Ecuador: New ISD exemption provides credit opportunity

Ecuador: New ISD exemption provides credit opportunity

An amendment provides a tax exemption for outbound payments arising from direct credit, credit lines, or deposits. These remittances are not subject to the “capital outflow” tax (Impuesto a la Salida de Divisas—ISD) when the funds come from international financial institutions or specialized non-financial entities located in a jurisdiction or country that has been “qualified” or approved by the Superintendence of Banks, Ecuador (SBE).

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The amendment—published in Ecuador’s official gazette No. 567 (18 August 2015)—provides new opportunities for SBE-approved foreign financial institutions or specialized non-financial entities to grant credit to Ecuadorian financial institutions.

New measures

Financial entities operating in the Ecuadorian financial system will benefit from the ISD exemption when the payment resources originate from an SBE-approved international financial institution or specialized non-financial entity. The ISD exemption will apply to payments arising from direct credit, credit lines or deposits beginning 5 May 2015.  The exemption, however, is not available with respect to payments that are in excess of the interest rate, measured with reference to the active interest rate on the date of the credit disbursement.

To be eligible for the ISD exemption, the following requirements must be satisfied:

  • The funds must be received as direct credits, credit lines, or deposit. 
  • Direct credit operations, credit lines, or deposits must be registered with the Ecuadorian Central Bank. 
  • The term of direct credit, credit lines, or deposit are not to be shorter than one calendar year.
  • The funds must be directed towards financing the following segments:  Retail micro-credit (up to US $3,000); simple accumulation micro-credit (US $3,000 - $10,000); expanded accumulation micro-credit (greater than US $10,000); corporate productive credit (greater than US $1 million); business productive credit (US $200,000 - $1 million); SME productive credit (less than US $200,000); priority commercial credit; public interest housing credit; and credit relating to the liquidity requirement for the entities.

 

For more information, contact a tax professional with KPMG’s Americas Center:

Devon Bodoh | (202) 533-5681 | dbodoh@kpmg.com

Alfonso A-Pallete | (305) 913-2789 | apallete@kpmg.com

 

Or contact a KPMG tax professional in Ecuador:

Gino Erazo | (593) 4 - 229-0697 | gerazo@kpmg.com

Karina Rubio | (593) 4 - 244-4225 | krubio@kpmg.com

 

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