Ecuador- Tag Archives - Business News and Updates

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Changes to Accounting Obligations in Ecuador During COVID-19

by Accounting Team Ecuador | May 22, 2020

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. President of Ecuador Lenin Moreno has announced economic measures focused on outlining the financial steps to sustain business and the economy during the pandemic. 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 spendingThe 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...

What is a Corporate Compliance Officer for an NGO in Ecuador?

by Legal Team Ecuador | May 12, 2020

Owners of a Non-Governmental Organization (NGO) must appoint and register a Compliance Officer in Ecuador according to local corporate regulations. Non-Governmental Organizations in Ecuador, beyond having to comply with specific requirements for the operation of their activities locally, are also considered obligated subjects before the Financial and Economic Analysis Unit of Ecuador (Unidad de Análisis Financiero y Económico - UAFE). This regulatory body is the one in charge of identifying and regulating companies or organizations whose activities could become directly related to money laundering and/or crime financing in the country. For this reason, NGOs, like other entities, must comply with the process of registration and compliance with obligations, controls and reports to the UAFE. Part of this includes working with a Compliance Officer in Ecuador. What is a Compliance Officer in Ecuador? It is necessary to register a main Compliance Officer in Ecuador, plus an alternate. A Compliance Officer, according to the UAFE, is defined as a managerial level official responsible for complying with Ecuador’s regulations regarding the prevention of money laundering and financing of crimesexecuting the compliance program aimed at preventing the NGO from being used to carry out these illegal activitiesensuring the implementation of the procedures, controls and good practices necessary for the prevention of money laundering and the financing of crimes. Note that it is necessary to register a main Compliance Officer in Ecuador, plus an alternate. This applies whether the entity is...

Simplified Shares Company (SAS) in Ecuador: A New Opportunity to Do Business

by Legal Team Ecuador | Mar 28, 2020

Ecuador is promoting business in the country by introducing a new legal entity, the Simplified Shares Company, or SAS (Sociedad de Acciones Simplificadas). On February 28, 2020, the new Law of Entrepreneurship and Innovation came into force in Ecuador. This law is a very important advance in Ecuadorian legislation and is accompanied by the implementation of a series of new regulations in the field of business promotion in this country. Among the most important points of this law is the creation of a National Council for Entrepreneurship and Innovation to support commercial development in Ecuador, and to promote entrepreneurship education and culture. However, the most striking point of this new law is that it establishes the opportunity to form a new legal entity, the SAS in Ecuador. This follows in the footsteps of countries such as Uruguay and Colombia, who have established the same entity in the name of business growth. What are SAS Simplified Stock Companies and what is their creation process? Simplified Stock Companies (SAS) are a type of company whose shareholders are held liable up to the amount of their respective capital contributions to the entity only. Shareholders can choose to waive this limitation to insure with their own assets any operation of this type of entity. It is important to mention that the SAS in Ecuador cannot not be listed on the stock exchange. The SAS is constituted by means of a private document that will be registered in a new Registry of Companies by the Superintendence of Companies. Additionally, SAS entities do not have a minimum capital...

Opportunities for E-commerce Companies in Ecuador

by Legal Team Ecuador | Mar 26, 2020

The use of mobile devices and social networks have increased the usage of e-commerce sales methods and online purchases in Ecuador, presenting a great opportunity for businesses in the world of online sales. The dynamics of buying goods have changed; consumers can now make different purchases on the internet through e-commerce platforms. Ecuador is no exception to this rule. The use of mobile devices and social networks has made this practice to continue growing, according to a report by the Ecuadorian Chamber of Electronic Commerce (Cámara Ecuatoriana de Comercio Electrónico, CECE). In 2017, online transactions generated US 800 million in the Ecuadorian market. 35% of these transactions were made by regular users purchasing items in a virtual store. Learn the opportunities for e-commerce companies in Ecuador’s evolving retail and services markets. Ecuadorian e-commerce consumer profile and online shopping preferences Understanding the preferences and needs of the online consumer helps companies build a clear and effective sales and loyalty strategy for their online commerce platform. The following statistics show the profile of the online shopping market in Ecuador: Ecuador is the fourth country with the most Internet users in South America, with approximately 13.5 million (80% of the population). Ecuador is the fourth country with the most Internet users in South America, with approximately 13.5 million (80% of the population).64% of the Ecuadorian people use their mobile devices to connect to the Internet, but 41% use a desktop PC or laptop to make...

Update on Ecuador Taxation and Accounting Compliance

by Accounting Team Ecuador | Mar 21, 2020

Understand crucial reforms of Ecuador’s taxation and accounting compliance regulations, and what should be expected for the year 2020 on Ecuador’s tax front. The country's President Lenin Moreno is trying to reform the economy and improve the business environment with the help of the International Monetary Fund (IMF). An important part of these attempts was a major tax reform at the end of last year. 18 tax reforms were implemented between 2007 and 2017. What were the effects on Ecuador's tax system and how does it look now? Timeline of changes in Ecuador’s taxation and accounting compliance The elimination of the advanced payment of income tax as a minimum income tax and the elimination/reduction of the foreign currency exit tax is what the business sector calls for the most. President Rafael Correa, who had his presidential term from 2007 to 2017, announced from the beginning of his campaign that his intentions were to remove inequalities, distribute wealth and achieve social justice. He also sought to eliminate commercial activities connected with tax havens. As Ecuador is a dollarized economy, it was not an option to use an exchange rate policy as a tool to balance public finances. This led, in 2012, to the creation of the controversial foreign currency exit tax. In order to support investment in national production, encourage the use of environmentally friendly technologies, support strategic economic sectors and encourage job creation, the government issued the Organic Code of Production, commerce, and investments in 2010. The Moreno government The Moreno...

Steps to Forming an LLC in Ecuador

by Legal Team Ecuador | Mar 7, 2020

Find out the steps to forming a Limited Liability Company (LLC) in Ecuador. In Ecuador, this legal entity structure is known as Compañía de Responsabilidad Limitada. Over the last few years, Ecuador has become more attractive to foreign executives expanding into the region. Its strong stable economy due to decreasing corruption, the Ecuadorian government has become more stable, natural resources of the country, use of US dollars and many other factors. Therefore, knowing what type of company to start is important. As a foreign company looking for new business opportunities in Ecuador, consider forming a Limited Liability Company. In general, forming an LLC in Ecuador is much easier to set up than many other types of legal entities, and it offers more flexibility and defense for the vulnerability of the company. Forming an LLC in Ecuador: Compañía de responsabilidad limitada (Cía. Ltda) The Compañía de Responsabilidad Limitada (Cía. Ltda) is the equivalent entity to an LLC in Ecuador. This is a business structure whereby the owners of the business are not personally accountable for the company’s liabilities or debts. A Limited Liability Company is a business structure whereby the owners of the business are not personally accountable for the company’s liabilities or debts. The LLC in Ecuador is similar to the characteristics of a regular corporation, but the way of taxation is very different. LLCs do not pay taxes, instead of paying taxes their profits and losses are listed on a personal tax list returns of owners. If fraud is recognized or the company is not fully...

5 Tips for Following Business Etiquette in Ecuador

by Legal Team Ecuador | Mar 2, 2020

Gain key insight into business etiquette in Ecuador to integrate smoothly into the country’s commercial culture and make crucial inroads with clients and partners. When expanding your company to a foreign country, it is essential to understand local business etiquette and culture. According to the Hofstede analysis, Ecuador is very similar to other Latin American countries in terms of etiquette. However, there are some unique traits in Ecuador to keep in mind when conducting business. Understanding the values of your Ecuadorian partners builds a solid foundation for lasting work relationships. What influences business etiquette in Ecuador? Ecuador has a rich culture, history, and vast biodiversity. Ecuador is made of 4 geographical regions: the jungle, highlands, coast, and islands. Oil is the most important industry in Ecuador, experiencing a significant economic boost during 2007-2014 due to its production in this sector. The economy is growing to some level but it is a country that has experienced social, political, and economic challenges that impact the country's business environment.The majority of the population in Ecuador lives in the central regions of the country such as the Andes mountains or on the coast of the Pacific Ocean. In terms of demographics in Ecuador, it has 17,554,304 inhabitants, with the majority living in the center regions such as the coast or the Andes mountains. There are also about 100,000 American and 30,000 European expatriates living in Ecuador, many of whom moved to the country for business opportunities. The Labor Force Participation...