What is the real weight that the provinces have in tax collection? SRI shows the figures where it was actually sold and taxed

The tax map by province changes significantly when the figures are analyzed by taxable event and not, as is normally done, by tax residence. The Internal Revenue Service (SRI) released this Tuesday, September 5, 2023, a study that reveals that sales and taxes generated in every province in the country do not necessarily match what is reported by tax address. In this way, it is possible to know more clearly what the true weight of the contribution is by province.

Francisco Briones, director general of the SRI, said that this study – carried out with high technical rigor and based on information reported by taxpayers – “allows a more realistic assessment of the fiscal effort and economic activity carried out in each of the provinces”. But, he clarified that these are preliminary figures and are not included in the national system of tax statistics.

The usual way in which SRI shows collection values ​​at the provincial level is based on where the taxpayer’s tax domicile is registered, but not where the sale took place.

For its part, the collection of taxes according to economic facts recognizes that business operations can be carried out throughout the national territory and that, therefore, the events giving rise to the tax occur in provinces other than those in which they are reported; for example, larger businesses, such as convenience stores, gas stations, pharmacies, supermarkets, and the like, that sell in several provinces.

Briones pointed out that tax collection according to economic facts allows us to notice that in some provinces tax generation is lower than when calculated according to residence. For example, although $85.235 million in sales were reported in Pichincha in 2022, those actually realized in the province reached only $74.553 million; the rest was done in the rest of the country. So, while tax collection by tax domicile was 8,486 million dollars, which is equivalent to 49.45% of the total taxed in the country, according to the economic fact it was 6,933 million dollars or 40.40%, or 18.33% less.

On the other hand, in Guayas, sales according to the fiscal house were $72.567 million, but sales according to the economic fact reached $72.769 million; that is, it prefers to go up. Collection also had the same behavior: according to tax residency it was $5.346 million (31.15%), and according to economic fact it was $5.671 million (33.05%), 6.08% more.

In Azuay, the sales reported according to the tax address was $9.707 million in 2022, but when measured by economic facts, it reaches $9.841 million.

Briones pointed out that since this is the first attempt to evaluate this data, the results are perfect and subject to verification; nevertheless, they represent an important tool for knowing the dynamics and economic potential of each province in the country, as well as its actual contribution to the fiscal coffers.

According to Briones, the goal of presenting this type of problem is to allow discussion and debate in order to create, if deemed relevant, a fairer model on the tax issue. “This is part of our tax justice plan,” he said.

Provincial sale in 2022

VAT collection in 2022

Collection of income tax in 2022

Briones, on the other hand, when asked whether the decree on the tax law will be referred to the Constitutional Court, as was announced, explained that it is being analyzed in Carondelet. However, he said that the analysis also includes understanding whether the said shipment is relevant or not, considering what the constitutional body has already decided on.

And that is that the government that applied death by cross has sent five draft laws to the Constitutional Court since May and only one succeeded: