The largest additional income that the State would receive (almost $ 400 million) is focused on reducing deductions for personal expenses.
If temporary contributions on patrimony are excluded, the Government of Guillermo Lasso aims with the tax reform to permanently increase the tax collection at $ 700 million a year.
Of that amount, $ 452 million (65%) would come from the modifications in the payment of the tax to the income of natural persons. The original proposal of the Executive was that tax is mandatory for everyone who earns from $ 2,000 per month or more.
In addition, it was established that the limit for deductions personal expenses is $ 5,000; and not the current $ 14,709 per year.
The Minister of Economy, Simón Cueva, has assured, during his appearances before the Economic Commission, that the level of deduction Personal spending in the country is one of the highest in the region and the world.
The debate within the Assembly caused that base proposed by the Executive to rise to $ 2,600 per month and the limit of what can be discounted per year for personal expenses is set at $ 10,000.
If the bill is approved under these conditions, the $ 452 million that is sought to be collected from the changes in income tax will fall on the shoulders of approximately 189,489 Ecuadorians.
For lower personal expenses deductibles, the treasury would obtain $ 399 million; and through the changes in the table for the payment of taxes, the sum would reach $ 113 million.
Temporary contribution for two years
The other great source of collection, inside of tax reform they are the taxes on the patrimony of people and companies.
The report for second debate, prepared by the Assembly, proposes two rates for companies. The first is 0.4% for those with equity between $ 4 million and $ 4.9 million. The second is 0.8% for amounts of $ 5 million or more. The contribution is for two years.
Business unions have questioned this tribute and have come to denounce that the proposal would cause that, between 2022 and 2023, the affected companies would have to pay the equivalent of two income taxes.
On the other hand, people’s assets would be taxed at three different rates: 1% for those with between $ 1 million and $ 1.19 million; 1.2% for between $ 1.2 million and $ 1.49 million; and 1.5% for more than $ 1.5 million. In this case, the payment would only be in 2022.
With these special contributions, the Government expects to have $ 1.9 billion in extra revenue in the next two years. The approval of the tax reform It is one of the conditions included in the agreement with the International Monetary Fund (IMF).
If the country complies with all its commitments, the multilateral organization will deliver a disbursement of $ 700 million in December 2021. By 2022, there would be a final loan for $ 1,000 million. (JS)