Banks will not pay Overseas Remittance Tax

Image: El Comercio

Since last July 22, payments of direct loans, credit lines or deposits made by institutions of the national financial system abroad are exempt from tax on foreign exchange outflows (ISD). Thus determines resolution 107-2015-F of the Financial Monetary Board.

According to the standard, the institutions of the national financial system shall benefit when resources come from (financial or otherwise) international bodies that provide financing provided they meet four conditions.

First of all, when resources from abroad are direct loans, credit lines or deposits. Second, when transactions are recorded in the Central Bank; third, when the term of these operations is over one year; finally, when resources are used to finance corporate productive loans, business productive loans, loans to SMEs, commercial priority, housing, microcredit and possible liquidity requirements of the institutions.

The ISD is the third highesy yield tax to the Treasury. This tax was introduced by the current government in 2008 and is levied on the outflow of money abroad from Ecuador. The collection of this tax grew 40 times until 2014, going from $ 31 million to US $ 1259 million, according to the Internal Revenue Service (SRI for its Spanish acronym).

In order for banks, cooperatives or other local institutions to be eligible to the benefit, international financing institutions must be qualified by the Superintendency of Banks or of Popular and Solidarity Economy, notes the resolution.

Source: http://www.elcomercio.com/actualidad/banca-exenta-pago-impuesto-ecuador.html

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