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New Law for Production Promotion approved by the Assembly includes International Arbitration.

Quito, June 28th, 2018.- On June 21st, the Law for the Promotion of Production, Attraction of Investments, Generation of Employment and Stability and Fiscal Equilibrium was approved. This law prioritizes issues for support to small and medium enterprises through the remission of interests, support to the agricultural sector and the limit to the indebtedness of the State. Additionally, it includes the Reduction of the Tax on Special Consumption (ICE) to the induction cookers, exemptions from the Value Added Tax (VAT) to the electric vehicles of load and zero VAT for the bodies of armed electric buses in the country. 

In the axis of investments and exemptions, it is worth highlighting the incorporation of international arbitration which is positive since it is an incentive for large investors, despite the government's rejection of this figure in recent years. Once the National Investment Policy has been issued, the State ensures national or regional arbitration mechanisms for contracts that exceed $ 10 million.

On the other hand, 12 years of exemption from Income Tax (IR) will be applied to new productive investments outside of Quito and Guayaquil, and in these cities the benefit will be for 8 years. Among other achievements we can find: 

  • Investments in the industrial, agroindustrial and agricultural sectors exempt the IR for 10 years.
  • In basic industries it will be for 15 years and in border cantons it will reach 20.
  • The foreign exchange exit tax (ISD) is exempted from investors who sign investment contracts when they import capital goods and raw materials that are not available in domestic production.

It is important to clarify that it is still a bill, at this time it is for the presidential veto. However, it is a big positive step towards attracting investments.  

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