He The national government presented it on May 11 in the National Assembly its tax reform project called the Family Economy Strengthening Act, which aims to reduce income tax (IR) for 341,000 taxpayers through the deduction of expenses in the amount of USD 15,294 based on family obligations, as well as those who make up the Simplified regime for entrepreneurs and companies (Rimpe).

The President of the Republic Guillermo Lasso signed the proposed articles this morning. The announcement was made together with the Minister of Economy and Finance, Pablo Arosemen, and the director of the Tax Administration (SRI), Francisco Briones, in an action that took place in the Yellow Room, which was attended by ministers and members of the civil service assembly.

A few hours later, Arosemena and Briones went to the parliament to submit the project as an economic emergency; that is, it must be processed in 30 days.

Minister Arosemena explained in Carondelet that this reform is not a “return to the past”, that it has been worked on for the last ten months and that it was made according to the principle of “progressiveness”.

According to him, this “evolution” implies a tripling of annual deductible expenses up to USD 15,294 depending on family obligations, which will enable the registration of up to 5 family obligations; to which it is added that the citizen can include expenses incurred on pets as deductible items.

In the case of persons with disabilities or catastrophically ill and/or orphans, they will have the right to the maximum deductible cost and it will be total, regardless of the number of benefits, specified Arosemena.

The maximum deductible cost is defined according to the number of family obligations and is equivalent to 20 basic baskets, which the reform proposes is 18% of the annual deductible cost.

“We throw a cross at the Assembly, we give it the goal to work as a team and move forward in the next 30 days,” he commented later during the presentation of the document at the institution’s secretariat.

If approved by parliament, SRI will receive $195 million less, but according to President Guillermo Lasso, it will be $195 million that will remain in the “pockets” of 340,000 families, which corresponds to 99.8% of those who pay taxes.

As an example of reducing the expense deduction, in the case of a taxpayer currently receiving $2,400 in income and paying IR of $900, the reform would reverse $459 if there were no expenses.

In the case of a person receiving $3,500 and paying $3,054 IR with zero loading, the reform would reduce this to $2,466 a year, $1,915 with two loadings and $600 with five loadings.

The head of state said that he hopes that the initiative will be approved by the National Assembly as soon as possible, so that taxpayers, who make up 99.8 percent of those who pay income tax, will benefit within a month at most.

“Yes, you heard right: 99 percent of those who pay income tax, so almost everyone. There is $195 million that will remain in homes to fund health, education, food and recreation costs. This law is urgent because it is about injecting money in the shortest possible time to the family, and thus to the national economy. For these reasons, this reform must be processed by the National Assembly within a maximum of 30 days as prescribed by law. It is in the hands of the representatives to side with the citizens, it is in the hands of the Assembly to think about the needs and urgency of the 340,000 families that benefit from this reform,” the head of state asserted.

Amidst the political crisis his government is facing due to impeachment proceedings against him in the National Assembly, Lasso looked back and said, “Regardless of the obstacles that come our way, rest assured that we will continue to ensure the welfare of the majority.

For Arosemena, this tax reform would direct funds to the middle class and boost trade and employment through simplification and reduction of tax payments for entrepreneurs.

Some important points of the project

About Rimpe

The changes also target Rimpe’s regime, in which popular businesses with annual sales of up to $2,500 would pay no tax; progressive quotas are proposed for popular companies with sales greater than $2,500 to $20,000 per year. The tax fee will be fixed between 5 and 60 USD according to the increase in annual sales.

As part of Rimpe, the public transport sector will be included, such as taxi drivers who are thinking about abolishing the obligation to issue electronic invoices.

Tax for sports forecast operators

The government’s proposal proposes the introduction of a single tax on sports forecast operators, so that platform operators pay 15 percent of their tax base, whose payment and registration will be monthly.

In case the bet is placed with an operator who is not a resident of Ecuador, the player must take a tax of 15% on the value of his bet. Likewise, it is proposed to apply a retention of 15% on the value of player rewards that the platform will give to the institutions through which the reward is awarded.

to public appearances

A value added tax (VAT) of 12% will be applied to public issues, which according to Francisco Briones, director of SRI, aims to make revenues transparent in this sector where there is “a lot of informality”.