The Minister of Economy and Finance, Pablo Arosemena, announced that next Monday, May 8, the executive power intends to submit the new tax reform to the National Assembly. The government proposes to raise the level of deduction for personal expenses to $15,200 per year.

Arosemena announced the news at an international congress organized by the Association of Private Banks of Ecuador (Assobanca) that took place on Thursday.

What you need to know about personal income tax in Ecuador

The Head of Finance explained that Carondelet is trying to “relieve the burden on the pockets” of citizens, as part of an economic policy whose horizon is fiscal order. “We are now in a position to propose a tax reform that puts funds in people’s pockets, but at the same time is compensated, which is fiscally responsible,” he noted.

He explained that it is not a matter of “returning to the past”, but “developing” with a new scheme in which the number of family obligations of taxpayers will be taken into account.

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He described that “a person who has two or three children is not the same as a person who does not have them or a person who has a relative suffering from a special condition or a situation of catastrophic illness”.

The offer is to lower taxes for the middle class, in a “fiscally responsible” way, said the head of Finance.

This new government tax proposal is a far cry from the Economic Development Act, which took effect in November 2021, and which eliminated the personal expense deduction of up to $14,576. Now the limit of personal expenses that applies to the reduction of income tax is equal to seven basic family baskets; for 2023, the cap is set at $5,344.08.