In eleven years the inheritance and legacy tax generated $ 215.6 million to the State

Two brothers inherited assets after the death of their mother in February 2020. The amount exceeded the base on which, until last November, before their “elimination” was ordered, the inheritance and legacy tax had to be paid, which was of $ 72.090,01.

Michael Dáger, the lawyer who carried out the processing of one of them, assured that despite having inherited a large amount of property, it did not mean that they had the cash that they had to pay for that tribute, which amounted to $ 12,000.

This resulted in a payment agreement with the Internal Revenue Service (SRI), through which the beneficiaries pay monthly installments of $ 800 to cover that debt.

According to figures obtained by Diario EL UNIVERSO from the SRI website, from 2010 to 2021 (from January to November this last year) they were collected $ 215.6 million for this tax. For example, in 2020, $ 24.3 million, which represented only the 0,2 % of the total collection.

In the period analyzed, the year with the highest collection is 2021 with $ 38.2 million; and the lowest was 2012 with just $ 6 million. While in 2016 there was a collapse in the average that had been collected. Well, in 2015 $ 28.8 million were received, in 2016 it fell to $ 14.5 million; and in 2017 it rose again to $ 25.9 million.

Ecuador will tax inheritances of more than $ 35,400, announces Rafael Correa

About, the tax expert Carlos Licto He assured that he did not find reasons for this decrease, only the Law of Humanitarian Support for the Earthquake of 2016 that established an exemption in the tax, but for the donations of goods in favor of natural persons domiciled in the province of Manabí, the canton Muisne and in the other districts of the province of Esmeraldas. This, in his judgment, is not enough for such a dramatic drop.

Another peculiarity that was found in the analyzed period is that Pichincha was the province with the highest collection of this tax, followed by Guayas and Azuay, although in much lower value.

EL UNIVERSO newspaper consulted the Ministry of Finance on the use made of these resources. The State portfolio maintained that permanent expenses were financed from the General State Budget (PGE).

This tribute dates back to October 29, 1912, when the Patriotic Tax Law that, among other levies, established the inheritance and donation tax, according to information obtained from the Institutional Repository of the Simón Bolívar Andean University.

However, it was not until October 30, 1920 that a specific law was issued to collect this tax.

This established that all testated or intestate succession worth more than ten thousand sucres up to fifty thousand sucres would pay a half percent on the total stock of assets; This percentage increased according to the value of the estate until it reached 3%, which was taxed over a million sucres.

Since that time, nine laws or reforms were issued for this purpose, until December 22, 1989 when, in the Law of Internal Tax Regime, the Law of taxes on inheritances, bequests and donations was repealed and from this the levy as income tax on income from these sources, with a proportional rate of 10% on the surplus of five million sucres.

In 2001, the Reform Law, known as Law 41, modified the single rate and reduced it from 10 to 5% on the excess of the basic non-taxed fraction of the tax.

In 2008, through the Equity Law, during the government of Rafael Correa, the tax rate was modified whose minimum range for not paying this tax was $ 0 to $ 68,880.

In 2015 the regulations were again modified and the scope of action increased by reducing the amount of the base from $ 0 to $ 35,400; Afterwards and until 2021, the base was updated annually in accordance with inflation, until it was modified with the enactment of the Economic Development and Fiscal Sustainability Law that came into effect on November 29, through which exemptions were issued.

His “elimination”, as he called it the President of the Republic, Guillermo Lasso, It is due to the low representation that it occupies within the tax collection. According to the president, on September 1, in an interview at the Carondelet palace, the inheritance tax “does not generate anything for the State.”

Guillermo Lasso affirmed that more than 9 million people have been vaccinated; and announced that inheritance tax will be eliminated

“The most modest of Ecuadorians owns a little piece of land, owns a house, owns a fishing boat, owns a farm … And what does he want? That the effort of his life reaches his children , not the state. Therefore, this tax, which frightens and annoys the citizens, we are going to eliminate it, “Lasso promised.

Meanwhile, on the current exemptions, the tributarist Javier Bustos He highlighted, for example, that “beneficiaries within the first degree of consanguinity with the deceased are exempted from paying inheritance tax. The tax will not be incurred either in the event that the beneficiary is one of the surviving spouses, provided that there are no children who can access the estate ”.

He added that to the current exoneration are also added the inheritances that are generated by the death of the deceased between March 15, 2020 and December 31, 2021, except for those who have already paid it. This is defined in the Tenth Transitory Provision of the Standard.

In the opinion of Bustos, the income tax on inheritance for the countries that maintain it, rather than a collection purpose, seeks to reduce the gaps between large fortunes and people living in poverty levels, it is what is called redistribution of wealth .

Thus, before the enactment of the Law, Ecuador was among the seven countries with the highest percentage of inheritance tax in the world, according to a ranking of the consulting firm PwC (Price Waterhouse Coopers). The collection of this tax was made progressively from 5% to 35%, when the amount received was greater than $ 865,113. France, with 60%, is the country that has the highest percentage charged for this tax.

Licto also considered that the collection of the tax is minimal compared to what the SRI manages to receive for global income tax, VAT, ISD and ICE, which are the largest. “We are talking about $ 10 billion between these four taxes compared to $ 24 or $ 25 million that the inheritance tax could achieve in its best days,” the expert compared.

The Economic Development Law entered into force upon being promulgated by the Official Registry

For this reason, Licto assured that this tax obeys more to a philosophical and political approach “of why the great fortunes do not pay taxes when the children receive these great patrimonies for free, from the point of view of distributive justice.”

However, he warned that the decision taken by the current government could be changed by another president with another ideology, for example, left-progressive, who is against these great fortunes.

“Right now we are living a right-wing, center-right ideology that looks after these legacies,” said Licto, who nevertheless indicated that it is possible to reach medium terms, so that this tax is collected when luxury goods or goods that do not generate benefits for society, such as recreational houses, yachts, among others; but if factories are inherited, do not collect taxes.

Meanwhile, for Dáger, no matter how minimal the tax collects and represents for the State, the country loses. “If perhaps Ecuador loses or wins because it has stopped charging, I think it loses, because beyond $ 1,000 million being collected, $ 100 million, even one dollar, it loses,” said the lawyer. (I)