2024-02-14 07:05:12
The reform will raise more than USD 1.9 billion in the first two years of validity.
The president, Guillermo Lasso, sent the Organic Law of Economic Development and Fiscal Sustainability to the Official Registry on Monday, November 29, 2021, after coming into force by the ministry of law. The tax reform will be published in the Official Registry today, at 5:00 p.m. and, with this, it will come into force, reports Hugo del Pozo, director of the entity.
The tax reform will generate more than USD 1.9 billion in new tax revenues for the State in the years 2022 and 2023. The new law establishes that those who have income of more than USD 2,000 per month must n pay more Income Tax. In addition, it establishes a contribution from those who have assets of USD 1 million or USD 2 million if they are in a marital partnership.
The law also reduces and eliminates taxes for certain goods and services such as feminine hygiene products and cell phone plans. In addition, the tax reform establishes that companies with assets greater than USD 5 million will make a solidarity contribution of 0.8% for two years. This tax reform also eliminates the current regime for microbusinesses, which will be replaced by a new regime for entrepreneurs and popular businesses. The main changes of the tax reform are:
TO). Who pays more IR The new law establishes an increase in the Income Tax (IR) starting from a certain threshold of annual income. According to the Ministry of Finance, “those who have the most will pay more and those who have the least (income, ed.) will not be affected.” The law contemplates a “minimum increase” in the IR, starting with those who have monthly income of USD 2,000 per month.
These people will pay an average of USD 28 per month or USD 336 per year. Until now, these taxpayers pay USD 13.05 per month or USD 156 annually for Income Tax. That is, the amount to be paid is doubled.
Those with annual income of USD 25,000 (or income of USD 2,083 per month) are in the tax bracket between USD 21,630 and 31,630, which means they will pay a 15% tax on their annual income. But the increase in the payment of Income Tax will be more noticeable among those who have annual incomes greater than USD 31,630, or USD 2,635 per month and above.
The current tax law establishes that personal expenses in areas such as health and education could be deducted from the total annual income. But the new law establishes the elimination of the declared expenses of natural persons, but in exchange there will be a tax credit.