not have to change for several occasions or incur those expenses.
For Muñeton, the most important thing for tourism companies is reactivation and for this they need liquidity. In this sense, he said that on Tuesday there was a meeting with Iván Andrade, president of the National Finance Corporation (CFN), in which it was agreed to review company debt issues on a case-by-case basis. According to the manager, at the moment an openness of the authorities is perceived.
Explained that Although the occupation has improved, there are cities that are doing better and others that have greater problems. For example, in October the national occupancy of hotels was in the order of 65%. However, this still represents 50% of the pre-pandemic numbers. On the other hand, in Quito, the occupancy has barely reached 25%. (I)
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