The proposed economic measures would temporarily increase taxes to aid in the reconstruction after the earthquake. If enacted, taxpayers should ensure that they comply with the new measures.

Rafael Correa, President of Ecuador, submitted to the National Assembly the Solidarity and Stewardship Citizen by Earthquake Damages Draft Law, which would fund a multi-billion dollar reconstruction after the devastating 7.8 magnitude earthquake on April 16. If enacted, the proposed economic measures would apply in May. The proposed economic measures would take effect the day after their publication in the Official Gazette.

The President proposed the economic measures to create a solidarity fund for the reconstruction of homes and businesses.

Under the proposed economic measures, the value added tax (VAT) on movable assets and services would increase from 12% to 14% for one year. Goods included in Articles 55 and 56 of the Ecuadorian Internal Tax Regime Law would be exempt. This proposed economic measure would not apply to the affected free trade zone taxpayers in the Manabí and Esmeraldas provinces.

The proposed economic measures would impose an additional 3% tax on the 2015 profits of companies. Additionally, the proposed economic measures would impose an additional 0.9% tax on individuals with assets of $1 million or more for one year.

The proposed economic measures also would require a contribution of one day's salary for those earning $ 1,000 to $ 5,000 per month. If the salary is more than $ 1,000 per month, the contribution would be one day's salary for a month. If the salary is more than $ 2,000, the contribution would be one day's salary for two months and so on according to the salary.

The proposed economic measures would include the following exemptions:

— Individuals and businesses would be exempt from paying the income tax advance payment for 2015.
— Donated goods, including kitchen cookers or gas cooker kitchens that will be used in shelters, would be exempt from the Special Consumption Tax (ICE), when the beneficiary is a public sector institution.
— All donations designated to those affected by the earthquake would be exempt from tax.
— Individuals, public and private servers including members of the Army and National Police, counselors and councilors, board members of collegial bodies and elected officers who provide services to the affected areas of Manabí, Muisne and southern Esmeraldas, would be exempt from the salary contribution.
— Ecuadorian and foreign citizens who have been directly affected by the natural disaster, and whose domicile is in the Manabí province and in the affected free trade zones would be exempt from the payment of the salary contributions and increased taxes; additionally, they would be subject to the VAT refund.

In addition, cash donations to official government accounts created to cover the national emergency since April 17, 2016, would be treated as tax credits.

If a taxpayer pays taxes for which it is exempt under the proposed economic measures, the IRS would return those amounts.

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