Government Formalizes Regulations Governing Entrepreneurship Law and Tax Reform
7 agosto 2020

On August 5, the Executive Branch published the general regulations of the Organic Law on Entrepreneurship and Innovation governing collective financing platforms. Likewise, the Regulations for the application of the Organic Law on Tax Simplification and Progressiveness that taxes digital services were made official. The regulations are already in force.

Organic Law on Entrepreneurship and Innovation  

The Regulations issued by the Executive establish that each platform may establish the terms and conditions for the provision of services to seek funding for entrepreneurial projects. The acceptance of the terms and conditions will be established through a contract between the fund and the promoter, which will authorize the fund to open a bank account for the project.

The regulations also state that companies that carry out project publication activities through crowdfunding may not use their own platforms to raise funds on behalf of third parties or to exhibit projects with the aim of making their own expenses or investments.

Organic Law on Tax Simplification and Progressiveness  

The Regulation states that the 12% Value Added Tax (VAT) will be applied to the import of digital services provided or contracted through the Internet or any other platform, for which credit card issuers will be the withholding agents. It is worth mentioning that this rate will be applicable as of September 16, 2020.

Credit card issuers will be authorized to withhold 100% of the VAT raised, and the withholding must be made at the time of payment when this is made by a resident or a permanent establishment of a non-resident in Ecuador, in favor of the digital service provider.

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