Radar on Ecuador

Grimaldi Alliance

Knowledge Management

Jan 23 2023

Tax

New Tax Reform in Effect

The tax reform came into effect on June 20, 2023, modifying matters related to the payment of income tax, deductible expenses, and value-added tax. Some of the key changes include:

Increased deductible expenses: The tax reform increases the amount of expenses that households can deduct from income tax. Individuals can now deduct up to US$15,294 per year for personal expenses, based on the number of family responsibilities they have. The maximum number of family responsibilities is five.
Therefore, a person with five dependents could deduct multiple expenses and receive the largest reduction in income tax payments, which is US$2,753 per year. Finally, those who have no family responsibilities, on the other hand, benefit from a reduction in their income tax payment of US$964 per year.

New income tax table: The new law regulates the income tax rate from 5% to 37%, but it makes it easier for beneficiaries to determine their payment rate. This means a reduction in tax payable.

Changes for popular businesses and microentrepreneurs: Popular businesses previously paid a single income tax of US$60 per year. The new tax reform establishes a progressive payment table, which means that popular businesses with less than US$2,500 in annual income are exempt from income tax. This benefits 340,000 producers. The new reform also establishes a rate of 0% valueadded tax for these businesses and excludes 500,000 artisans from the Simplified Regime for Entrepreneurs and Popular Businesses. Taxpayers with sales between US$2,500 and US$20,000
per year will pay between US$5 and US$60 per year in tax.

Environmental

Ministry of the Environment strengthens wildlife protection

The Ministry of the Environment has officially launched the Ecuadorian Biodiversity Information System (BIS-EC), which is designed to be an information system for supporting the control and management of biodiversity in the country. BIS-EC provides connection services that enable access and use of information and collaboration on specialist topics using state-of-the-art technologies.

This collaborative approach aims to improve access to biodiversity data and information while helping to improve research, exploitation, monitoring, control, traceability, and decision-making processes. BIS-EC is an important part of the Single Environmental Information System led by the Ministry of Environment, Water Ecology and Transition, in response to the need for updated data and statistics that reflect the management and protection of natural heritage objects from Ecuador.

Data Protection

The Personal Data Protection Law enters the Penalty Regime

The new regulation focuses on broadly protecting personal data, ensuring its security and confidentiality. Additionally, it establishes a system of sanctions that applies to both national and foreign companies operating in Ecuador. In this way, the objective of guaranteeing the exercise of the right to the protection of personal data is fulfilled, which includes access and decision-making regarding information and data of this nature.

The recently enacted regulation includes a system of sanctions for those who fail to comply with the provisions regarding the use and processing of personal data. These companies are obligated to implement data protection programs and systems that enable data subjects to exercise their rights. Among the sanctions, fines ranging from 0.1% to 1% of the total sales of the last annual billing exercise are established for companies that fail to responsibly handle user data, depending on the type of violation. Also, the public entities will be subject to fines of up to 20 minimum
wages.

In the case of recurring or serious violations or misuse of personal data, the temporary or permanent closure of the offending entity is also contemplated, in addition to the possibility of suing those who misuse data, both within and outside Ecuador. The severity of the infringement and the type of sanction depend on its intentionality, recurrence, nature, and repetitiveness.

Country

Ecuador

Talk about

latam

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