How much income tax will those who earn more than $ 2,000 a month in Ecuador pay?

With the publication in the Official Registry of the Organic Law for Economic Development and Fiscal Sustainability after the COVID-19 Pandemic, the income tax (IR) changes.

The tax reform establishes the increase of this tax for those who earn more than $ 2,000 per month and will apply from 2022.

These citizens will pay an average of $ 28 per month or $ 345 per year. For now, these taxpayers pay $ 13 a month or $ 156 a year for income tax. This means that it will be a little more than double the amount to pay.

In previous statements, the Minister of Finance, Simón Cueva, pointed out that this contribution affects 3% or 4% of the population with higher incomes.

In that group there are no people who earn a basic salary ($ 400) or a little more, like a basic education teacher, who earns $ 480 a month. She works for a private institution.

Nor does it concern a dentist, who earns $ 600; to a public relations account executive, with $ 1,200; a coordinator of marketing, who receives $ 1,500; or a journalist, $ 950 a month.

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But there are people in other positions, such as directors, managers, engineers and more, who will be affected.. For example, a person who preferred the reservation of his name receives $ 6,000 a month and works as a general manager in a bank.

He says other measures had to be taken. “There is a lot of informality, and that’s where you have to focus. Because, for example, what I do is stop consuming and, if I consume less, in the end it affects commerce ”, he mentions.

And it also interprets that it is “how to work half a month more for the government, without receiving anything in return”.

This person, according to the virtual calculator that the Government launched last October, would pay an additional $ 255.49, which is equivalent to $ 715.69 per month. A year it becomes $ 8,588.28.

Another person who works for a private company, and who also reserved his name, has a salary of more than $ 4,000. I would pay an average of $ 334.55 per month. In an annual fiscal year it would be $ 4,014.60, that is, more than your own salary.

“It really does affect me. It becomes a double damage to my economy. Although I am single, I buy my mother’s medicine, who has Alzheimer’s, is diabetic and has high blood pressure. My mother is not insured, so there is not even that option in an emergency. I have always tried to save for emergencies, but now it will not be possible. And it is not that I think that we should not contribute to the State, but it does seem exaggerated and pushes us into poverty or at least in some cases, “he says.

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There are other cases. An operations manager with a salary of $ 8,000 would pay an average of $ 16,632 annually, according to the government’s virtual calculator.

An environmental engineer who earns $ 2,900 will have to pay $ 139.72 per month and $ 1,676.64 for all of 2022.

And in the public sector, a Communications director with a salary of $ 2,600 would pay $ 1,191.12 in one year. An assembly member, who earns $ 4,759 per month, would pay $ 5,916.72 in taxes.

However, the calculations in this digital tool of the regime are different from those of the tax expert Hugo Mejía.

For example, a citizen who earns $ 3,000 a month would end up paying $ 3,323.40 during 2022. Although the Government’s calculator reflects that it would be $ 1,840.92.

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Another case is a person who earns $ 96,000 per year ($ 8,000 per month). Mejía calculates that he would cancel $ 21,978.90, while the virtual calculator shows $ 16,635.72.

Mejía affirms that this difference may be due to some adjustments or factors not considered.

Meanwhile, the tax expert emphasizes that the reform includes a tenth tranche or range of income tax.

“The maximum is no longer 35% for individuals who earned $ 10,000 monthly, now the maximum is 37%,” he points out.

And indeed, The regulations state that those with annual income greater than $ 100,000 must pay a rate of 37% of the tax.

For example, a person who earns $ 10,000 a month ($ 120,000 annually) would pay $ 24,997.80 in taxes for twelve months, according to the government calculator. (I)