From this Monday, May 22, until Tuesday, May 23, the Law on Attracting Investments, or the Law on the Free Zone, will be sent by decree to the Constitutional Court (US). This was stated by the Minister of Economy and Finance, Pablo Arosemena, during his responsibility held this Monday in Guayaquil.

According to the minister, a free zone is a place or geographical location that has tax benefits, and the goal is to achieve exports.

Arosemena currently commented that free zones or zones of special economic development (ZEDE) can only exist at the initiative of the state, but what they propose with the law is that it is like “anywhere in the world”, that initiatives come from the private sector as well. even the mixed one, between public and private.

The government minister predicts that the legal decrees issued by President Guillermo Lasso, after he dictated the cross of death, will be in economic matters

As a second point, he indicated that a free export zone can currently be created, but only for certain types of jobs that are closely related to logistics. “We suggest that you can create a free zone for the export of goods or services, software it’s a service, whatever it is, practically whatever it is, whatever it is in any part of the world,” he said.

He added that now the benefits of the free zone are “none, they are nice”, but now they are proposing to make it “zero income tax for 10 or 15 years, depending on the location”.

He cited as an example that if it is located on the Ecuadorian border, the tax would be zero for 15 years; if within the limits, the tax would also be zero for 10 years and additionally in both cases 10 points of tax reduction after 10 or 15 years, while the free zone lasts.

He also indicated that he will have the benefits of exemption from taxes on foreign trade, including VAT. “When you export, don’t export tariffs, don’t export taxes,” he said.

2022 status data

The minister pointed out that the fiscal deficit, the difference between income and expenditure, has been reduced. In 2020, it was -7.7%; in 2021 from -4.1%; and in 2022 it reached -1.7%, and by 2023 -1.5%.

He said some of that reduction was achieved after debt renegotiations with China and debt swaps for the conservation of the Galapagos Islands, which would have saved Ecuador more than $1,100 million.

On the other hand, he emphasized, the level of public debt in relation to gross domestic product (GDP) has also decreased. In 2020, it was 61%; in 2021 from 60%; and 2022 from 57% and so far for 2023 from 55%.

The government announces a debt swap for the preservation of the Galapagos Islands, which would save Ecuador more than 1,100 million dollars

During his presentation, among other things, he highlighted the payment of, as he said, “historical debts” to various public institutions.

He said they have canceled $107 million of the $172.6 million budgeted until July this year to the Devolved Autonomous Governments (GAD). He stated that the payments were pending from 2015 to 2020.

“Seven years ago, two governments passed and left and left accounts…”, he asserted.

Likewise, it was stated that they paid $2.458 million to the Ecuadorian Social Security Institute (IESS) until December 2022. In addition, he pointed out that in 2022 they have set aside 140 million dollars for retirement incentives. “We have paid retirement incentives to people who retired 14 years ago,” he said.

Regarding inflation, he pointed out that inflation in Ecuador is the second lowest in the region and the ninth lowest in the world. He indicated that the annual international inflation in December 2022 was 3.7 percent. He emphasized that this was achieved by maintaining dollarization.