Economy & Business - July 2021

ECUADOR: Lasso’s planned tax reform likely to be diluted

After only recently passing a tax reform in December 2019, Ecuador is once again bracing itself for a new tax changes, which analysts argue is necessary to ensure long term fiscal sustainability as oil revenues progressively decline. During his election campaign, President Guillermo Lasso promised that his government’s tax reform would raise revenue by broadening the tax base and cracking down on evasion. The need to gain the support of a left-leaning congress, however, has led to the government indicating that the reform will also increase the tax burden on the wealthy. Nonetheless, an ambitious tax changes are not to be expected due to political factors and an improved outlook for public finances, which will reduce the urgency of comprehensive reform.

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