The show expressed anger and rejection because the tax reform removes public broadcasting from the list of services on which value added tax (VAT) is not paid.

With this new measure “the entertainment industry would end”, warns Fabián Vallejo, owner of Dfabis Producciones with 25 years in the market, who says it means “an increase in another tax” and that the 12 percent fee would be on the box office, not on profits .

Taxi drivers will not have the obligation of electronic invoicing and returns to Rimpe, a “very convenient” change of the tax reform

This is because the draft of the Organic Law for Strengthening the Family Economy eliminates the number 11 of Article 56 of the Law on the Internal Tax Regime.

“It’s not like we were exempt from taxes. People think we don’t pay anything, (on the contrary) it’s the industry most affected by taxes,” says the businessman who organized concerts in his hometown, Cuenca, in Guayaquil and Quito, and brought artists like Romeo Santos, Alejandro Fernández, Ricardo Arjona, Roberto Carlos, Maná.

According to Vallejo, by adding the 12% VAT, the total taxes would be 45%, since it shows that the Internal Revenue Service (SRI) already collects 25% of the artist’s contract, i.e., if the artist costs $100,000, the SRI charges $25,000 upfront for giving permissions. He says hiring an international fashion artist costs between $300,000 and $1,000,000, while hiring a local artist costs between $3,000 and $10,000.

Public relations expert Zuley El-Wakel agrees with this criterion: “25% of the contract value has already been paid to the artist’s SRI, something that no artist undertakes, it is part of the contract, so a local entrepreneur undertakes it.” And he claims that it costs not only the artist, “but also the value plus tax, the outflow of capital.”

Vallejo says that the SRI will probably say that the 25% should not be paid by the businessman, which is the tax withheld from the foreign artist, which is the tax that the foreigner has to pay for taking money out of Ecuador. But “it’s absurd, because it’s the artist who sets the conditions, collects his royalties without taxes, and the one who ends up paying taxes is the businessman, and of course, they can say: ‘don’t hire an artist who doesn’t accept the conditions of this country’, then that means that the artist will never come”.

At 25%, he claims that the payment of 8% of the box office to the Society of Authors and Composers of Ecuador (Sayce) must be added, as well as the production costs, which, adding some costs, exceed 145,000 USD, not counting the payment of firefighters, utility fees, bathroom rent, wardrobe, sound system, advertisement etc. It is that if an artist charges 100,000 dollars, generally in that value the cost of production must be doubled, so organizing a concert would cost approximately 200,000 dollars.

For example, the rent of the stadium in Quito costs 50,000 dollars; field protection costs between $20,000 and $30,000. To hire a security guard, if he is at the stadium, they ask for around 300, which would be more than 5000 dollars in price. They should also budget about $40,000 for rider technical (a document indicating the technical needs of the artist for the successful performance of the event).

“If you start adding up everything that production actually means, all of us who worked shows For so many years, we shut down every day, because it is impossible to last and with this tax the industry would really end, for me the industry in Ecuador ends”, he says.

This is the income tax table proposed by the tax reform

Also, as an example, he states that if he determines a stadium for a capacity of 25,000 people, the distribution of tickets would be as follows: 10,000 general tickets at $20, 3,000 bleacher tickets at $30, about 2,000 box tickets at $60, and so on and so on. according to his calculations, the box office at 100% would be $600,000, but from that one must subtract $400,000 of production and artists, leaving about $200,000 “in quotation marks”, however, he says that he must keep in mind that in most shows, 80% of entrepreneurs are at a loss and that is why few of them remain in business.

There are companies that continue to create shows, He comments because they have advantages, they have the means of communication and the ability to promote artists, and they are limited by holding events with English artists.

Cuencano explains that this new measure would make the product more expensive. If a ticket costs $100, it would now cost $112. You risk not selling all the tickets. And this would not only affect the employer, but also companies that provide security, those that offer public relations services, advertising in the media, taxi drivers, hotels… “Our industry generates too many sources of work”, for the organization of the concert it creates about 700 sources of employment.

Economy Minister Pablo Arosemena said the 0% VAT applies to basic necessities, medicine, food and “entertainment is not necessary”, although he admits it is “essential to the Ecuadorian economy”.

“The authorities can say all kinds of things, but the reality is different, they are persecuting us as criminals, they are persecuting us with taxes, with permits, with closures, they will realize that in the end it will affect a lot of people, not only the businessman, because the businessman says in the end: “I’m not doing anything anymore, I’m not risking my capital,” says Vallejo.