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Ecuador News

Business owners complain about new import tax, call it a return to Correa-era tax policy

Although the government says that new import taxes that went into effect yesterday will have minimal impact on consumers, Ecuadorian businesses say it’s too early to tell. They also complain that the taxes represent a return to the policies of former president Rafael Correa and contradict President Lenin Moreno’s pledge to provide relief to the private sector.

The customs service began applying the new import tax yesterday.

The tax applies to 375 items that the government says will raise $900 million a year to help combat smuggling and to keep U.S. dollars in the country.

Of immediate concern for importers is figuring out exactly how much the new taxes will cost them. The taxes are based on complicated formula in which a “control unit” determined by the weight of products is multiplied by 10 cents. Business owners complain, however, that they cannot determine the tax per item since the customs office has set weights that often far exceed their own calculations.

“The way they decide on the tax is crazy,” says Cristina Álvarez, administrator of the Importadora Aliap in Guayaquil. “No one outside of the customs office understands it and they refuse to provide a list that shows the tax by product item.”

Mauro Andino, customs director, agrees the formula will be confusing at first but says importers will quickly understand it. “There are always complaints about a new system of charges and this is no different.”

The government has offered a short list of what the tax will add to the cost of imported products, including $5.50 for a 32-inch television and 48 cents for a pair of women’s shoes.

Some importers say that the examples are deceptive and put a “good face” on the new taxes. “In general, the tax will add at least 5% to 8% to final costs but I’ve seen some cases that are much more,” says Álvarez. “At this point, we are just waiting to see the values that are assigned as products come into port.”

Like the importers, some members of the National Assembly complain that the new tax is a “regression” to the tax policies of the Correa administration. “I thought we had moved beyond that, but here we are again,” said Assemblyman Henry Kronfle. He also said that the government had made the tax formula too difficult for businesses to figure out.

On Monday, a judge in Guayaquil rejected a petition by three importers to delay implementation of the new tax.

  • StillWatching

    I’m very disappointed in this new tax. I’ve already dealt with suppliers that have been hurt by it and regular passengers coming into the country from Colombia have told me that they are being delayed tremendously at the border as a result of it, even before the tax change being fully applied. I imagine it is the same coming in from Peru, but I have no personal experience with that.

  • Acbig1

    Re: ““The way they decide on the tax is crazy,” says Cristina Álvarez, administrator of the Importadora Aliap in Guayaquil. “No one outside of the customs office understands it and they refuse to provide a list that shows the tax by product item.”
    Didn’t we just go through this similar criticism regarding the new healthcare law? Guess we shouldn’t complain. A third world country offers a third world education system, resulting in third world government incompetent communication.

    • LadyMoon

      The saying that comes to mind is “walk a mile in my shoes” to businesses. Now you have a sense of how expats experience with the very slippery and confusing health insurance requirement.

      • StillWatching

        The whole health insurance thing is a hoax, perpetrated by insurance companies that sell health insurance.

  • Joe

    Deal with it people, as you are in a host country.

    • Michael Berger

      Is that what you would say if the theft occurred on the street by a loan criminal?

      In case you have not been paying attention there were already many import taxes in effect before this new tax that have not been modified or rescinded and when combined often exceed 100% of the fair market value of the product.

      This is the complete opposite of what Moreno promised after taking office and another step towards communism so people have a right to complain.

      • ecexplorer

        Agreed. A friend of mine moved to Colombia a while back. He was going to order a computer part when he was living in Ecuador and the tax on that part was going to be 100% so he did without it. When he went to Colombia he looked into it again there and the tax was 23%. That is why gringos are smuggling goods into Ecuador for each other regularly (“mule” = “smuggler”).

        And, Colombia’s economy is doing better than the Ecuadorian economy which is going down the chute.

        (But, what is a “loan criminal”)?

        • Michael Berger

          Some years back they tried to charge me a little over $200 in taxes for some break parts for my truck that I shipped in. When I refused to pay they returned the wheel cylinders back to the States at no charge and someone brought them back for me on the plane.

          My point was that theft is theft whether it is done by one criminal acting alone or an organized criminal gang that has control geographic area like in the video below.

          • StillWatching

            Let me see if I get burgerspeak correctly. Loan=Lone and break parts are what educated people call brake parts? How about the redundancy “returned back”?

            Did you go to school in Ecuador or in a third world country?

    • StillWatching

      Host country my ass. I’m a citizen and you “you’re a guest in their country” clowns are a vexation.

    • Karen Lynn Kennedy

      What??? The Ecuadorians don’t have the right to complain about what is happening to them??? This isn’t about expats!!!

    • Acbig1

      Joe, could it be that you wrote the words to the Jamaican song called, “Don’t Worry, Be Happy”.
      No offense, Joe, but your comment is as evasive as it is shallow. Do the readers a favor and put some thought into your replies next time.

      • Joe

        If I really wanted to put thought into it I would need an audience that would be able to comprehend. No offense but I didn’t move here to listen to a bunch of malcontents that are not happy wherever they go. Why can’t complainers just stay in one place and fester. I find the life style much better here and much better without whinning Americans. Fix America first if you’re going to complain and not come to another country and try to screw it up with complaining. I hear what is being said but complaining without a comprehensive solution is worthless.

        • Acbig1

          Hey Joe: “The squeaky wheel gets the grease.” Things never get better when you simply turn a blind eye. Sitting on the sidelines in your comfort zone is great for you. But in the big picture, it accomplishes nothing.

        • Acbig1

          Your liberal view doesn’t help anyone that wants to know the pros & “cons” of Ecuador life. Joe, Ecuador isn’t an island with 30 people on it. You have to deal with reality here as you would anywhere else. Or maybe your “comprehensive solution” would be to stay away from social media, so you don’t have to listen to the other side of the conversation.

  • Nate

    “Of immediate concern for importers is figuring out exactly how much the new taxes will cost them”

    A tax won’t cost business owners anything. This is a very common belief that it’s “their money” when in fact they’re just collecting it for the government.

    • lorenzo

      A tax does cost business owners. It costs them less business.

  • Dwight

    I’ve commented that this is coming. How will this apply to European products?