Increase Your Telecom Market Share, Pay More Taxes in Ecuador

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EspañolOn Wednesday the Ecuadorian National Assembly imposed a new tax on telecom companies with a “dominant” market share.

The tax on big companies increases as their market share is larger.
The tax on large companies rises in line with their market share. (La Hora)

The reform to the Organic Law of Telecommunication, approved with a 93-25 vote, received a high dose of criticism. Opposition lawmakers pointed out that it was tailored to undermine the positions of only select companies.

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The law establishes a tax for companies with a market share of over 30 percent — a trimonthly imposition starting at 0.5 percent of their revenues. As the market share of a company increases, so does the rate of taxation.

According to the text, the reform seeks to “avoid distortions in the telecommunications markets and promote competition.”

“There are more land lines than inhabitants in the country. They must be controlled to guarantee a healthy, competitive environment,” said lawmaker Richard Calderon, a supporter of the bill.

Opposition Congressman Patricio Donoso, from the CREO party, says the bill “targeted” the Mexican telecom company Claro, which must pay a trimonthly tribute of 7 percent of their revenues — “punishing entrepreneurship in the country.”

Henry Cucalón, a legislator from the Madera de Guerrero Civic Movement, claims the law is “unconstitutional,” since it imposes “discriminatory practices and undermines efficiency.” It exempts government-owned companies from paying the tax.

A Claro lawyer, Eduardo Carmignani, described the new law as a unilateral and “open breach of contract… [since it] aims to increase the price agreed on in the concession.”

Satellite TV provider DirecTV, with a 34 percent of the market share, also feels the brunt. They will have to pay 0.5 percent of their revenues.

Social Christian Party Congressman Luis Fernando Torres fears that the new law emulates the Venezuelan model of telecommunications, where “control and centralization” are the rule.

Source: El Comercio.

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