ECUADOR A smart investment option Video
INDEX • Ecuador´sFacts • EcuadorianEconomy • Ecuador´s Incentives forinvestments
ECUADOR: Interesting Facts
ECUADOR Ecuador High-value Strategic and Geographical Position
ECUADOR Fast Facts History: Divided in four stages: - Inca - Colonization - Independence - Republican Stages have marked the government structure and created new public policies for steps towards democracy and equality. Location: Western South America, bordering the Pacific Ocean at the Equator, between Colombia and Perú. Ecuador lies between latitudes 2°N and 5°S, and longitudes: 75° and 92° W. Area: 109.483 square miles (283.561 square kilometers) Population: 15,007.343 (July 2011 est.) Growth rate: 1.4% Capital: Quito
ECUADOR • Geography: Crossed by the Equator line and The Andes Mountains, both of which boost its geographical advantages: • Four different worlds in one: • The Galápagos Islands, one of the biggest laboratories in the world. • The Coast, where world renowned quality products are grown, amongst others bananas, cacao, tuna and shrimp. • The Andes, with its different climates favours the growth of exceptional products, like our national icon: roses • The Amazon,one of the world´s most mega diverse zone per square kilometer. • Climate: 12 hours of direct equatorial daylight 365 days a year. Climate in the regions varies because of location.
ECUADOR Interesting facts
Trade Ecuador - Israel Soure: Banco Central del Ecuador
Main exports products Source: Banco Central del Ecuador
Main imports products Soure: Banco Central del Ecuador
ECUADOR: Our Economy
Important economic growth Source: Banco Central del Ecuador
Stable economy growth Rate of GDP growth - 2011 (percentages) The growth rate achieved by the country in 2011 ranks third in Latin America. Also, Ecuador register an annual economic growth of 4.8% at the first quarter of 2012. Source: World Bank Data Bank, Referencial data
Unemployment rate in Latin America Unemployment rate(December 2011) Percentages Source: INEC
Dynamic non-oil exports Millons US Source: Banco Central del Ecuador
Non-oil Exports 1 2 3 4
Main Export Markets Source: Central Bank of Ecuador
Government Debt Ecuador has a very low debt-to-GDP ratio reaching 22.1% on Jul-12. External debt represents 13.7% while the remaining 8.4% corresponds to domestic debt. Source: Ministry of Finance
Government Efficiency Latin-America 2011 – Regional Comparison 2011 Scale 1 to 10, from 1 “not efficient” to 10 “totally efficient” Source: Latinobarómetro 2011 INVESTMENT GRADE Latinobarómetro places Ecuador as one of the most efficient states in Latin America (18 countries).
ECUADOR: A smart investment option
ECUADOR, the country of intelligent investment in South America
¿WHY DO WE TALK ABOUT VALUES? ¿WHAT DOES IT MEANS TO INVEST WITH VALUES? NOT PROFITABLE INVESTMENTS IF THEY DO NOT OBSERVE AN ETHIC BEHAVIOR AND IMPROOVE PEOPLES LIFES: • ETHICS WITH EMPLOYEES 2. ETHICS WITH ENVIROMENT 3. ETHICS WITH THE STATE 4. ETHICS WITH CONSUMERS
ECUADOR: Smartinvestmentoption 7 STRATEGIC REASONS Country and tourism mega diverse Stable and Growing Economy Strategic Location and Logistics Hub Qualified Human Resources Easy Access to Andean and World Market Protection and Incentives to Investors Dollarized economy
MAIN CHARACTERISTICS OF THE CODE OF PRODUCTION • An organic legal norm and specific regulations for each area. • MCPEC chairs: Production Council which brings together about 20 public institutions • MCPEC: Coordinates 6 Ministries and other public organizations related to production. • Tax incentives established in the COPCI, that are already in other legal norms such as the Internal Tax Regime Law
MAIN CHARACTERISTICS OF THE CODE OF PRODUCTION STABILITY AND PREDICTABILITY • Investment Contracts with STABILIZATION of the CODE INCENTIVES renewable up to 15 years
MAIN CHARACTERISTICS OF THE CODE OF PRODUCTION LEGAL SECURITY • National or International Arbitration • Investment Contract • No confiscation or nationalization allowed
MAIN CHARACTERISTICS OF THE CODE OF PRODUCTION PROFITABILITY • More than 20 tax and non-tax incentives (cumulative) • Income Tax Exemptions Exemption of the Tax Advance Income Tax • Income Tax DeductionsDuty suspension arrangement (Zedes) Special Economic Development Zones
MAIN CHARACTERISTICS OF THE CODE OF PRODUCTION FREEDOM TO INVEST • Freedom to invest without conditions or authorizations of any kind • National Treatment: no minimum requirements of % of domestic investment or joint ventures • No prior qualificationsorauthorizations
MAIN CHARACTERISTICS OF THE CODE OF PRODUCTION INTERNATIONAL STANDARDS • Fair and equitable treatment • Full protection and security • Not arbitrary or discriminatory treatment
KINDS OF INCENTIVES Tax Incentives of the Code of Production
GENERAL INCENTIVES GENERAL. WHO SHOULD APPLY? • New companies (before or after issuance COPCI) or old companies • Anywhere in the country • In any economic sector, prioritized or not
GENERAL INCENTIVES • GENERAL. What are they? INCOME TAX: Reduction of 3 points to the IT Rate (progressive). In 2013 IT Rate will be 22%. INCOME TAX: Reduction of 10 points to the IT Rate for reinvestment in productive assets INCOME TAX: Exemption from payment of the advance IT for 5 years for any new investment. INCOME TAX: Some deductions
GENERAL INCENTIVES • GENERAL. What are they? DUTIES: Facilities in payment of taxes on foreign trade ISD: Capital and interest on foreign loans ISD: Dividends distributed by companies stablished in Ecuador to foreign companies or individuals not resident in Ecuador- No tax havens VAT EXPORTERS: Suspension of payment of ISD in special customs imports of goods that are exported
PRIORITIZED SECTORS TAX EXEMPTION FOR FIRST 5 YEARS FOR NEW INVESTMENTS MADE IN PRODUCTION IN PRIORITY SECTORS OF THE ECONOMY PETROCHEMICAL METAL WORKS FORESTRY AND AGROFORESTRY CHAIN, AND RESULTING MANUFACTURED PRODUCTS • TOURISM FRESH AND PROCESSED FOOD • PHARMACEUTICALS • RENEWABLE • ENERGY BIOTECHNOLOGY AND APPLIED SOFTWARE LOGISTICS SERVICES STRATEGIC IMPORT SUBSTITUTION AND EXPORT -FOSTERING SECTORS ARE ALSO BENEFICIARIES OF THIS INCENTIVE.
INCENTIVES FOR IMPORT SUBSTITUTION AND EXPORT FOSTERING SECTORS TAX EXEMPTION FOR FIRST 5 YEARS FOR NEW INVESTMENTS MADE IN IMPORT SUBSTITUTION AND EXPORT FOSTERING SECTORS MANUFACTURE OF PESTICIDES AND OTHER CHEMICAL PRODUCTS FOR AGRICULTURAL USE • MANUFACTURE OF • CERAMIC PRODUCTS MANUFACTURE OF CHEMICAL SUBSTANCES MANUFACTURE OF SOAPS, DETERGENTS, PERFUMES AND TOILETRIES MANUFACTURE OF OTHER CHEMICAL PRODUCTS • MANUFACTURE OF RADIO RECEIVERS, TELEVISION, CELL PHONES AND RELATED PRODUCTS MANUFACTURE OF LEATHER GOODS AND FOOTWEAR MANUFACTURE OF APPLIANCES FOR DOMESTIC USE • MANUFACTURE OF • CLOTHING AND OTHER TEXTILE GOODS
5 YEARS EXEMPTION OF THE INCOME TAX General Requirements New company New investment Outside Quito and Guayaquil Priorized sectors of the economy or import substitution and export fostering sectors (18 in total)
INCENTIVES FOR MEDIUM ENTERPRISES Have an additional deduction 100% (double) on expenses incurred for: • Expenses of training • Expenses for improving productivity • Expenditure related to international promotion of the company and its products (up to 50% of such expenditure)
ENVIRONMENTAL INCENTIVES For Income Tax calculation purposes, there will be an additional deduction of 100% from the expense of purchasing machinery and equipment for cleaner production and for the implementation of renewable energy systems (solar, aeolic, or similar), or for the mitigation of environmental impact.
INCENTIVES FOR DEPRESSED AREAS • - Companies making investments in economically depressed areas may take advantage for the first 5 years -since the benefits are generated- of the additional 100% deduction on expenditure for new jobs created in the area. • A “depressed area” will be defined by indicators such as lower human, economic and social development. Normally, a depressed area is located outside Quito and Guayaquil.
¿HOW TO APPLY TO THE INCENTIVES? • There are no preliminary ratings by the tax authority or by the MCPEC or by the Technical Secretariat of the Sectorial Council of Production • No previous evaluations • Tax payers have to make their tax declaration as usual
SPECIAL ECONOMIC DEVELOPMENT ZONES • Technological Innovation • Logistics Development • Productive Diversification
INCENTIVES FOR SPECIAL ECONOMIC DEVELOPMENT ZONES • Further reduction of 5 POINTS ON INCOME TAX RATE • ¿New investment? • 0% income tax applies for 5 years. • The import of goods will have a 0% VAT rate. • Foreign goods, while they remain in said territory, will have no tariff payments. • Managers and operators will have tax credit on the VAT paid on their local purchases of services, supplies, and raw materials for their production processes. • Exemption from the Currency Outflow Tax (ISD in Spanish) for payment of imports and payments sent overseas to pay foreign financing.
EXAMPLES biofuels mariculture forestry mining OBJETIVES ProductionDiversification PRIORITIZED refinery petrochemiCAL Shipyards Siderurgy AREAS Strategic Industries Generation of value added Cocoa Vehicle assemblers oil Selective import substitution cafe fuels energy Improved export supply Traditional products with quality
INVESTMENT CONTRACT CHARACTERISTICS Purpose: establish the treatment of investment under code production and other provisions that are crucial for the activity Optional: not an obligation to sign contract to access to the incentivesMinimum investment: US$ 250,000 first year Can be requested at any time15 years renewable for another 15
INVESTMENT CONTRACT PROCESS PROCESS OF CONTRACT INVESTMENT FIRMEstimated time (depending on the complexity of the project): 1 to 2 months • SIGNATURE REQUEST • 30 DAYS EVALUATION • THECNICAL SECRETARIAT REPORT TO THE SCP (SECTORIAL COUNCIL OF PRODUCTION) • SCP AUTHORIZATION • SIGNATURE OF CONTRACT • SUPERVISION STAGE
PRIVATE INVESTMENT PROTECTION Safe and profitable investment Agreed arbitration Investment contracts Incentives All these instruments of Ecuadorian Law work together to protect private foreign and national investment
Our ministry welcomes you! Santiago León E-mail: email@example.com Phone: (593) 2 381 5600