The Ecuador Assembly has debated and approved some of President Rafael Correa's tax reform package as amendments to the Tax Equity Act, including the raising of Capital Outflow Tax from 1% to 2%.
The Capital Outflow Tax would be applicable to all amounts remitted abroad in excess of USD500, which are not deemed to be payments for imports of raw materials and other commercial inputs and capital goods. The Assembly amended the maximum amount remittable tax-free by non-residents to USD1,000.
Other revenue raising measures included imposing VAT at 12% on newsprint, which was previously exempt, and the elimination of Advance Corporate Tax refunds; in future the advance tax would be paid as a "minimum tax."
The Assembly threw out a proposal for a Special Consumption Tax (ICE) on cigarettes, alcoholic beverages and soft drinks and another proposal to discontinue the zero rate VAT status applicable to qualifying small businesses with turnover of less than USD60,000.
Director of the Internal Revenue Service, Carlos Marx Carrasco, had announced in mid-November that Ecuador planned to increase overall tax revenues by 12% in 2010.
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