“A great number of laws does not make a nation better. On the contrary, the proliferation of laws is a symptom of disorder and underdevelopment. There is a good need for a legislative moratorium so that the National Assembly can fix the legal chaos by codifying the fundamental laws for social coexistence, among which, without a doubt, are the tax laws”.
That’s how our partner Francisco Rosales begins his article for Gestión Magazine. He offers his opinion on the lack of a legal framework in Ecuador to provide confidence to the investor. From his point of view, “A fundamental element for the development of a country is its legal framework; it must be clear, orderly, stable and consistent. And, along with it, an enlightened, timely, autonomous and trustworthy administration of justice”. Unfortunately, Ecuador does not have it.
Tax laws become essential within the legal framework. Rosales adds that “in the last 14 years, between 2007 and 2021, 28 tax reforms have been enacted in Ecuador containing a plethora of laws and changes that have created monumental chaos complicating the already serious economic situation we are experiencing.”
Ecuador is currently in need of sustained economic growth of at least 5% per year for the next 20 years, but this projection does not seem to be happening today.
The Legislative Chaos
In the words of Rosales, on top of the norm that applies to dividends paid by companies domiciled in the country, “we have to add the regulations of the Internal Tax Regime Law and the hundreds of general resolutions issued by the Internal Revenues Service.
The Legislature Assembly of the country has failed to fulfill one of its fundamental functions, that is: “Mandatorily Issue, codify, reform and interpret laws.” “In turn, Article 31 of the Organic Law of the Legislative Function carries out its obligation to codify the laws by ruling that the Plenary of the Assembly may request that the Legislative Technical Unit carries out the obligation to codify the laws by ruling that the Plenary of the Assembly may request that the Legislative Technical Unit prepares the codification of certain laws, send it to the respective permanent commission, and that, with its report, the plenary, in a single debate, approve the codification and that the president of the plenary orders its publication in the Official Registry”, concludes Rosales.