Ecuador parliament debates law to prevent tax evasion on gains from bequests

Ecuador's National Assembly is, today, to debate the Law to Prevent Income Tax Evasion on Estates, Legacies and Donations.

The law reportedly states that income and asset gains from bequests, legacies or donations in Ecuador will be subject to income tax.

The main aim of the law is to prevent the evasion of income tax through the transfer of assets into societies, non-profit entities, trusts and similar instruments irrespective of whether they are in Ecuador, nil or low-tax jurisdictions. In instances where assets have been transferred into this type of structure, the tax will be applied to the beneficial owner.

Following widespread protests, President Rafael Correa announced in June last year that he would withdraw two proposed bills which would have increased inheritance tax and capital gains tax. The bill under consideration today would focus instead on removing any mechanism that would permit evading the tax.

Sources

• National Assembly of Ecuador
• El Comercio (in Spanish)