16- May- 2011
IVA/ICE/INCOME REFORMS SINCE 80´s
In the 70´s, the discovery of petroleum in the Ecuadorian Amazonia and its exportation the productivity of thecountry increased quickly. The price of the petroleum and the stability developed in inflation. The income per capita increased; therefore, the collection of taxes increased too. But in the 80´s, therewas a great fiscal reform which was the determinant factor to the restructuration of the tributary system. The system used to tax on natural persons was made of nine intervals that varied from 10% to42% but the intervals were adjusted to the minimum wage. And for juridical persons the tariff was 20% for the national companies and 40% for international ones.
In 1989, the system was changedfor a set of tariffs that varied from 10% to 25 in only five intervals or brackets. And for juridical persons the tariff was standardized to 25%. In this reform also was created the down payment whichwas 50% of the previous year. In the 90´s, Ecuador suffered a lot of economic shocks like the war with Peru, the “Niño”, low prices of petroleum and politic instability that damage the economicdevelopment. This disaster concluded with the worst economic crisis in 1999 that forced to an expansion of the fiscal apparatus increasing the number of taxpayers and the control of tax obligations.
In1993, the calculus of the down payment changed to 1% over the total value of the assets declared in the previous year. Its purpose was to have more control over the taxpayer’s contributions. In 1999,the income tax was replaced temporarily by the ICC or the Capital Circulation Tax, leaving without effect the last down payment reform. This tax levied 1% to all the national movements of capital until2000, and subsequently with a tariff of 8% until November 2000, when it was eliminated. In 2007, the income tax is reformed with the “Ley de Equidad Tributaria” published in December 29th. In this...