The tax reform, which is being processed by the Committee on Economic Development of the National Assembly and whose first report should be published on December 8 this year, continues to provoke debates in various productive sectors and the national economy. The business sector is one of them, which exposes the advantages and disadvantages of the project presented by the President of the Republic, Daniel Noboa.
The Chamber of Commerce of Guayaquil (CCG) expressed its objections this Wednesday, December 6, through a statement, in which they assure that Article 13 of the project seeks to revive the income tax advance (IR) which reduces the liquidity of companies when they need it most, due to of which they propose to delete this article.
“About 500 companies would have to calculate monthly withholding tax on the total income for the month, for a value greater than the withholding at the current source,” explains the union.
The real estate sector warns that, if the government’s urgent bill is adopted, it will affect those who occasionally sell real estate
They also question the fact that Article 28 of the project changes the tax base for paying taxes on foreign trade. They note that in 2021, the CCG proposed to exclude the front from the tax base due to the aggressive global increase in the cost of maritime transport. “Today, the reform seeks to undo that change in a wrong way. “It is correct that the law establishes that the tax base for paying taxes follows the provisions established by the norms of the Andean Community.”
The Chamber indicated that to deal with the economic crisis the country is going through, measures that generate investments, as well as strategies that can have long-term benefits, but not “hit the manufacturing sector” with higher taxes, must be implemented. The union points out that the state is aware that there is a need for resources in the state, as the fiscal gap for 2024 is $4.118 million. However, they believe that dealing with the problem “should not affect the production sector”, because this would again affect the economy and employment, “if taxes are predicted, growth is delayed”, they claim.
For her part, the president of the Chamber of Industry and Production, María Paz Jervis, indicated that Ecuavisa that any reform that is carried out urgently, taking advantage of the political situation, support, should be aimed at this, however, they have “the feeling that this bill, as it was to some extent the custom of past governments, is a patch to cover.”
According to Jervis, what is constantly being done is “taking into account” the formal sector, those who pay taxes and additionally thinking about the short and medium term, but not the long term. “The question is what comes next, what comes by 2025? This bill contemplates oxygenation in 2024, but does not calculate the fiscal deficit that would arise in 2025, given that credits are rare and very expensive for Ecuador,” the executive said.
Tax reform: if taxes are progressive, growth is delayed.
We share the Institutional Position Report. pic.twitter.com/XPmhnmate0
— Chamber of Commerce of Guayaquil (@lacamaragye) December 6, 2023
Meanwhile, the CCG also highlighted the positive aspects of the project, regarding free zones and public-private alliances; as well as the employment of young people aged 18 to 29, but they believe that it is necessary to modernize the Labor Act.
The National Assembly will amend the emergency law on economic efficiency and employment
“In order to stimulate economic growth, it is also necessary to implement other measures and/or new reforms that help generate investments. From this Chamber, we are always open to working together to promote the structural changes that the state requires,” said the CCG.
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