NEWS WRAP: Expats will feel little impact from inheritance tax increase, says CPA; OPEC backs Ecuador in Chevron legal battle; Cotopaxi volcano activity increases; Central Bank lowers growth forecast
CPA says inheritance tax changes will have little effect on expats
A former CPA from the U.S. says that increases to Ecuador’s inheritance tax rate will have little impact on most foreign residents from the U.S. and Canada. George W. Lewis, a Quito expat, says that higher inheritance tax rates will mostly affect wealthy Ecuadorian families. “My research of expats in northern Ecuador shows that less than 1% have assets that would be significantly affected by the tax increase. Almost all expat assets are in real estate and unless someone has property valued at more than $600,000 or $700,000, the increase will be minimal,” Lewis said. He added that the average value of property owned by the expats he surveyed was less than $200,000. The proposed inheritance tax increase submitted Friday by President Rafael Correa to the National Assembly raises the top inheritance tax rate to 47.5% for property going to direct heirs, including children, grandchildren, parents, and grandparents. There is no tax on property going to a spouse.
OPEC supports Ecuador in legal fight against Chevron
The Organization of Petroleum Exporting Countries, or OPEC, issued a statement Thursday supporting Ecuadorian residents in their legal fight against Chevron Oil. In 2013, an Ecuadorian court ordered Chevron to pay $8.6 billion in damages to indigenous villages for oil pollution in the 1970s and 1980s. The pollution, that villagers say affected water sources and caused illness to hundreds in the region, was committed by Texaco, which Chevron bought in 2000. Chevron has been fighting the judgment in courts around the world. In the statement issued from its headquarters in Vienna, OPEC urged Chevron to “respect Ecuador’s sovereignty” and to pay the judgment as soon as possible.
Volcanologists say that seismic activity at the Cotopaxi volcano continues to increase
The Geophysical Institute of Ecuador reports that seismic activity and gas emissions have grown throughout the week at Cotopaxi, the 5,911-meter, or 19,400-foot volcano south of Quito. On Monday, the institute reported that there had been more than 3,100 small earthquakes in May, centered near the volcano, up from about 600 in April. The institute says that the pace of earthquakes has increased in the first four days of June and that it is stepping up its monitoring activities. In past eruptions, in the 1700s and 1800s, Cotopaxi has destroyed a number of nearby communities, including Latacunga, Machachi and Sangolquí. Cotopaxi is the world’s highest active volcano.
Ecuador growth forecast lowered for 2015
The Central Bank of Ecuador has lowered the country’s growth forecast to 1.9% from 4.1% for 2015. Central Bank Director Mateo Villalba, said that the downgrade was the result of lower oil prices and a strong U.S. dollar, which Ecuador uses as its national currency. He said that the growth figure is based on a $45 per barrel price for oil, lower than the current price of $57.