‘Tax simplification’ bill passes National Assembly, awaits presidential approval

Dec 10, 2019 | 3 comments

Advertised as the “tax simplification” law, legislation to reduce taxes on some products and services and raise them for others easily passed the National Assembly Monday. The legislation, which contains many of the items in the government’s economic reform law rejected by the Assembly last month, goes to President Lenin Moreno for his signature.

The National Assembly.

The law eliminates the 12 percent VAT tax on a wide range of products and services including small tractors, insulin pumps, pacemakers, glucose test strips, web hosting, artistic and cultural events and some craft beer products. It also eliminates the special consumption, or luxury tax (ICE), for electric vehicles, some agricultural products and services and frozen foods.

In a change sought by business lobbies, the new law eliminates the advance income tax, which required some businesses to pay taxes in advance based on income estimates.

The legislation increases taxes progressively on internet services such as Netflix, post-paid mobile phone service and assesses a special three-year tax on companies earning more than one million dollars a year.

For individual tax payers, the law eliminates personal expense deductions for those reporting more than $100,000 in annual income.

The legislation passed the Assembly overwhelmingly with 83 votes in favor and only eight votes against. There were 37 abstentions.

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