Inclusion of freight in the calculation of customs duties

From the enactment of the Organic Law for Economic Development and Fiscal Sustainability (“LODES“), published in Official Gazette Supplement 587 of November 29, 2021, freight was excluded from the calculation of the taxable base for customs duties.

However, Article 6 of Decision 571 – Customs Value of Imported Goods of the Andean Community (CAN) establishes that the customs value of the goods must include the transportation costs to the port or place of import. Therefore, the legal provision that excluded the freight cost is contrary to CAN communitarian legislation.

After several requests from Ecuador before the CAN, on March 16, 2022, Decision 894 was issued by which member countries were allowed to reduce a percentage of the transportation and/or related expenses from the taxable base for the calculation of customs duties until December 31, 2023. Decision 894 established that this period could be extended for an additional year if agreed by the member countries.

To date, there has been no extension of the exclusion period. Neither the Foreign Trade Committee (COMEX) nor the Customs Authority (SENAE) have issued a statement regarding the application of the legal provision included in the LODES as of January 2024.

In this scenario, the urgent draft of the “Law for Economic Efficiency and Employment Generation”, currently in process in the National Assembly, provides for the reinstatement of freight costs for the calculation of the taxable base of customs duties.

The reinstatement of freight costs for the calculation of the customs value of goods will increase the value to be paid for foreign trade taxes such as customs duties, the Child Development Fund (FODINFA) and the Value Added Tax (VAT), among others.

In the following link you can review the complete text of the Resolution:
DECISION 894

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