Hotel reservations can be made with a deposit or with a voucher, but the payment and the invoice must be made in carnival so that the value added tax (VAT) is reduced to 8%, which will be applied for the first time in Ecuador as a result of the tax reform.
Perhaps there is some inconvenience in establishments that, due to internal policies, ask for advance payments; however, the sector considers that ways to solve it will be sought. And it is that this holiday of Saturday, February 26, Sunday 27, Monday 28 and Tuesday, March 1, this benefit with which the Government seeks to promote tourism, the sector most affected by the pandemic, will be put to the test.
-What happens if I buy five days on Monday, February 28 to use them on May 20? That question was raised in a meeting that the Ministry of Tourism had with representatives of the tourism sector of Quito, Guayaquil and Cuenca.
-That can be done. That was the answer recalled by Holbach Muñeton, president of the Federation of Chambers of Tourism. That is why he says that the billing date will be the one that marks the tax reduction.
However, in the Ministry of Tourism they clarify that the reduction is only for those days, that it does not apply to purchases for future use. The Internal Revenue Service (SRI) also indicates that the discount “will apply to services provided” on the four days of the carnival holiday: February 26, 27 and 28 and March 1, 2022; and the three days of the Good Friday holiday.
By reinforcing security, the VAT reduction to 8% proposed by Guillermo Lasso for the carnival holiday would have a better impact on tourism
In the case of air tickets or tourist packages, if the reduction will be only for those who use those dates or those who cancel those days even if they are used later, the SRI also ensures that “the services will be taxed with 8% VAT. that are provided” on those holidays.
However, those trips are already scheduled in advance. For example, American Touring of Machala has already sold and paid with 12% VAT for carnival packages. The biggest destination is Punta Cana for $720 for three nights and four days. This travel agency, indicates Santiago Cabrera, considers that there is a lack of information on this change covered by the Law on Economic Development and Fiscal Sustainability after the COVID-19 pandemic that came into effect in November 2021.
In Equair they indicate that 8% only applies to carnival days. In its call center inform that air tickets purchased between February 26 and 28 can be used until March for a promotion.
The third general provision of the Economic Development Law empowers the President of the Republic to reduce the VAT rate from 12% to 8% in tourist activities up to twelve days a year during holidays and weekends, whether unified or divided, either national or regional level.
With Decree 339 of January 31, seven of those days were defined, in carnival and Holy Week.
Isabel Fonseca only knows that VAT will be 8% on holidays, not more details. For her, more than information, promotion is lacking. The six quadruple rooms of her Los Molinos de Yanuyacu inn, in Cotopaxi, where the stay with activities costs $50, remain empty. And she hopes that with help they can overcome the crisis of the pandemic that left them with just two of the ten employees they had.
According to Muñeton, this holiday will serve as a test and results could be seen and then adjustments made in a second stage. The Federation considers that a zero rate could be applied to sites where occupation falls, even with this the biosafety issue would be covered, avoiding crowds. In simulations done, the average cost is about $300, in which 0% would mean savings of $36, which are more attractive.
Other services and fast food outlets will have VAT of 8%
Accommodation in a hotel in Esmeraldas during the days of carnival or vehicle rental to carry out tourism activities in Guayaquil during the Easter holiday will pay 8% value added tax (VAT), are examples given by the Revenue Service. Internal.
In restaurants and cafeterias that appear in the registry of the Ministry of Tourism, the reduced rate will also be applied. “Applies to the entire country and to the services indicated in article 5 of the Tourism Law: accommodation; food and beverage service; transportation dedicated to tourism; air, sea, river, land transport and the rental of vehicles for this purpose; operation, when travel agencies provide their own transportation; that of intermediation, tourist services agency and organizers of events, congresses and conventions; and, casinos, game rooms, racetracks and amusement parks”, indicates the SRI.
In the national registry of tourist establishments for the application of the 8% VAT, there are 12,234 records that include sites such as Mc Donald’s, Sweet & Coffee, Menestras del Negro, KFC, which are part of the tourism value chain, as well as bars, restaurants, hotels, tourist transport, agrotourism farms, travel agencies, explains Muñeton.
This cadastre is already published on the institutional page of the Ministry of Tourism, and that list will also be shared on the website of the tax entity. (I)
Source: Eluniverso
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