The Rimpe, ‘a mix’ between RISE and RIM, generates expectations for its early entry into force

Elena Álvarez owner of the Entre Migas store, which provides bread, various foods and more consumer products for the residents of the Armenia sector, is surprised to be consulted if you know that from 2022 it goes into effect the new Simplified Regime for Entrepreneurs and Popular Businesses (Rimpe). She says that until now she had been using the Ecuadorian Simplified Tax Regime (RISE) and comments that it was an easy and non-cumbersome system. She also says that although her business is not required to keep accounts, she hired software to record her income and expenses. In any case, he assuredto that these days it will try to soak up the new regulations to properly comply with it.

Indeed, according to the Economic Development Law that entered into force on November 29, both the RISE and the Tax Regime for Micro-businesses (RIM, which established a payment of 2% of invoiced income) are repealed. And the Simplified Regime for Entrepreneurs and Popular Businesses (Rimpe), which will be applied to businesses and enterprises with income from $ 0 to $ 300,000. These are divided into two segments, l$ 0 to $ 20,000 falls into the category of popular businesses, while $ 20,001 to $ 300,000 are startups.

The jurist Andrés López, from the Cevallos y Noboa Abogados law firm, explains that in the case of Ecuador since 2007 the RISE was managed, which worked very well and with a progressive table, but that only applied to businesses that received income up to $ 60,000. In 2019 the government of Lenín Moreno put into effect THE RIM, which consisted of paying a fixed rate of 2% of the invoiced amount. Both the RISE and the 2% system were presumptive regimes, and therefore se calculated with respect to income. Unfortunately, this last regime worked very badly and especially in a pandemic year, where there was a great economic contraction, he recalls.

“Now the Development Law eliminates the RISE and 2%, but creates the Rimpe, which is a kind of mix or mix between the two taxes,” he explains. López vowed that this system works well. However, you have to wait and see what the regulation says to know the details of how it works.

López explains that the Rimpe refers to income tax, so the regulation should clarify what happens to taxpayers who for certain reasons do not have profits. They should be able to be exempted, if they can clearly demonstrate with a follow-up of income and expenses and the respective crosses with the Internal Revenue Service (SRI), says the expert. At the moment the law “is silent” on the issue of losses, he explains.

There are many issues to consider when using the new Rimpe.

• Those who are engaged in the provision of services, mandates and representations, transportation, agricultural activities, commercialization of fuels, or those who have a dependency relationship, among others, cannot benefit from this simplified regime.
• For enterprises, it is established that they may belong to this regime for only three years. In addition, if an enterprise has a turnover of more than $ 300,000, then it must leave the Rimpe and take advantage of the ordinary income tax payment system. If an enterprise leaves, it will no longer be able to return to that regime.
• The tax table requires businesses that have income of up to $ 20,000, $ 60 a year, an equivalent of $ 5 a month, to pay. The payment rate then goes from 60 to 2,797 (when it is a segment that has income from $ 200,000 to $ 300,000. But there is also a marginal payment that goes from 0% to 2%.

This is the table mentioned:

Marcos Vega, executive director of the Entrepreneurship Incubator of the Private Technical University of Loja (UTPL), believes that this type of regimen is not an appropriate alternative for entrepreneurs. It explains that due to the nature of the processes, entrepreneurs should not be subject to tax payments for a certain period of time, taking into account that for the enterprises to reach a maturity stage should pass between three and five years.

The UTPL incubator knows the reality of entrepreneurs closely, since it has focused on promoting, since 2018, at least 220 food technology, electronics, telecommunications and bio-enterprises.

For Vega, both the Rimpe and the 2% of the income tax that was in force before, rather than promoting the formality of the ventures, obstruct it. Explain that most entrepreneurs do not want to submit to any type of legal figure, at least until they have a project that is already going ahead. Explain that there must be an exemption, which does not mean carte blanche, but takes into account the particularities of the undertakings. Remember that a national database of ventures is already being created that can be used to keep this control. For Vega, having a tax that is levied on sales and not on profits is ridiculous.

López, for his part, explains that by definition, simplified regimes seek to facilitate the operating conditions of taxpayers, so that they do not have to invest so much time and resources in complying with their tax obligations. He explains that in the case of Ecuador, according to technical studies, a medium-sized company uses about 680 hours a year to handle its taxes, when the regional average is 400 hours. This means that the operational load is too high.

Being Simplified regimes are presumptive, that is, they do not respond to the economic reality of each case, but to that of the majority.

It should be clarified how crowdfunding works

Andrés Zurita, executive director of the Alliance for Entrepreneurship and Innovation (AEI), considers in a general way, that the law is positive. However, it does ask that certain clarifications be made, through the regulations, on the subject of undertakings and especially on the subject of their financing.

Explain that the law passed reform the theme of crowdfunding (funds that finance various initiatives). The text says that the platforms of crowdfunding They will be responsible for the projects that are uploaded to those platforms. This would not be appropriate in all cases, says Zurita.

“It’s like the Amazon platform turns out to be responsible for the problem that there is in some product sold. What should happen is that the one who makes the presale or the opening is responsible. The regulation should include the two options, he assures.

Meanwhile, it also aspires that entrepreneurs are included, through the regulations of the law, in the possibility of 150% deduction of income tax for private contributions for innovation and culture issues. And that they are part of the debate on this regulation.

On the other hand, it stands out as a very positive issue that there is a 100% deduction on donations for bio-enterprises. This will allow these types of ventures to have resources that, in addition to preserving the wealth of bio-knowledge that we have, generates jobs and sales. (I)