On October 13, the President of Ecuador, Guillermo Lasso, announced that the Creation of Opportunities Law will be divided and presented in three bills: tax, labor and investment. In this way, the Executive Branch expects the National Assembly to analyze the initiatives and not reject them in the first instance. Although Lasso did not specify which of the initiatives will be presented first, the tax reform is considered a priority for the Government due to the agreement it has with the International Monetary Fund (IMF).
Regarding tax matters, the President explained that it will have three fundamental parts. The first one is the simplification of taxes and some tax regimes; the second one is about special contributions, and finally, the income tax will be modified. In this line, Lasso expressed that a change is contemplated so that the Wealth Tax will have “more impact on companies than on individuals”. Regarding labor, Lasso expressed that the bill will be reviewed and that the errors previously proposed will be adjusted, since “it is unacceptable to think that a worker gives compensation to the employer”.
It is worth mentioning that in order to meet the IMF’s goals, tax reform is key. The organization foresees additional revenues equivalent to 0.6% of the Gross Domestic Product (GDP) by 2022, that is, about 600 million dollars. The majority, 500 million, would come from temporary levies on the high net worth of individuals and companies. The remaining 100 million will come from changes to income tax.