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STABILITY AND INCENTIVES

TAX STABILITY FOR UP TO 30 YEARS

Within the Organic Code of Production, Trade, and Investments, an investment contract is established as a legal instrument that recognizes the rights of both domestic and foreign investors and bestows tax stability. It also allows for the exemption from certain import tariffs.

KEY INCENTIVES

INCOME TAX

  • 8 year exemption to income tax in the cities of Quito and Guayaquil.
  • 12 year exemption to income tax in the rest of the country.
  • 15 year exemption to income tax for Manabi and Esmeraldas, which may extend up to 20 years the tourism sector.
  • Tourism projects, micro, medium community tourism companies and / or associations, to have an exemption from income tax 20 years.
     
    Note: the benefit will apply from the first year in which income attributable to generate new investment
     
  • Income Tax reduction from 10% Income tax on reinvested earnings in the acquisition of new productive assets.
  • Double tax deduction of depreciation costs of fixed productive assets 5 years (It includes Quito or Guayaquil).
depressed areas

  • tax benefit through additional deduction 100% the cost of hiring new workers, for five years.
TAX Remittance (5%)

  • Tax exemption foreign exchange outflows (ISD) for principal and interest credits abroad, whose funding is greater than 360 days and the rate should be lower than the benchmark rate Ecuador
  • Tax exemption foreign exchange outflows (ISD) for new productive investments that sign investment agreement, for payment of dividends or profits abroad
  • Tax exemption foreign exchange outflows (ISD) for new productive investments that sign investment agreement, for imports of capital goods and raw materials needed for the project, up to the amounts and terms established in the aforementioned contract. These amounts will be indexed in cases where any increase in planned investment, these increases in proportion to prior authorization from the national authority on investment
Investment contracts with the Ecuadorian State

The Investment Agreement is an agreement to protect new productive investments, available for investments above USD 1 a million dollars, offering the following incentives:

Stability:

  • Stability on tax incentives to 15 years.
  • Renewable once (maximum validity of 30 years).

exonerations:

  • The company can apply for reduced tariffs on capital goods to be imported.
  • Departure tax exemption on foreign exchange: utilities and imports of capital goods.

Security:

  • Establishes mechanisms for conflict resolution.
DUTY

temporary deferral of full payment of tariffs.
requirements:

  • The goods shall not have cared domestic production and / or technical standards should not be generated in the country; NATIONAL PRODUCTION CERTIFICATE NO.
  • Goods must have the motivated certification governing the sector Ministry where the activity is performed, that the amount and goods imported directly related to the activity to which they are to be designed.
  • Company and / or project must be submitted to the Committee for Foreign Trade - COMEX.
Tourist copies

  • For tourist services.- may be authorized the establishment of special economic development zones for tourism services, only for the development of tourism projects as public policy prioritization cantons or regions issued to effect the Sectoral Council for Production.
  • ZEDES enjoy the customs-treatment that gives them the customs legal regime, with exemption from duties and VAT on foreign goods entering these areas.
  • Managers or operators of ZEDES will be exempt from paying income tax and advance payment for the first 10 years,  counted from the first fiscal year in which operating income is generated.
Private Partnerships

The model of Public Private Partnership (APP) It permits a joint venture between the public and private sector.
 
incentives:

  • Exemption from income tax for 10 years, from the first year of operation.
  • Exemption from customs duties on imported products and services for project development.
  • Legal stability on various issues affecting investment and fiscal incentives.
  • Disputes can be submitted to international arbitration.
  • Exoneration of ISD:
    1. In the import of goods for the implementation of public project, Whatever the import regime employee.
    2. In the procurement of services for the implementation of public project.
    3. Payments made by the company to the public project financiers, including capital, interest and commissions, provided that the agreed interest rate does not exceed the benchmark rate at the date of registration of credit. The benefit extends subordinated claims, provided that the borrowing company is not on thin capitalization situation according to the general scheme.
    4. Payments made by the Company for distribution of dividends or profits to its beneficiaries, notwithstanding which have their tax domicile.
    5. Payments made by any person or company because of the acquisition of shares, rights or interests of society according to the execution of a public project in the form of public-private partnership transactions or securities representing fall on debentures issued to finance public project.

APPLICABLE REGULATIONS

  • Organic Law for Productive Development, Investment Attraction, Job creation and stability and fiscal balance.
  • Incentives Law for Public Private Partnerships
  • Organic Code for Production, Trade and Investment.
  • Organic Law of Internal Tax Regime.
  • Resolution 022-2018 COMEX
  • Resolution 002-2019 COMEX

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