Ecuador: five new taxes to finance the war against gangs

It is a strategic victory that Ecuadorian President Daniel Noboa has just won. Although he does not have a majority in the National Assembly and the latter is mainly opposed to the increase in VAT to finance the ongoing war against gangs, these are five new taxes which will replenish the very empty coffers of State. 

Without a majority in the National Assembly, Ecuadorian President Daniel Noboa has just won a strategic victory (our illustration photo). AFP - RODRIGO BUENDIA

By: RFI Follow

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With our correspondent in Ecuador,

Éric Samson

Originally, the

Ecuadorian head of state

wanted to increase VAT from 12% to 15%, saving only basic necessities. Despite its legislative agreement with the right and the support of former president Rafael Correa, the latter refused any tax increase. Thanks to his right of

veto

,

Daniel Noboa

then made a counter-proposal which the Assembly did not approve but, due to lack of a majority, it also did not ratify its initial refusal concerning tax increases.

Safety contribution

It is therefore the Ecuadorian president's counter-proposal which will come into force by default. VAT will increase from 12% to 13% with the possibility of pushing up to 15% if the circumstances merit it and following a favorable opinion from the Ministry of the Economy and Finance. This increase will be limited to 5% for construction materials. Large and medium-sized businesses will have to pay a temporary security contribution of 3.25% on extraordinary utilities for the 2022 fiscal year. 

Fines

This will be a one-off payment with fines planned for companies refusing to pay their tax. This contribution will not be applied to small and very small businesses. Depending on their profits, banks and cooperatives will also be taxed on their 2023 profits. The tax on the outflow of foreign currencies may increase from 3.5 to 5%.

Read also Ecuador: the resumption of power in secure hands welcomed by the population, despite the risks of slippage

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  • Ecuador

  • Finance

  • Daniel Noboa

  • Crime

  • Economy

  • Economic crisis

  • Taxation