Ecuadorian Government would collect taxes from OTTs

From 2020, Ecuadorian Government analyzes to tax digital platforms, with the aim of raising its tax collection by 1.5% of the Gross Domestic Product (GDP). The proposal, which came up after an agreement with the International Monetary Fund (IMF), will be sent to the National Assembly in order to be discussed and approved in the last quarter of the year, and has an advance of 85%, according to Fabian Carrillo, Ecuadorian Economy and Finance Vice Minister.  

According to Carrillo, incomes from taxes to OTTs could be the same as the one estimated by the Economic Commission for Latin America and the Caribbean (ECLAC) in the report “Fiscal Panorama of Latin America and the Caribbean (2019)”. The document mentions that if Ecuador imposed the Value Added Tax (VAT) on digital services, annual collection would rise to USD 11.2 million per year.

At a regional level, three of 16 countries already apply VAT to this type of services (Argentina, Colombia and Uruguay), while, according to the ECLAC report, Chile and Costa Rica also evaluate doing it together with Bolivia, Mexico and Peru. “These are options that should be considered, because they allow equal conditions in the market with other companies that are providing services and are domiciled here, which fulfill labor and tax obligations’, said Carrillo.