On 01APRIL24 These are the 208 most consumed products that will pay 15% VAT from April 1, 2024. Check the guide to everything that will increase in price when VAT goes to 15% in April, among the goods are cars, lunches, clothes.
The new Value Added Tax (VAT) rate will go from 12% to 15%, as confirmed by President Daniel Noboa. The Law to combat the internal conflict ordered that VAT rise from 12% to 13% and gave the power to the President of the Republic, Daniel Noboa, to increase that rate to 15%. These regulations were already published in the Official Registry, on March 12, 2024, so the president can now use that power.
With a VAT at 15%, the Government expected additional income of USD 1.3 billion per year. In 2024 alone he could receive about USD 1,000 million. These monies will be used not only to cover security expenses, but also the State's arrears and the expenses incurred by the damage caused by the rains during February 2024, the Government anticipated.
Of the 359 products that make up the basket of goods and services consumed by a typical household and used by the National Institute of Statistics and Censuses (INEC) to calculate inflation, a total of 208 now have 12% VAT and 151 do not pay this tax. Among those who do not pay are rice, bread, fruits and vegetables. Of the 359 products that make up the basket of goods and services consumed by a typical household and used by the National Institute of Statistics and Censuses (INEC) to calculate inflation, a total of 208 now have 12% VAT and 151 do not pay this tax. Among those who do not pay are rice, bread, fruits and vegetables.
These are the 208 most consumed products that will pay 15% VAT from April . These are 13 changes that the new law will bring to the VAT:
1. Few foods in the basket will have a VAT of 15%
Some 21 foods, of the 115 that make up the basket of goods and services consumed by a typical household and used by the National Institute of Statistics and Censuses (INEC) to calculate inflation, VAT will increase from 12% to 15%.
That means that the VAT increase will make 18% of the food in this basket more expensive.
Among the foods that have VAT in this basket are: ice cream, cookies, snacks, instant coffee, soft drinks, fruit juices, soft drinks, jellies, dressings, mayonnaise and tomato sauce.
👉 On the other hand, there are 94 foods in this basket that have 0% VAT, so consumers will not have to pay more with the new law.
These are the foods most consumed by Ecuadorians, among which are: rice, flour, oats, bread, meat, chicken, eggs, milk, sausages, tuna, cheese, oil, fruits, vegetables, legumes, grains, tubers.
2. Eating in restaurants and cafes will be more expensive
Those who buy prepared food in restaurants and cafes will have to pay the new 15% rate.
The food services that have a VAT rate are:
Breakfasts. Popular and executive lunch. Traditional prepared food. Prepared dishes. Fast food. Burgers and sandwiches. Hot drinks. Prepared desserts. For example, an executive lunch that costs USD 4.25 today pays a VAT of USD 0.51; that is, a final value of USD 4.76 for the consumer. When the VAT increases to 15%, it will cost USD 4.89.
3. What will happen to basic services?
Citizens will not have to pay more for basic services either, since they have a 0% VAT rate. Considered in this group are: Electricity, drinking water, sewage and garbage collection.
Cable television, Internet, and cellular and landline telephone services are not in the group of basic services, so they will have a 15% VAT rate.
4. Some household expenses will increase.
The rent or rental payment of properties intended for housing has a 0% VAT rate.
However, household goods and appliances will be subject to VAT of 15%. Among these goods are, for example: Kitchens. Refrigerators. Washers and dryers. Air conditioners and fans. Curtains. Mattresses. Electric showers. Water pumps. Living room and dining room furniture.
5. Diesel and gasoline increase in price
National land and water transport services for passengers and cargo have 0% VAT, so passengers will continue to pay the same values when they board, for example, buses or taxis.
International cargo transportation and national air cargo transportation from, to and in the province of Galapagos also has 0% VAT.
However, national and international air tickets will have 15% VAT. Those who have their own vehicle, as well as companies that have a fleet of vehicles, will also have to pay more for transportation, since gasoline and diesel will have 15% VAT.
When the VAT rises to 15%, the gallon of Extra and Ecopaís gasoline will rise USD 0.06 per gallon; diesel is USD 0.05 and Super is USD 0.10 per gallon.
6. Increased payment for using Uber, Netflix and other platforms
The digital platforms that are in the registry of the Internal Revenue Service (SRI) will also have a higher VAT.
Among the platforms are the popular transportation and package delivery applications, such as Uber and Glovo.
There are also applications for online grocery shopping like Uber Eats.
The registry also includes entertainment applications, such as Amazon Prime, HBO, Netflix, Disney, DIRECTV and Hulu.
For example, a $10.99 Netflix plan now pays a VAT of $1.32; That is, the total bill is USD 12.31 per month.
With a VAT at 15%, this expense will be USD 12.63 per month.
The group even includes popular sports prediction platforms, such as Ecuabet and Cyberbet.
7. What banking services will have more VAT?
Nearly 60 types of financial services from banks and cooperatives will have 15% VAT, among which are:
Money withdrawals at non-banking correspondents, located in businesses such as neighborhood stores and bazaars. Issuance of certified checks. Gasoline consumption with credit or debit cards. Issuance, replacement or renewal of debit or credit card plastic due to theft, loss or deterioration.
8. What will happen to health and education?
Medicines and health services, such as consultations with general practitioners or specialists, including prepaid medicine services and health insurance, have 0% VAT.
Laboratory tests, hospitalization expenses, dental services, and veterinary expenses for pet care also do not have VAT.
Education should not increase in price due to VAT either, since pensions have a 0% rate for: Initial basic education up to high school. Undergraduate and postgraduate university education.
However, computer and language courses will have a 15% VAT rate.
9. Cinema and football tickets will be more expensive
From June 2022, tickets for public shows have a 12% VAT, they will now increase to 15% rate. Tickets for events such as: Soccer matches, Concerts, Cinema screenings
Artistic and cultural events are excluded from this group, which continue to have 0% VAT.
According to the SRI, these are the requirements for an event to have 0% VAT:
The capacity of the event site must be up to 2,000 people. It is necessary that the promoter of the event be included in the Single Registry of Artists and Cultural Managers (RUAC), granted by the Ministry of Culture.
Or, failing that, the place where the event will be held must belong to the Registry of Cultural Spaces and Infrastructures or the Registry of Audiovisual Spaces. In the latter case, the promoter must be registered with the RUAC.Furthermore, in the case of audiovisual spaces, such as cinemas, it should also be considered that they do not have more than three screens.
10. Image and personal grooming
Clothing, shoes, handbags, jewelry and watches will also have 15% VAT, as well as some services to improve personal image such as: Hair cutting and hair treatments. Washing and brushing hair. Manicure. Gym.
And among the personal hygiene products that will have 15% VAT are: Shampoo. Soap. Toothpaste. Deodorant. Creams. Talc. Toilet paper. Shavers.
On the other hand, sanitary pads and diapers have 0% VAT from 2021.
11. What will happen to technology?
Among the technological products that will have 15% VAT are: Cell phones. Desktop computers and laptops. Printers. Tablets. Portable memories. Televisions. Audio players. Photographic cameras.
12. Cars will be more expensive
Cars and motorcycles will be more expensive with the increase in VAT, as well as other goods that are not essential goods, such as cigarettes, alcoholic beverages, perfumes. These goods, in addition to VAT, have a rate of Special Consumption Tax (ICE) and other taxes.
13. Toys will be more expensive
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