“Forgiving debts led the bank “Banco de Fomento” to bankruptcy “

Ecuadornews:

Hours before the National Assembly entered the second debate of the draft Organic Law for the Reactivation of the Economy, Strengthening of Dollarization and Modernization of Financial Management, the document was analyzed in Guayaquil with businessmen.

The tax expert Pablo Guevara, from Fidesburó; the ex-Minister of Commerce and former assemblyman  Juan Carlos Cassinelli; and the president of the Export and Investment Promotion Corporation, Eduardo Egas.

Among the points that worry experts is that with the forgiveness of interest and fines for not paying taxes on time, a bad tax culture is developing. The experts recalled that with similar measures the former Banco de foment was bankrupt.

It was recalled that in the past entrepreneurs could not do long-term planning, because in 11 years there were 35 laws that contained reforms to the tax regime. This limited foreign direct investment: in 2015 they were $ 1,322 million (1.32% of GDP) and in 2017 of $ 606 million (0.58% of GDP).

It was also pointed out that the project does not directly stimulate the creation of new jobs; but indirectly, by stimulating investment and production. They highlighted that around 120,000 university students leave every year in search of work, and this cannot be forgotten.

Juan C. Cassinelli, former assemblyman and former Minister of Commerce

The beneficiaries of the referral must pay up to 90 days, if they had sales over $ 5 million. It should not be about income but about utility, because it is possible to have many sales and at the same time many expenses. And if you are forced to pay in 90 days you will have to make a loan to a bank to pay. In the end it is not the company that wins.

About the point of responsibility of the shareholders, legal and family representatives of the properties by presumption, it seems good to me that it is eliminated. It is not yet clear what happens with the processes that are underway.

The same law should incorporate a more comprehensive reform of the Organic Code of Production, Trade and Investment in relation to the free zone. It cannot be subject to a geographical space, but to an activity. So there is a benefit to that area.

Eduardo Egas, president of Corpei and former Minister of Industries

There is a need to define with greater clarity the gradual reduction of the Exit Currency Tax.

There are some inconsistencies in certain benefits and incentives that, when not clearly determined, end up affecting the purpose. An example is the payment of contribution before the benefit for the transfer of shares.

Tax exemption should not be abused. We are already like the former Bank Banco de foment, which went bankrupt because of the many debt forgiveness. That is paternalism. It is a kind of incentive and reward to the defaulter and punishment to the achiever. You can think that in Ecuador you do not have to be so disciplined with the payments, because sooner or later an amnesty arrives that frees you of the surcharges and fines. This generates a bad tax culture, which is not good for the country.

Pablo Guevara, tax expert at Fidesburó

Eliminating the provision of the law on internal taxation, article 9 numeral 1, which eliminates the exemption in favor of companies resident in Ecuador, when they have an effective beneficiary resident in the country. Because as it is written means that local holding companies that receive dividends from production companies would be taxed and when they distribute the dividend to the beneficial owner, they would be taxed again and a multiple taxation is generated.

That provision in the current law has been moderated by a resolution of the Internal Revenue Service, clarifying that it does not tax Income Tax, but there is still a law that says yes and a resolution that does not. At some point the law will prevail. Now it must be reformed. It is a normative absurdity that is taxed Income Tax, the dividend of a local company when it has an effective beneficiary in Ecuador. (I)

Source: http://www.expreso.ec/economia/bancodelfomento-deudas-finanzas-asamblea-CF2236217