Ecuador’s bankers are scratching their heads wondering how to design products to accommodate a radical new 1% tax on capital transactions, which from January will replace traditional income tax. The tax will be withheld from bank customers whenever a deposit is made into an account or for a fixed-term investment, or when a cheque is cashed. Customers will not be charged, however, when money is withdrawn from an ATM. It is feared that the tax will lead to further distortions – the financial system already has a huge quantity of transactions that don’t always provide added value but which are operationally necessary – and to tax avoidance by conducting transactions outside the system, says analysts.
Access intelligence that drives action
To unlock this research, enter your email to log in or enquire about access
