The Law on Economic Efficiency and Employment, directed by the President of the Republic, Daniel Noboa, and adopted by the Assembly, establishes that In order to take advantage of tax credits or credits, payments of amounts greater than $500 will need to be made by electronic transfer.using credit or debit cards, checks, money orders or any other means of electronic payment.

The provision is intended for companies that deduct for the calculation of income tax or apply tax relief in the case of value added tax.

In this way, they have proof that the money has been moved, which they must present to the tax administration, i.e. the Tax Administration (PRI).

Payments greater than $500 can no longer be made in cash, as required by the Economic Efficiency Act, if a deduction or tax credit applies.

Individuals can continue to pay with cash and ask for a receipt, although for security reasons they usually do not use physical money for larger amounts.

Economic analyst and magazine editor weekly analysis, Alberto Acosta Burneo indicates that the rule is aimed at suppliers and companies that, as of December 20, must pay online using cards or electronic transfers.

It is a mechanism to control the flow of money and create a more formal economy, he assures. With natural persons, they can pay in cash when purchasing a device, for example a refrigerator or a car; What is clear is that they must require an associated account.

“The $500 problem works for businesses, so it’s a deductible expense. So the company’s supplier needs to know that in order to receive payment, the company will require a bank account for the deposit,” says Acosta.

This one Requiring business suppliers to make bank payments when the amount exceeds $500, so that the expense can be tax-deductible, is on the way to improving tax culture.

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Another purpose, Acosta says, is to encourage the use of electronic money to move toward an economy that uses less and less physical money as is happening in developed countries.

The so-called tax reform Nobo also foresees the obligation to issue invoices of more than USD 50 in the name of the customer or consumer. This provision was already in force from November 2022 through the SRI regulations.

Even though it was already in place, it wasn’t necessarily enforced because consumers didn’t demand it, Acosta says, but also because more effective controls were lacking.

“The goal is to make consumer spending transparent, to have much more tax control. There is a very large informal sector in the country that has revenues that pass under the SRI radar. These are people with a lot of money, but who live informally, do not register, do not pay taxes. One way to go under the government’s radar is to leave no trace of your purchase, so buy with cash and ask for a receipt in the name of the end consumer.Acosta says.

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One of the purposes of submitting invoices is to create a greater tax culture, to close the space for informality.

The problem is on the side of the consumer, who prefers to pay without the possibility for the state to realize the level of consumption that citizens have. By forcing the delivery of invoices, consumption can be reconciled with the income reported to DZI and see if there is any evasion.

Considering customer rejectioncompanies like As of this week, supermarkets have decided to ask whether they share their shopping with those who refuse to provide their information (identity card number, name and e-mail) for creating an invoice. Your alternative is to sell.

“Now it has more weight because it is in the law, but it also depends on the tax administration, which has the will to carry out control, otherwise there is a practice of dividing procurement and not giving an invoice with data,” he said. adds.. Acosta.

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Spending without invoices on behalf of consumers is a consequence of the tax reforms of the former President of the Republic Guillermo Lasso, which limited the possibility of deducting expenses pay income tax.

By having tax-deductible expenses, taxpayers themselves sought receipts for their expenses in areas such as health, thus becoming supervisors of tax compliance.

By eliminating the incentive to claim bills, taxpayers only claim them until they reach the maximum amount they can deduct. “There comes a point when it’s no longer useful to ask for bills because you won’t be able to turn them down,” says Acosta.

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Art. 25 of the said standard establishes “the obligation to use any institution in the financial system for the execution of payments.”

“In order for the cost or expenditure for each case considered to be greater than five hundred dollars to be deductible for the calculation of income tax and tax credit for value added tax, the use of any means of payment is necessary. above, with proof of which and an account corresponding to the acquisition, the deduction or tax credit will be justified,” according to the approved rule, which took effect on December 20, 2023.

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