Popular businesses that have annual sales of up to $2,500 will not pay income tax; but, if sales exceed that value — up to $20,000 — they will have to pay, and the installments will be progressive, with a maximum amount of $60, according to the reform proposed by the Tax Regime for Entrepreneurs and Popular Companies (Rimpe), which was created as part of of the Law on Economic Development, in November 2021.

Currently, business owners with or without sales had to pay $60 a year.

Income tax: now the reduction will depend on how many family obligations the taxpayer has, not on salary

According to the changes for business entities, payments would be established as follows:

Entrepreneurs are also included in this regime, who currently must report if sales reach $300,000 and pay according to a progressive table. As amended, it would be as follows:

According to the reform, “if at the end of the fiscal year the taxpayer had a gross income of more than USD 300,000, he must report and pay income tax in accordance with the provisions of the general regime.”

According to the Internal Revenue Service (SRI), 340,000 popular businesses that previously paid $60 will now no longer pay.

It also shows that 150,000 popular businesses that previously paid $60 will pay less tax, up to $35 a year.

President Guillermo Lasso announces tax reform this Thursday, May 11 in Carondelet

The changes also indicate that the value added tax (VAT) rate is 0% for all operations carried out by popular businesses and that they should not report this either.

Also, that craftsmen and those who produce or import goods and/or provide services taxed with a special consumption tax (ICE) are excluded from Rimpe.

Taxi drivers are included in Rimpe as popular trades, but the obligation of electronic invoicing is removed, which will be optional for popular companies that want it.

Popular companies are not subject to withholding.

According to the project of the Organic Law for strengthening the family economy, “the reform aims to comply with the provisions of the Constitutional Court, including the scheme of progressive taxation of the popular business segment and avoiding its excessive taxation.” .