Products that pay VAT will now cost more, the Government decreed the increase of this tax to 15%. APIFOTO/Juan Ruiz Condor
The president used the power given to him by law to decree the increase in VAT to 15%, which is the maximum allowed.
Through Executive Decree 198, President Daniel Noboa established that the increase in the Value Added Tax (VAT), which will take effect from April 1, 2024, will be 15%.
According to the Law to Combat Internal Armed Conflict, VAT will automatically go from 12% to 13%, but the president can elevate it up to 15%
A lift greater than 13% can only be carried out with a favorable opinion from the Ministry of Economy and Finance, in which the Government would have received, where the conditions of public finances and the balance of payments are set out.
As established in the Decree, the 15% VAT will be applied during all year 2024.
The Internal Revenue Service (SRI), through a statement, reported that the objective of the VAT increase is to obtain economic resources to face the armed conflict internal.
In addition, it seeks to guarantee the income that contributes to the sustainability of finances as well as fiscal stability.
Exceptions in the application of the Law
Although the VAT is raised generally, the payment of this tax for construction materials is will reduce to 5%the Assembly approved this incentive with the desire to support this economic activity.
This was one of the sectors most hitfirst due to the COVID-19 pandemic and then due to the economic crisis.
In addition, the Ministry of Tourism confirmed that the measure that reduces VAT to 8% during holidays with the aim of supporting the tourism sector.
The next holiday on which this measure will be applied is Easter from Friday, March 29 to Sunday, March 31, 2024.
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