On 14 December 2019, the President, Moreno, made objections on the second tax reform bill approved by the National Assembly. Accordingly, he proposed to limit the application of the thin-capitalization rules to inter-company loans. Accordingly, threshold would be at 300% of the entity’s equity for bank. The main tax measures contained in the second tax reform bill are given below:
- For companies whose taxable income exceeded USD 1 million in fiscal year 2018, a temporary corporation tax will be charged. These companies will apply a progressive tax rate of 0.1%, 0.15% and 0.2%, respectively, for the years 2020, 2021 and 2022;
- Entrepreneurs and micro-enterprises whose annual net turnover does not exceed USD 300,000 are subject to a simplified tax regime. Such entrepreneurs are also subject to a flat tax rate of 2% on gross income;
- Rules on mandatory advance income tax payments will be repealed;
- Dividends paid to non-resident companies are subject to income tax;
- Rules establishing the obligation to make income tax advance payments will be repealed;
- Income from agricultural activities is subject to a uniform tax, with progressive rates between 0% and 1.8% for producers and local traders and between 1.3% and 2% for exporters; and
- A 0% VAT rate will be applied for certain goods.
