The airline says the move will attract companies and stimulate more flights
The Foreign Exchange Tax (IST) for all sectors will not be abolished immediately. The government yesterday outlined the idea of what would be the way to phase it out by eliminating this tax in line with the segments of the economy.
During a tour of the deep-sea port of Posorja, President Guillermo Lasso, before questioning the Attorney General’s Office, responded that the company could take an alternative to reducing IST.
The branch that was first selected to eradicate IST, with the intention of promoting tourism, was severely affected in the midst of the epidemic. The move applies to all airline ticket transactions, Lasso said.
Although the president did not examine the details, he said that in the aviation sector, the abolition of IST would benefit airlines’ resources in sending flights from Ecuador to their headquarters overseas, and that they would offset the costs demanded by the operation. These costs include payment For lease Rental of aircraft, maintenance, insurance and other goods.
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Marco Supia, president of the Air Representatives Association in Ecuador (Arle), said the removal of the IST would reduce airline costs and stimulate the arrival of new aircraft and other companies.
With a lower tax burden, travelers can benefit from cheaper tickets. “Ecuador is a very expensive country to operate in, so the measures taken by the government will help reduce costs, and as more competition arises, more airlines will, of course, affect tickets,” Supia said.
The association estimates that airlines pay about $ 14 million annually for the concept of IST. While this is significant for the sector, the financial impact of shattering the total ISD in the overall collection is small.
“The entire IST cannot be eliminated because it represents a financial sacrifice of more than a billion dollars, but in some aviation sectors, in aviation, it can be reduced immediately to allow an open sky policy,” said Manufacturing Minister Julio Jose Prado.
This gradual reduction of the IST is one of the tax proposals outlined by Lasso, who proposed to remove 2% of the income tax for micro-enterprises; Reduce value added tax (VAT) on four holidays a year to support the tourism sector and greater control over the fight against evasion.
A few days ago, Peter Serde, regional vice president of the IATA, the global body for airlines, proposed the abolition of ISD for the Lasso government and would re-activate tickets.
“Eliminating ISD will positively reduce the bulk of the costs, which we estimate will create 31,350 new jobs and contribute $ 440 million to GDP,” Serdey said.
IATA recommends removing the tax levied on air tickets to improve the sector
Prado noted yesterday that several international companies were waiting for the announcement and that the Ministries of Tourism, Finance and Manufacturing were working on the move.
For Holbach Musetton, president of the National Federation of Tourist Rooms, the gradual elimination of IST is an important step towards reactivating and encouraging investors.
“What you need to look at now is the creditworthiness of companies, the competitiveness, the development of the country, the long-term loans and the promotion of a tourism cluster,” Musetton said.
President Lasso noted that the elimination of IST in the aviation sector would help finalize open space agreements with other countries. When launching the operation, he noted that it was “easing the open sky”.
Open skies policies allow foreign airlines to create favorable conditions without restrictions if they decide to operate in Ecuador.
Withdrawal of ISD paves the way for the open sky because other countries like the United States do not have this kind of tribute and need mutual treatment. (I)
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