1st Bac - RIMPE - Simplified Tax Regime for Entrepreneurs and Popular Businesses

According to the IRS, the RIMPE eliminates the Microenterprise regime in force until 2021. This regime, designed for microenterprises, levied a 2% rate on the gross income of microentrepreneurs, regardless of whether they have reported loss. 

 

What is it used for?

The purpose of this Resolution is to establish the conditions for the application of the Simplified Regime for Entrepreneurs and Popular Companies (RIMPE), provided for in the Organic Law of Economic Development and Fiscal Sustainability after the COVID19 Pandemic.

 

 RIMPE – Entrepreneurs

 

Natural and legal persons with annual gross income of up to USD 300,000 (as of December 31 of the previous year).

 

RIMPE - Popular businesses

 

Natural persons with annual gross income of up to USD 20,000 (as of December 31 of the previous year).

 

 The transfer to RIMPE, which is temporary and valid for three years, has been automatic, which has raised many questions. According to the Internal Revenue Service (SRI), more than 143,000 companies and 645,000 businesses are subject to this tax regime.

To make it operational, both the national government and the Internal Revenue Service (SRI) have issued certain regulations, one of which is the Organic Law on Economic Development and Fiscal Sustainability, whose regulations were signed by the President of the Republic, Guillermo Lasso , just two days before the end of 2021, in Executive Decree 304. The SRI did the same through resolutions NAC-DGERCGC21-00000060 and NAC-DGERCGC21-00000062, issued on December 29 and 30, respectively.

 

Among the main benefits of having the ESTR, according to the IRS, are the following:

 

-       There is no need for declarations, no cost of forms and the hire of third parties to fill them out

-       Avoid taxes retaining

-       Allows to give out simplified sales slip with the date and amount of sale

-       No accounting

-       For every new employee added to the business and that is a member of IESS, a 5% discount will be applied to the payment, up until 50%

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