Learn how Ecuador has modified some of its accounting obligations for companies due to the current situation and economic uncertainty facing the country.
Ecuador, like many other countries, has been affected economically, politically and socially by COVID-19. However, despite the current situation and existing restrictions, companies operating in the country have continued their commercial activities and must comply with the accounting obligations established by the government.
The Ecuadorian government has taken a series of measures and issued important resolutions on accounting obligations in Ecuador in order to support entrepreneurs and prevent them from going bankrupt.
Economic measures in place
During the last months, President of Ecuador Lenin Moreno has announced economic measures focused on outlining the financial steps to sustain business and the economy during the pandemic.
These measures include:
- US$4 billion reduction in public spending
- The single tax on vehicles with an appraisal greater than US$20,000 must pay a contribution of 5% of the appraisal value.
- Creation of a fund for loaning to small and medium-sized companies at 5% interest, with a 3-month grace period and a 36-month term.
- Merge the Ministries of Telecommunications and Transport
Additionally, Lenin Moreno announced that Ecuador received an international collaboration for around US$60 million as exclusive funds to face the needs that have arisen with the emergency of COVID-19 in the country.
Changes to accounting obligations in Ecuador
On the other hand, some government entities in Ecuador have announced additional measures in order to reduce the impact of the pandemic for companies in Ecuador.
On 17 May, it was announced that the tax payments for the months of April, May and June will be deferred for 6 months.
The government is working with control authorities, the public, private financial system and cooperatives to alleviate the payments that should be made in the next six months.
According to the International Financial Reporting Standards (IFRS), the “operating business principle” concept outlines the ability of a company to continue operating.
In the wake of the global economic crisis caused by COVID-19, companies in Ecuador must include and present the information on the “going concern principle” in their financial statements for the year 2020. The objective of this measure is that companies can notify to the government about its current situation and report on the impact and damages suffered as a result of the pandemic.
The Internal Revenue Service, through Resolution No. SRI-SRI-2020-0002-R, announced an extension of 30 days to the deadline for filing tax annexes that were to be filed in March and April 2020 by companies operating in Ecuador. This has generated peace of mind for the companies, since every year in April the Income Tax declaration is made with the results of the company’s operations during the previous year (2019).
Furthermore, the Superintendency of Companies, Securities and Insurance (SUPERCIAS), through resolution SCVS-INPAI-2020-00002715, ordered an extension for the delivery of financial statements of the companies. These financial statements for the year 2019, will have an additional term of 30 days that will be counted from the expiration date of the original term.
Seek help from local experts to meet your accounting obligations in Ecuador
During these times of crisis and uncertainty, it is important to partner with a local expert who can help you meet your accounting obligations in Ecuador.
The accounting team at Biz Latin Hub can provide you with the tax, accounting and financial advice that your company needs. Additionally, it can provide advice on how to take advantage of the measures announced by the Ecuadorian government to benefit and protect your company and operations in the country during this period.
If you want to get advice that meets your needs in the country, Contact us today to find out more about how we can support you.
We will provide you with personalized services and options to protect your business during times of crisis.
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