The list of taxes to eliminate President Guillermo Lasso notarized when he was a candidate -as a campaign offer- is almost fulfilled.
There are already more basic necessities that do not pay value added tax (VAT). Although this benefit offered to diapers was established in the Economic Development and Fiscal Sustainability Law -the tax reform that came into force in November 2021- it is not applied and consumers continue to pay 12%.
And it is that specifications were given so that 0% VAT is for popular diapers and there are none of those on the market. In stores of supermarket chains and pharmacies in Guayaquil, there are no diapers with that name or exempt from VAT. Dependents of these stores assure that these types of products never reached their hangers nor with that tax benefit, but there were no customers looking for them either. At the beginning of the year there were mothers who were looking for these diapers.
“There has never been that type of diaper, only the normal ones that you see on hangers, traditional brands, and customers have never asked about diapers that do not pay VAT,” said the manager of a pharmacy belonging to one of the big chains that operate in the country. However, she did point out that diapers have offered significant discounts in recent weeks. For example, the Panolini and Pompis brands offer discounts of up to more than $2 on packs of XXG diapers. The Pequeñín brand offers the 3×2 promotion on Wednesdays and Fridays. These promotions are also given in self-service stores.
The foreign exchange outflow tax (ISD) was the first on the list and to be executed. In September the Government made official the elimination of 5% of this tax for the air sector. And in general, in 2022 the progressive reduction of 0.25% per quarter began until reaching a rate of 4%.
Executive makes official, via decree, the progressive reduction of the ISD
“The first corrective we have made is to eliminate the 5% ISD charge to airlines, this impact has made the price of tickets more expensive and has prevented the arrival of visitors to Ecuador, and now there will be a better environment for new lines airlines come to Ecuador and the existing ones increase their frequencies”, President Guillermo Lasso said at the time.
And eight months later, that the airlines have resumed and even surpassed their operations in Ecuador is for Tourism Minister Niels Olsen a direct effect of the elimination of that tax. “For example, Avianca, which increased its frequencies to the US thanks to the elimination of the 5% ISD. The fact that Latam increases its offer in Ecuador by 60% as of July is also a direct effect of the elimination of the 5% ISD.”
Although eliminating this tax has meant a sacrifice in income for the State, its collection has increased by $75 million, “which is surely due to the fact that foreign trade has been revitalized, there are more imports above all”, said Pablo Guevara, senior partner of the firm Andersen in Ecuador.
His balance of the offer to eliminate taxes is positive, since he maintained that sensible adjustments were made. For example, in the case of the inheritance tax in which donations did not enter the elimination, because he considers that donating assets in life had the risk of creating an environment that favored money laundering.
These are the five taxes that Guillermo Lasso undertook to eliminate when he came to the Government
Thus, the inheritance tax was eliminated, the ISD was eliminated, the ICE for certain products as well. In VAT on diapers “the norm exists, it depends on the private sector” to put on the market the characteristics and denomination of ‘popular’.
The only one that indicated that it has not been eliminated and that it was included in the notarized list is the tax on assets abroad. He explained that this is a strange tax, of very low collection, which is included in the Tax Equity Reform Law, in article 182: a monthly tax on available funds and investments held abroad by banks, savings cooperatives and credit, private entities that carry out financial activities in accordance with the provisions of the Organic Monetary Code, fund and trust management companies, broker-dealers, insurance companies, reinsurance companies, as well as administration, brokerage and portfolio management and purchase companies ( …) It is not a tax paid by the people, that is why nobody claims and the value that is collected is for having the asset abroad.
Executive evaluates in which other holidays VAT will be reduced from 12% to 8%
Among the proposals spread during the campaign, Guillermo Lasso spoke of the relaxation of VAT collection for holidays to stimulate consumption, that the president would have the power to reduce the rate for a maximum number of days in the year. This is part of the current Economic Development Law and on January 31, 2022 he signed the first decree to reduce the VAT from 12% to 8% on carnival and Easter holidays, it was seven days in total.
These five provinces captured the highest tourist spending on the Easter holiday, which reached almost $50 million
Five more days remain to be defined for which the Ministry of Tourism has already made its recommendation to the Presidency and is currently under evaluation.
In the three holidays of 2022 (added that of May 1) tourist spending in Ecuador was $173 million, that is $30 million more if we compare it with the tourist spending of 2019 in the same period of time, according to that portfolio of State. (YO)
Source: Eluniverso
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