On 22 February 2022, the Ecuadorian government presented a bill in the National Assembly that introduced a new regulation for a Special Economic Zone (SED) and a Free Trade Zone for investors. The draft law provides for the following measures:
- Under the new rule, taxpayers who are administrators or operators of SEDs and free zones will be exempt from paying income tax for the first 10 years, followed by a 10 percentage point reduction in relation to the corporate tax rate in effect at the time of approval;
- The establishment of a zone will be granted a minimum validity of 20 years, with the possibility of extension, in which case the 10-percentage point discount may be extended, but there will be no new exemption;
- In addition, a VAT exemption is provided on the import of inputs, capital goods, and raw materials by administrators and operators of SED and Free Zones, provided that they are destined exclusively for the authorized zone or incorporated in any of the productive transformation processes developed in a zone for export to third countries; and
- Transitional provisions are also included, providing that companies already operating under existing SED and free zone regimes may continue to operate and enjoy the appropriate benefits and exemptions for the approved term. Such companies may also choose to migrate to the new regime.
