On December 5, 2024, the Organic Law for Financial Relief and Economic Strengthening of Generations in Ecuador was issued and published on December 9, 2024 in the Official Register Supplement No. 699. This legislation aims to provide tools to enable businesses and citizens to access financial relief and economic strengthening mechanisms in the country.
Objectives of the Act
This law seeks to alleviate the financial burden through debt restructuring, tax incentives and economic support mechanisms. Its main objectives include:
- To facilitate access to refinancing and credit differentiation for companies in economic difficulties.
- To provide tax relief to companies with expired debts.
- Promote investment and financial stability in the productive sector.
- Support the recovery of small and medium-sized enterprises through economic incentives.
Key Measures of the Law
1. Payment and Business Refinancing Facilities
Financial institutions, both public and private, should offer refinancing programmes and credit differentials for companies that demonstrate significant economic impacts. This will include:
- Restructuring of payment deadlines.
- Reduction of interest rates.
- Partial remission of moratoriums.
These measures shall apply to undertakings which submit an application accompanied by documentation justifying their financial situation with the credit institution concerned.
Tax benefits and donations
Companies with tax obligations due until 31 October 2024 may benefit from exceptional payment plans with the following facilities:
- Failure to pay tax debts in quotas without additional interest.
- Reduction of fines and surcharges.
- Application of tax credits to alleviate the financial burden.
In order to access these benefits, undertakings must comply with the requirements set by the relevant tax authority.
Impact on Business and the Productive Sector
For Companies:
- Access to refinancing mechanisms to improve their financial stability.
- Tax incentives that promote liquidity and competitiveness in the market.
- Different payments essential to maintain operation without economic effects.
For the Productive Sector:
- Stimulating business investment and expansion by reducing financial burdens.
- Support for economic recovery in key sectors such as trade, manufacturing and technology.
- Creating new opportunities for entrepreneurs and small entrepreneurs.
