According to the Tax Regime law, various taxes such as VAT and ICE come into effect from the first day of the following month. Others from January 1.
From this Wednesday, December 1, 2021 Sanitary napkins and other feminine hygiene items, diapers, cellular plans, hybrid vehicles of more than $ 35,000 will have a lower price to the public, because in accordance with the Economic Development and Fiscal Sustainability Law that came into effect on November 29 , For these products, the value added tax (VAT) is reduced to 0% in some cases and the special consumption tax (ICE) in others.
It is that once the Economic Development and Fiscal Sustainability Law came into force, when it was published in the Official Registry on November 29, there are several reforms that come into effect from December 1, 2021 and others from January 1, 2022. The Ministry of Economy and Finance ratified that from tomorrow all the changes that concern VAT and ICE come into effect.
Indeed, article 11 of the Tax Code explains that tax laws, their regulations and general circulars will govern from their publication in the Official Registry.
However, it says that “the norms that refer to taxes whose determination or settlement must be made for annual periods, as a merely declarative act, will be applied from the first day of the following calendar year ”. Instead, Laws that are settled with shorter periods will come into effect “from the first day of the following month.” This is December 1st.
Pablo Guevara, Andersen consultant, He explained that taxes are defined by the generating event and there are certain that are periodic and others that apply immediately. In the case of income tax, the amount to be paid is only known when the year is over. Instead, VAT or ICE does it immediately. For Guevara, the immediacy with which the issue of VAT and ICE will come into force will generate problems at the level of the establishments that sell the products.
Napoleón Santamaría, tax expert, It also agrees that the taxes that are settled annually, such as the IR, will come into effect from January 1, 2022. On the other hand, the VAT and the ICE They will do so from December 1 of this year.
For both experts, the issue will generate trouble and discomfort in the various shops where these products are sold. Santamaría additionally emphasizes that the law is already in full force, even though there are certain sectors that speak of making unconstitutionality demands or repealing the law. In any case, consider that The law has several errors and technical inaccuracies and it hopes that the regulations that must be issued by the Executive seek, as far as possible, to redress these errors.
Santamaría said that the entry into force of the law leaves a perception that President Guillermo Lasso is not duly advised, since it would have been preferable for him to send the law to the Official Registry on December 1 or 2 so that the issue of immediate taxes can begin to govern from January 1, giving space to producers and businesses so that they can perch and change systems without problem.
In summary: sanitary napkins and others feminine hygiene products drop from 12% to 0% VAT, also popular diapers (although it is not well known which ones have this quality). Plans cell phones lower their rate from 15% to 0% from ICE. In the case of hybrid and electric cars, for example, the law already contemplated the ICE exemption for cars up to $ 35,000, but now it is extends this exemption to the most expensive cars of this type.
Meanwhile, Jorge Cevallos, executive director of the Association of Telecommunications Companies (Asetel), commented that there are several positive reforms for the telecommunications sector in the law. One of them is the lowering of the tax to special consumption (ICE) from 15% to 0% for personal and corporate plans. Said This would help customers to lower prices and, therefore, also to recover the loss of subscribers to postpaid plans (about 800,000) that the entry into force of this tax generated exactly two years ago.
Regarding the need to make urgent changes to the rates, due to the early entry into force, Cevallos said that the companies will comply with the law and that they are surely already working on making the necessary changes to their systems.
Instead, there is other taxes that are increased on certain products and which in turn would allow their prices to rise. For instance, industrial beer that increases the tax per liter of alcohol from $ 9.62 to $ 13.08. While craft beer lowers its tax. (I)
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