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Inheritance tax generated high revenues

Inheritance tax generated high revenues

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On September 2, 2021, the ” El Comercio” website published a report on the inheritance tax and the income figures that Ecuador had as a result of it.

1. Inheritance tax 2021

The tax on inheritances, legacies, and donations generated USD 30 million between January and July of this year for the Treasury. Although, President Guillermo Lasso announced that it will be eliminated because it supposedly does not generate anything for the State.

2. 2020 revenues

In 2020, the Internal Revenue Service (SRI) collected USD 24.37 million for this tax, a figure 1.4% higher than the 2019 collection, being USD 24 million then.

3. Comparing other taxes

The inheritance, bequests, and donations tax are among those with the lowest tax collection along with the Non-Returnable Plastic Bottles Redeemable Tax or the RIS (Régimen Impositivo Simplificado – Simplified Tax Regime), whose annual revenues range from USD 20 to 30 million.

4. What does the inheritance tax consist of?

According to the above-mentioned website, the tax is levied on the increase in assets resulting from inheritances, legacies, donations, and any type of act or contract by which goods and rights are acquired free.

The tax is progressive and based on a rate that increases depending on the inherited value. The beneficiary must pay a rate from 0 to 35% when the amount received is higher than USD 865,113.

The rate between heirs is reduced by half when it is the first line, i.e., from parents to children or vice versa.

Source: El Comercio 07/09/21

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