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CNA Warns that Tax Reform Project Will Affect the Shrimp Industry
Monday, December 04, 2023, 01:00 (GMT + 9)
Increases taxes, deteriorating the working capital and liquidity of the shrimp sector.
The National Chamber of Aquaculture CNA speaks out on the tax reform project sent by the Executive to the National Assembly called “Law of Economic Efficiency and Employment Generation”, specifically on article 13 that creates a new sales tax, seriously decreasing working capital and subtracting liquidity from the entire value chain of the shrimp sector at a time when the sector is going through one of the worst economic crises in its history.
The article in question proposes that taxpayers make a monthly self-withholding of up to 3% of the total income obtained. The CNA points out that this measure constitutes a sales tax that would be prepaid monthly, generating a shortage of illiquidity and deteriorating the little working capital available.
Additionally, the union pointed out that the effect is more aggressive on the export sector since it is not subject to withholdings for its sales abroad and now, under the proposed scheme, self-withholding would be applied on said values.
José Antonio Camposano, Executive President of the CNA, noted in his X account: "Imposing a 3% sales tax would result in the decrease of our limited working capital, leaving us without the necessary liquidity to operate. This measure, which we questioned in the previous government, remains a harmful proposal today."
The shrimp sector accumulates losses of 1.4 billion dollars in 2023 due to the weakening of consumption in China and other key markets, generating unsustainable pressure on the production chain. The contraction in demand has affected exports, while producers face competitive challenges due to increasing operating costs, such as fuel prices, salaries, insecurity and raw material costs. In the last year, this increase in production costs has generated loss of liquidity and a total economic impact that exceeds 1.4 billion dollars.
Although the CNA, as part of the Corporation of Exporting Guilds of Ecuador CORDEX, has already presented its arguments before the Minister of Production, Foreign Trade, Investment and Fisheries, Sonsoles García, the union announces that it will go before the Economic Regime Commission of the National Assembly to explain the reasons why they consider that the proposal is harmful to the competitiveness of the shrimp production chain and, therefore, should be discarded.
Source: CNA Ecuador (Translated fromm the original in Spanish)