Republic Of Opportunities

General Incentives_

Ecuador grants an incentive package to attract investment, through the Organic Code of Production (Copci in Spanish) and the Organic Law of Incentives for Public-Private Partnerships and Foreign Investment (APP in Spanish).

The Organic Code of Production (Copci in Spanish) provides incentives for foreign investors and for foreign public investment. Its objective is to regulate the productive process of the stages of production, distribution, exchange, trade, consumption, management of externalities and productive investments directed to the Buen Vivir (Good Living). The main benefits provided by the Code are:

  • Equality of conditions and protection for national and foreign investors and investments.
  • Protection of Investors Property
  • Prohibition of all forms of confiscation.
  • Freedom of production, commercialization, import and export of goods and services in accordance with the provisions of the National Constitution of Ecuador, laws and regulations established by the current legislation.
  • National and foreign investments are subject to the same Tax Regime.
  • Subscription of investment contracts that provides stability to tax incentives
  • Free transfer of profits abroad and investment (once the tax obligations and other responsibilities have been fulfilled, according to what the legal regulations establish)

The Organic Incentive Law for Public-Private Associations and Foreign Investment (APP in Spanish) grants private companies, national or international, that are associated with the State, the tax treatment of a public company. The APP Law (The Organic Incentive Law for Public-Private Associations and Foreign Investment) corresponds to projects in which a public entity delegates the execution and management of general interests services, which are under its responsibility (attribution) to a private entity. The main benefits granted are:

  • Exemption of foreign trade taxes for materials or equipment used in infrastructure.
  • Exemption of 10 years of Income Tax from the first year of operation.
  • Exemption of currency outflows (5%) on imports, financing and dividend payments.
  • Encourage the deposit of capitals that comes out of Ecuador to the national financial system, by the earning of the income produced by the capital and its retirement without paying taxes.
  • Legal stability on the fundamentals aspects of the investment development and applicable incentives
  • Exemption of Value Added Tax (IVA in Spanish) on imports related to the project.

Investment incentives for areas affected by the earthquake

Productive Investments_

Exemption for 5 years of Income Tax (IR in Spanish), while in the tourism sector the exemption will be up to 10 years (incentive applicable to investments made until May 2019)

Financial Entities_

Exemption of income taxes in the years 2017-2018, on the incomes attributable to credits granted (in 2016-2017) for affected areas. For the determination of the advance payment of 2017 income taxes, the income attributable to the credits described above will not be taken into account.

Discount to the advanced payment of the income taxes value of 2016, in proportion to the amount of credits granted from April 16, 2016 until December 31 of the same year.

Taxes on foreign trade_

Exemption of currency outflows (ISD in Spanish) and Customs Tariffs for imports in favor of taxpayers who have suffered an economic impact on their productive assets (that aren’t produced in the country), destined to productive processes or to the services provision.

Incentive to financing_

The Ministry of Finance, with the resources obtained through solidarity contributions, may pre-cancel investments, invest or transfer those resources in favor of financial and non-financial public entities.