To give a push to the economy and production sectors in the provinces of Manabí y Esmeraldas affected by an earthquake this past April, Ecuador has passed a Solidarity and Citizens Co-Responsibility Law. Among other provisions, the law grants tax benefits to investments in production in the affected areas, as follows:

  • Exemption from Income Tax for five years to new investments in the provinces of Manabí and Esmeraldas. For the tourism sector, the incentive can be extended for twice that time. Such investments must be implemented within the three years following entry into effect of the law.
  • Exemption for one year from the Tax on Remittances of Foreign Currency (ISD) and duties on imports of capital goods not produced in Ecuador that are for use in Manabí and Esmeraldas.
  • Exemption from payment of the balance on Income Tax for the year 2015 for affected taxpayers.
  • Reduction of the amount of the advance payment of Income Tax for the years 2016 and 2017, for financial system entities, on income obtained from granting credits allocated to the affected areas.
  • Condoning of interest and penalties on tax obligations for persons affected.
  • Exemption from taxes administered by the Decentralized Autonomous Governments on real property partially or totally destroyed.
  • Exemption from tax on donations to persons affected by the earthquake.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.