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Investment & Legal Framework
The Ecuadorian CONELEC and the South Korean
KOSEP after signing an agreement
Source: CONELEC
Ecuador is a country that is open to national and for-
eign investment. It is proven by numbers: production
assets of private companies have grown to 2200 mil-
lion US dollars over the last five years.
The new legal framework developed by the Nation-
al Government is striving to create conditions that
would lead to further increase of private investment
in Ecuador. According to the Production Code, there
are various incentives of both general and specific
character incorporated in the legislation.
General Incentives
1. Progressive reduction of the Income Tax rate from
25% to 22%. One percentage point per year.
2. Exemption from payment of the minimum tax for
expenditures associated with a new employment,
salary increase, acquisition of new assets aimed at
increasing production and technology, encouraging
cleaner production and with other incentives of this
code.
3. Exemption from payment of the minimum tax for
new companies during first 5 years.
The progressive reduction by three points of the In-
come Tax places Ecuador between countries with
the lowest Income Tax rate of the region. In addition,
those companies that reinvest their profits can ben-
efit from a ten-point reduction of the tax imposed on
a total amount of reinvested profits.
Specific Incentives
The National Government has prioritized sectors
that contribute to the change of the production ma-
trix of the country.
There has been proposed a total Income Tax as well
as Minimum Tax exemption for any new investment
in these sectors.
Another objective of the production policy is to en-
courage the Green Production, improve the produc-
tivity of companies and boost their access to inter-
national markets. For this, there have been planned
Investment climate
in the country and
its legal framework
different fiscal incentives that would allow tax de-
ductions in case of a rent or a purchase of new eco
efficient machinery or of expenses associated with
innovation, encouragement and promotion of export
activities.
It is necessary to take into consideration that current-
ly there is already a number of important incentives1,
such as a 10% reduction of the Income Tax rate on
profits that are reinvested in production assets and in
innovation and development, and that dividends can
be distributed without any deductions.
The Code also anticipates creation of economic
zones for development associated with technology
transfer and industrialization in order to boost export
and export of logistic services. These zones have
important additional benefits such as duty and tax
exemptions for the national aggregated value of ex-
ported products.
Ecuador is open for
national and foreign
investment
The environment is favorable for investment in Ec-
uador. The National Government is interested in at-
tracting investments that, apart from being profitable,
are also responsible: that fulfill their tax obligations,
as well as responsible and fair with their workers,
environment and the society in general.
There are different guarantees for investment in Ec-
uador. The Production Code creates different alter-
natives and economic incentives that haven’t been
provided before by any other investment treaty. In
general, all regulations that form part of different
investment treaties are included in the Production
Code.
Chapter Source:
Coordination Ministry of Strategic Sectors
1. www.mcpec.gov.ec