Ecuador has gone through the first month of Guillermo Lasso’s presidency and, as our partner specialist in Tax Law, Andrea Moya, says for LexLatin, “the basis of his administration have been established”. If we consider the benefits that were created during the last two governments with the proposals of the new president, and the return to ICSID, the outlook is very interesting for foreign investors.
CorralRosales is going through a moment in which a large number of foreign companies are requesting advice on investments in Ecuador and on Mergers and Acquisitions. It is important to know the incentives available if you want to invest in Ecuador and the different mechanisms to protect such investment.
Andrea points out that the most important tax benefits are the exemption from income tax (25%), which can be for 8 years or even 12 years, depending on the location of the investment, and the exemption from outflow tax on the import of commodities and capital goods necessary for the project.
It is also essential to know the scope of the investment contracts that may be entered into with the Ecuadorian government. These instruments allow to protect the investment, agree arbitration, and maintain immovable the applicable benefits, despite any subsequent legal reform.
In order to sign this contract, there is a fundamental requirement: the investment must be at least US$1 million and US$250,000 of this amount must be executed in the first year.
However, the most important thing to attract investments to Ecuador is to undertake a comprehensive reform to the tax and labor regimes.