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Ecuador Resets Limits on Wire Transfers, Adds New Taxes

Article Summary:

Ecuadorians who make wire transfers of up to $1000 will now be taxed on these operations. Prior laws exempted amounts under $1000, but government estimates show close to $40 million in tax payments were avoided by customers who made wire transfers below this threshold.

Photo Credit: El Comercio

Original Article Text From El Comercio via Google Translate :

Adjustment to Tax Foreign Exchange Outflow

From next week, Ecuadorians will make only two transfers of up to $ 1000 per month. The levy will weigh in excess of what the database. This was announced by the director of the Internal Revenue Service (IRS), Carlos Marx Carrasco, who argued that the resolution “has a strong ethical” and is based on the fact the “bad practice” by several contributors that have damaged the Treasury by about $ 40 million.

So far, the operations of up to $ 1000 were exempt from paying taxes to the outflow of foreign exchange (ISD). That, according to the official, which led to certain taxpayers slicing up significant amounts of money up to $ 1000 or less to avoid paying the tax.

For that reason, the measure will start operating once published in the Official Gazette, scheduled for the next eight days. This, despite the fact that Carrasco, several weeks ago, in an interview with this newspaper, said that tax reforms were not covered until later this year.

So, after learning of the decision of the SRI, reactions were immediate. For the entrepreneur Francisco Acevedo, on one hand, it is understandable because in general everywhere, taxpayers will always find ways to try to pay the least amount of tax possible. But on the other hand, considers that the tax authority itself is partly responsible for these practices to prioritize the collection of the stimulus.

“Changing rules permanently and not listen to the views of the private sector may be this type of situation. When posed ISD increased from 2 to 5% at the end of last year, we warned that it would be a bad decision. ” However, Carrasco thinks otherwise.

Ensure you are complying with the objective of controlling the outflow of foreign exchange, since in their statistics is found that in the first half of this year and there is a lower tax base (see chart).

For the auditor of a textile company, Damian Arteaga, the problem remains the unexpected change of rules. “They definitely do not give advertisements tranquility in the execution of our medium-term policy, because this measure is not bad, but because the name of ethics could be changed tomorrow other tax obligations.” T

hat contrasts with what the auditor says Manuel Bahamonde. For him, the corrections have to be made on the fly. “It’s fine. If evasion cases have to banish them. The only problem I see is that this can affect people who really make money short transfers during the month. ”

Indeed, for the systems analyst Fabricio Torres, the question is what will happen to the transactions, such as Internet shopping. “I like to buy music. ? I can buy only two songs from USD 0.99 per month, and the rest I can pay the ISD or exempt purchase as many songs to exceed the limit of $ 2000? “.

In theory, the tax advisor Gonzalo Figueroa, the multiple of USD 1000 is one that defines the action. That is, only when transactions spend USD 2000 per month, the excess will be taxed on the ISD, regardless of the number of transactions is made.

“For example, as I play, if a family sends abroad weekly USD 200 (USD 800 per month), it would not be taxed despite having done four operations and not two.” Viewpoint Mario Prado. Tax Analyst ‘You might see a parallel market’ The ISD is difficult to control. With this rule announcing the SRI is to eliminate distortion.

However, there is a risk and in the worst case scenario can be given desbacarización economy. Let’s say, for not paying the tax, could create an informal market and that would be the worst. That is, a person who makes a purchase online and use the local credit card, you should pay the ISD.

But what if there is a company that brings you the product, with a cost and a cash payment. That’s the problem with this tax. Pablo Aguirre. Tax Specialist

‘The SRI is attached to the Act, tax havens’ Since last year, the IRS collected information on the shareholders of the Ecuadorian companies. Then, you probably found that there are many companies whose shareholders are located in Florida and said it is important to clarify the rule on tax havens.

In itself, the IRS is acting attached to legislation that defines what a tax haven and lists. Now, the eye, the rule clearly states that this is not the only list and there could be the mistake of taxpayers who thought he was just attached to it. They will say that the rule is retroactive, but that is not so.

Link to Original Article:

From El Comercio

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