The estimate of tax expenditures for 2022 amounted to 5,150 million dollars, which represents 6.2% more than in 2021, which amounted to 4,850 dollars, noted the Director General of the Tax Administration (SRI), Francisco Briones, during a press conference held this Tuesday. October 10. , in Guayaquil, where he also presented a methodological update and new values ​​corresponding to the entire series between 2009 and 2022.

72% of tax spending is concentrated on social benefits such as 0% VAT on food, medicine, education, health, housing, transport, etc.; as well as deductions for personal expenses in income tax and VAT refunds for the elderly and disabled from the previous year. “Of the 5.150 million dollars, 3.708 million dollars are concentrated on benefits of a social nature and for individuals. “Every time they say, ‘reduce tax expenditure,’ they say put VAT on food, medicine, education, health, housing,” the official said.

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He reminded that tax expenditures are what the state gives in favor of taxpayers, that is, they are taxes that are not collected, because they are tax benefits. “Tax expenditures are all the tax benefits that citizens and companies have in order to encourage consumption, among other things, investments, and all of this is defined here by law,” he said.

Furthermore, he commented that on average (2009 – 2021) tax expenditures are corrected by -1% of GDP. In addition, it remains around the average recorded in Latin America for 2021.

Methodological update

During his presentation, the official also explained the methodological improvement they made in tax spending, between 2009 and 2022 (except 2010), since it allows comparability over time, for which he made four points. The first, the exclusion, for IMF technical assistance, of some items that were not considered tax expenditures, among them the double taxation avoidance agreement.

In this context, items such as: accelerated depreciation, international agreements on the avoidance of double taxation, amnesty, uniform income tax (bananas, palm trees and profit from the sale of shares), among other marginal items, are eliminated.

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On the other hand, he referred to the recognition of costs and expenses with income from investment contracts, where he indicated that the profit tax is calculated on the gross profit and not on the profit, but that this has now been corrected. In this case, he said that as a result of the adjustment in 2021 it was $1,489 million, which is a recalculation of tax costs. That year, $6.339 million was reported, but adjusted tax expenditures were $4.850 million.

As a third point, they mentioned that they updated the databases (with a cut-off date of July 2023). Finally, the approval of the net collection, that which actually enters the fiscal coffers and is available to the public budget.

“This new methodology ensures transparency of information because there is the same methodology for all years and because inconsistencies that existed in the past are corrected. We accept technical observations from multilaterals, correct inconsistencies and also standardize the series,” Briones said.