Posted On 02 Dec 2016
President Rafael Correa yesterday sent the draft Organic Law to the Assembly to Prevent Speculation on the Value of Land and Fixation of Taxes known as “Capital Gains Act,” with the character of an economic urgency, which was distributed to the assembly members at 16:58.
The Government’s proposal intends to add the section “Tax on the speculative value of land in the transfer of real estate” in the Organic Code of Territorial Ordering and Decentralization (Cootad).
This law will tax the extraordinary gain on the transfer of real estate, which corresponds to the difference between the transfer value of the property and that of the adjusted acquisition (sum of the value of the purchase plus the ordinary profit).
To settle the extraordinary gain, a 0% rate will be applied, ranging from zero to 24 basic unified wages for general workers and 75% to those with more than 24 basic unified wages.
The declaration and payment will be done before the authorization of the corresponding deed before a notary. The decentralized autonomous governments (GAD) will be responsible for administration, liquidation, and collection before the granting of the public deed.
The resources will be allocated to the GAD and “in those cases in which the Central Tax Administration exercises its determining power, a 20% of the surcharge will be assigned to the Single Treasury Account.”
Successions due to death, donations, raffles and sweepstakes, auction or sales made in courts or by state institutions are not subject to tax, nor the adjudication of real estate property of the gains of the conjugal society or property, and those caused by the distribution of the assets of a trading company.
The bill reforms five articles of the Territorial Code and includes the obligation of the municipalities and metropolitan districts to update the cadastre, and those who do not comply will be dismissed by the Superintendency of Land Use Planning, Land Use, and Management.
The Assembly has 30 days to process the urgent economic bill.