The Productive Law is the lifeline for the end of the year
Oxygen for a complicated second semester. The Law of Productive Development, which was finally approved by the National Assembly last Tuesday, hopes to give the government a break in liquidity through two channels. The first is the tax remission. Esteban Albornoz, president of the Economic Development Commission, assured EXPRESO that the Law will be in the Official Registry on August 25, that is, it will be effective as of that day.
From that date, according to the Law, the businesses that during the last three fiscal years registered revenues of more than 5 million dollars, will be able to benefit within a period of 90 days from the tax remission. The remission is the pardon of fines, interest and surcharges originated in debts to public entities, as long as the capital is paid in the determined period.
The cancellation will apply in outstanding debts until April 2, 2018 with the Internal Revenue Service (SRI), National Customs Service of Ecuador (Senae), National Transit Agency (ANT), Ecuadorian Institute of Social Security (IESS), Public Enterprises and Decentralized Autonomous Governments (GAD).
For companies with lower incomes have the option to cancel within 90 days or request payment facilities that can be extended up to 2 years.
In three months, that is, September, October and November, it is expected to raise about 600 million dollars, money that will alleviate the liquidity needs of the fiscal fund.
The figure can cover the payment of the thirteenth Christmas salary or Christmas bonus that is canceled in December to public workers. Last year, the Treasury allocated about 555 million dollars to meet this benefit.
For the president of the College of Economists of Guayas, Larry Yumibanda, it is difficult to know if the Government will be able to reach its objective of collection with the remission. Everything will depend on the litigation that companies have with the SRI and will analyze the cost benefit. “Companies when they enter litigation usually expect to win the litigation,” he adds.
The other way that will facilitate the new legislation to obtain more liquidity is the debt.
The Law of Productive Development seeks to give peace of mind to debt holders, such as investors, investment banks, multilateral organizations, in case they decide to make new loans and these are not considered illegal by the Ecuadorian Government, because they exceeded the 40% limit. % with respect to the Gross Domestic Product (GDP).
After the approval of the Law, international markets do not rule out a new bond issue this year. To close 2018, the Government still has to obtain 5.620 million dollars, of the 11.7 billion in financing needs that are required for the whole year. (I)