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Tuesday, January 23, 2007

Ecuador plans tax reform bill to hike revenues

Mon Jan 22, 2007

QUITO, Jan 22 (Reuters) - Ecuador's new government plans to send Congress a tax reform bill that would collect taxes from companies' net assets to energy drinks and could generate $150 million in revenues annually, a government official said on Monday.

President Rafael Correa has vowed to lower the country's value-added tax to 10 percent from 12 percent, which is expected to cost the country $400 million a year and has worried investors.

To compensate for the lost revenue, his government plans to send Congress a bill to collect a duty of between 0.5 percent and 1 percent over the net assets of companies that don't declare rent taxes.

"The idea is to compensate for the 400 million that would be lost from the reduction of the VAT and to guarantee stability in public finances," Carlos Marx Carrasco, the head of the Internal Revenues Service, told reporters.

The bill would also hike taxes on some special products such as cigarettes, cell phones and cars.

The bill is expected to reach Congress in March and generate $150 million every year. If the bill gets approved it would set into effect between 2007 and 2008.

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