he policy requires the Ministry of Energy and Nonrenewable Natural Resources to modify the model used for oil and gas contracts and renegotiate current contracts. In addition, the Government is reducing customs tariffs on 667 items beginning 1 August 2021.
The President of Ecuador issued an oil and gas policy aimed at promoting investments and exports. Additionally, the Government reduced customs tariffs on 667 items. According to these initiatives, the Government is incentivizing foreign investment in Ecuador to reactivate the economy.
Oil and gas policy
The policy is part of an immediate action plan for the oil and gas sector that will be implemented over 100 days beginning 7 July 2021. According to the policy, this sector must be efficient, competitive, sustainable, environmentally responsible and innovation based. It also must guarantee legal protection and increase investment.
The policy directs the Ministry of Energy and Nonrenewable Natural Resources to execute the following:
- Modify the model used for exploration and production of oil and gas contracts, based on international standards
- Promote international tender processes (i.e., competitive selection processes for a contract) under the new contracting model
- Delegate to private entities part of the oil and gas activities previously conducted by the state-owned company
- Renegotiate current contracts to follow the new contract model to encourage venture capital and increase production rates
Customs tariff reduction
On 1 August 2021, the Government will reduce the customs tariffs on 667 items. Of the 667 items, 590 will have a 0% tariff, 30 will have a 5% tariff, 20 will have a 10% tariff and the rest will have a 15% to 30% tariff. The tariff reduction will benefit 81 productive sectors.
For additional information with respect to this Alert, please contact the following:
EY Addvalue Asesores Cia. Ltda., Quito
- Javier Salazar
- Alexis Carrera
- Alex Suarez
EY Addvalue Asesores Cia. Ltda., Guayaquil
- Carlos Cazar
- Eduardo Góngora
Ernst & Young LLP (United States), Latin America Business Center, New York
- Ana Mingramm
- Enrique Perez Grovas
- Pablo Wejcman
Ernst & Young Abogados, Latin America Business Center, Madrid
- Jaime Vargas
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
- Lourdes Libreros
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
- Raul Moreno, Tokyo
- Luis Coronado, Singapore
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
