ECUADOR - NEW (IVA 12%) TAXATION LAW ! ITS BENEFITS FOR INCOMING TOURISM. APPLICABLE TO FOREIGN TOUR OPERATORS; FOREIGN OUTGOING AGENCIES AND FOREIGN TOURISTS, WITH EXAMPLES FOR EASY UNDERSTANDING !
Tourism is an INDUSTRY and the export of it is constituted by the Service Providers, namely Local Tour Operators, Agencies or individuals and also by the Hotels, Hostals, Resorts, Lodges providing shelter and/or food.
This reformed law applicable to Incoming Tourism, and currently enforced,Title II-TAX TO ADDED VALUE - CHAPTER I ART. 56 IVA ON SERVICES RENDERED 14. a) and b) & 15. published in the OFFICIAL REGISTRY OF ECUADORIAN LAWS #351 dated December 29th 2010, applies to Foreign Tour Operators, Foreign Agencies and Foreign Tourists, that have an operating branch in Ecuador, (representing the foreign Operator or Agency that already exists, outside our country.) The law also applies to Foreign operators/agencies that utilize a local agency or operator as an intermediary, they will be required to pay a 12% IVA tax, since business and money is being done inside Ecuador and it becomes a local transaction, plus the intermediary's own commision totaling two comissions to the foreign tourist to pay.-
ANY LAW cannot be fractioned when exposed, if the theme and sequence are the same, which only stands to reason so as to prevent manipulation of the referred law, including Only what may be of benefit and excluding any part of it which may be negative, that is why we transcribe and translate both articles.
This new law will APPLY to you as a Foreign Tour Operator or Agency if certain conditions and criteria are fully met and observed. Article 14 is the legal support for following Article 15; thus, if fully complied YOU will not have to pay the 12% IVA tax.
Article 14:
a) The service provider should be a legal resident of Ecuador
b) The Payee or Beneficiary should NOT be a Resident of Ecuador
c) That the expenses or utilization of the income belonging to the Receiver or Beneficiary’s, must be in a foreign country, even if the services rendered are in Ecuador ("pais" in the original).
Article 15:
Bundled packs of INCOMING Tourism invoiced inside or outside of Ecuador (pais in the original text) to individuals or Societies
NOT RESIDENT IN ECUADOR.
:
Two examples would be as follows:
1.- If a foreign agency, operator or even individuals, decide to handle all their reservations directly, with the service provider, i.e. hotels, yachts, resorts etc… they are exempt from paying the 12% IVA TAX and the Tour Operator abroad will receive his full commission, avoiding the local third party commission as well.
2.- On the other hand, if a foreign agency, operator or provider chooses to handle their business through a branch of their own company or ANY other third party, established in Ecuador, they are not exempt and must pay the 12% tax plus the costs, taxes etc of that ecuadorian branch and any commission charged by the third party.
By dealing directly with the hotel, resort, hostal etc of your choice, you also reduce the commission rate, because it will not be necessary to make a split of say (as an example) 50% each between the foreign tour operator and a local tour operator or travel agency; had you used a third party inside of Ecuador; so as not to inflate even more the cost for the consumer. The same applies, if you were to make your reservations, via Arasha/All Of Ecuador to another hotel, resort, lodge or similar if we were a profit-making operator.
Arasha Cia Ltda, Eximius Journeys and its Registered trade name "All of Ecuador" are members of the same GROUP, legally independent enterprises, they work together in the same premises and will provide all the services of a tour operator and the beneficiaries (Ecuadorian Hotels, Resorts, Lodges and similar) will be transfered to you, as a foreign Tour Operator; then, the New LAW will apply, you will get your full comission, sharing nothing and will not have to pay the 12% IVA tax. Article 15 is self explanatory, pointing exclusively to Tourism Packages (Paquetes Turísticos in Spanish), also applied if party involved IS NOT A RESIDENT OF ECUADOR and there are no transactions within the country's territory.
Now, you can enjoy from 98 passenger yachts in Galapagos to 12 passenger smaller crafts plus any other lodging of any category anywhere in the country. Arasha can attend now 120 pasengers at 2 persons per room with cots for families.
Even though Galapagos requires no longer 6 or more months advance payment due to the worldwide drop in tourism of which we are all aware, so you can book maybe 3 months earlier to choose a better yacht, cabins and at lower rates. Payments can be done directly to the facility or via Arasha/All of Ecuador when we will transfer the amount and instruct to whom the invoice should be made. (Either you as the Foreign Tour Operator or the client himself if you have previously so arranged and prefer)
Consequently, Eximius Journeys, owner of "All of EcuadorTM" functions now as a Non-Profit organization, making this a
great benefit overall to both, the Foreign tourism agencies and Tour Operators, because they get their full commission (they don’t have to end up loosing a part (IF COMMISSION IS SHARED) because they used a third party, but, even more important, is the fact that this largely contributes to the cost of your customer being reduced by not adding one extra commission and the 12% IVA tax. If you need any further explanations or make clearer a stated concept, do not hesitate and please e-mail us or give us a phone call.
Hotel, Resort, Lodge and yacht owners are glad to learn they will have to pay only one commission (Yours,the foreign Tour Operator) and will NOT have to charge the 12% IVA tax. You don't need to go to "All of Ecuador" if you wish, Arasha will do it for you if you prefer so.
Otherwise, charging both items increments sensibly the total cost to your client which reflects obviously in lower sales. This is the reason why All of Ecuador, assists Arasha in the logistics, and is a Non-Profit Organization and is a member of the same group. The tax must be paid by the hotel or similar or the tour operator when they become the Local third party, as they turn to be participants of an internal transaction between two Ecuadorian companies, societies or any other legal existence established in our country, therefore the NEW reformed Law will not apply nor its benefits.
Go To Top Click Here
ARASHA! LEADING RESORT IN SOUTH AMERICA
WHY ? Let's see what a NON TOURIST, well known magazine says about Ecuador and you will find some of the many reasons to visit the "pearl" of Western South America. Check climate plus any interesting pages you find in the first page of the link's right column.
http://internationalliving.com/countries/ecuador/
Go to CONTACT US
CHOOSE A TOUR OPERATOR OR OUTGOING TRAVEL AGENCY OF YOUR PREFERENCE TO CONTACT ARASHA DIRECTLY IN ORDER TO REDUCE COSTS UP TO 42% .
Go To Top-Click HERE
This page has been updated with "New Taxation Law " applied to Incoming Tourism in February 2, 2011, and New Village at the Resort. Page active since 2002
s.i.e.u.o Arasha Ltd- Eximius Journeys "All of Ecuador"TM - All Rights Reserved
|