The new investments will receive exemptions from Income Tax. Once the deadline has expired, the President may extend it for another two years. For the Minister of Foreign Trade and Investment, Pablo Campana, there are three alternatives to attract revenue to the country’s economy: more debt, extractivism or promotion to the productive sector.
On Monday, June 4, Campana affirmed that the current economic program follows the third path. “It is time for the public and private sectors to trust and bring capital to Ecuador,” said the Minister.
Chapter II of the Law on Productive Development that is currently analyzed in the National Assembly proposes incentives for the attraction of private investments that will be valid for 24 months and may be extended by the same time via Executive decree.
“The President has chosen to grant certain fiscal sacrifices for capital to enter the economy (during the first two years) as Uruguay, Chile or Peru have done. Once it is seized its way it will no longer be necessary to grant tax benefits, “explained Campana.
According to the bill, the new productive investments in priority activities for the country that are outside of Quito and Guayaquil, will not pay the Income Tax (IR) for 10 years, counted from the first year that income is generated . The investments in the two most important cities of the country, will enjoy eight years of exoneration; while for those that take place in border areas and in the Amazon region, the benefit extends to 20 years.
The Minister of Foreign Trade clarified that with these incentives “tax revenues are not at risk because they are for new investments. The existing ones will have the benefit over the tax proportional to the investment “. The proposal sent by the Executive, in general, has good acceptance among the business associations.
On Monday, June 4, before the Economic Development Commission, the president of the Chamber of Commerce of Quito, Patricio Alarcón, indicated that the project marks paths to improve competitiveness although the tax exemptions should be extended to all sectors, including trade. , and focus after 24 months.
For Caterina Acosta, representative of the Chamber of Industries of Guayaquil, the law shows signs of confidence. She also highlighted the promotion of Special Development Zones that “are stagnant due to bureaucratic issues”. The bill proposes 10 years of tax exemption for these areas. (I)