Passenger transport, which includes taxis and buses, with the latter being one of the best-performing segments in the first half of the year in terms of vehicle sales for this activity, has been given new impetus to continue its recovery that has more than doubled from 2021 to date. From now until 2025, the sector will be able to import vehicles with tariff preferences.

Who are these people who can import cars at a lower duty?

Thus, after the plenary session of the Committee for Foreign Trade (Comex), a reduction of the import duty by 50 percent for 5,801 transport units was approved. The decision of July 11 was recorded in Resolution 009-2023.

According to the latest data from the Association of Automobile Companies of Ecuador (Aeade), in the first half of 2023 – from January to June – the sale of commercial vehicles increased by 10.2%. This increase was driven by the passenger transport segments which recovered strongly in 2023. Bus sales increased by 85.7% with 502 vehicles sold, compared to 2022 when 264 were sold. Compared to 2021 figures when only 184 buses were sold, this increase represents 178.6% more.

As for the benefits, Comex explained that they will be targeted at the branches of the respective transport federations, according to a list that must be approved by the Ministry of Transport and Public Works (MTOP). For this purpose, the Agency ordered that the Ministry submit a list of users to the State Customs Service for each year, until December 31, 2025, until which the privilege will be in effect.

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The agency, however, clarified that the allocated units cannot be accumulated for the next year, and the benefit from the reduction of the tariff rate will be only once during the validity period determined by the decision. In addition, it is indicated that the granted privilege does not exempt from compliance with other legal regulations in force for importation.

Meanwhile, the reduction in tariffs comes after Ecuador’s National Inter-Institutional Transport Commission on June 13, 2022, requested the issuance of an executive order authorizing the importation of new vehicles with exemption from tariffs, setting various quotas through Comex.

The industry proposed developing an exclusive program for taxis and not including them in the reduction of tariffs

From the automotive industry there are signs tailored to Comex.

David Molina, executive director of the National Chamber of the Ecuadorian Automobile Industry (Cinae), assured that the measure is a consequence of the mobilizations of June 2022. “In July of that year, the Government just started negotiating with the transport sector to give them this benefit,” said the leader who completely disagrees with the measure.

He indicated that the industry has warned the Government about the disadvantages of this type of delay aimed at transport associations, which according to Molina prevents the benefit from going directly to users, taxi drivers and bus owners. “These measures have never produced results, because through these federations it turns into a structure that manages and distributes these quotas,” he complained.

The presenter revealed that at Cinae’s suggestion, trucks that were initially included in the resolution were excluded from this benefit. Molina argued that the exclusion of this type of vehicle occurred because they already enjoy tariff relief through the state’s Camioneta Productiva program, which establishes a reduction in the special consumption tax (ICE).

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In the case of taxis, Molina recalled that it was suggested to the Government that, as is the case with vans, a program for taxis be drawn up. “We believe there is a legal basis for this since the President of the Republic has the authority to reduce ICE by executive decree. We also proposed to them to include a reduction in the exit tax (ISD) in the benefits of this type of program, both for vans, which is a program that already exists, and for taxis, which is a program that we propose to create”, explained the head of Cinae, who believes that the benefits for carriers were equivalent, between a 50 percent reduction in the tariff and a reduction in ICE and ISD, but they are charged in different parts of the chain.

Meanwhile, Molina assured that it was a mistake not to exclude taxis from this 50 percent tariff reduction. “It is a mistake because the government has the tools to establish a taxi program,” said the leader.