The Quito Chamber of Commerce (CCQ) and its new president, Mónica Heller, sent a letter to President Lasso with alternatives to reduce the tax burden for companies and individuals.
This May 8, 2023, the Quito Chamber of Commerce (CCQ) sent a letter to the President of the Republic, Guillermo Lasso, with 9 proposals to simplify the tax system and reduce the burdens for companies and citizens.
Last week, the Minister of Economy, Pablo Arosemena, announced that a new bill would be sent on May 8, as a matter of urgency, to increase the deduction limit for personal expenses for income between $800 and $3,000 per month, among other measures.
In this context, the CCQ wants to put its proposals on the table. LA HORA learned that the expected new tax reform will not reach the legislature today and there is still no scheduled date.
Thus, the “relief to the pocket of families” is pending, but Mónica Heller, president of the CCQ, maintains that the changes are essential because the Economic Development Law (Lasso’s first tax reform), approved in November 2021, caused serious effects on the purchasing power of Ecuadorian families.
«The new proposal should not affect the productive sector, which has already faced more than six tax reforms in recent years.. It should aim to have a simplified tax system, provide certainty to the private sector, encourage national and foreign investment, as well as boost employment generation, which is the main challenge we face as a country,” he asserted.
He added that only in the last year the business sector paid extraordinary taxes in the amount of $546 million dollars.
The nine proposals of the CCQ
1.- Apply an income tax deduction scheme for all taxpayers:
Being able to subtract from the income the expenses of housing, food, health, education, clothing, services and others, that do not discriminate against any actor in the economy, whether salaried or independent.
2. Eliminate limits for personal spending
Eliminate the ceilings between spending items (housing, food, health, education, clothing, services and others), maintaining the maximum total amount.
3.- Adjust the income tax payment table for natural persons
Establish a maximum of 35%, giving Ecuadorian families greater liquidity to allocate it to consumption, generating positive effects on the economy and a positive externality for VAT collection.
4. Exemption to micro and small companies
Exonerate new micro and small businesses from income tax, during the first 5 years of economic activity.
5. Incentive to Inversion Contracts
Reduce the income tax rate on investment contracts by up to 10%, for the duration of the investment project, to encourage investment attraction and its positive effects on economic recovery.
6.- Reinvestment incentive
Restore the deduction of 10 percentage points in the income tax rate for the fiscal year for reinvestment of profits in productive assets.
7. Incentive for the generation of new employment
Incorporate additional deductions into the tax standard when there is a net increase in employment.
8.- Eliminate withholding on the payment of profits to shareholders
This is because the companies have already paid income tax and other taxes prior to the generation of profits.
9.- Incentive to digital books
Apply a 0% VAT rate to books in electronic format in the same way that they have it in physical format, as well as its complementary material. (JS)