Ecuador Seeks to Attract Digital Nomads With EconomicEfficiency Bill

Ecuador seeks to attract digital nomads thanks to a bill on economic efficiency and employment generation, sent to the National Assembly for study, and which, among other aspects, proposes establishing a temporary tax residence.

With this measure, the aim is to "be able to attract those digital nomads, who to date number one hundred million in the world, and who will reach one billion by 2050," said the Ecuadorian Minister of Production, Foreign Trade, and Investments. and Fishing, Sonsoles García.

He reiterated that with the bill – which must be analyzed this month since it came to the Assembly on an urgent basis – they seek "to be one of those countries that attracts digital nomads, who come, invest; who can come to buy goods , that they can come to make productive investments".

Minister García highlights the importance of the measure

In addition, it is expected that these potential digital nomads can also contribute to the Ecuadorian Social Security Institute (IESS), the minister said on Teleamazonas television, underlining the importance of expanding the current membership base.

"That is why this regime is interesting, to be able to attract digital nomads, returned migrants, investors who during the five-year period can have this special regime, where they do not have to lose their residence in another country, but rather pay taxes on what that they generate in Ecuador," he said.

Since March 2022, Ecuador has been issuing temporary residence visas "Remote worker renter".

Analysis in the Assembly on the bill

At the end of November, the president of Ecuador, Daniel Noboa, sent a bill for urgent study to the National Assembly (Parliament) that, among other objectives, seeks to generate employment in the country, whose economy is in a "serious" situation. .

Noboa sent the bill shortly after his Minister of Economy, Juan Carlos Vega, warned of a "serious economic situation" and pointed out that the projected fiscal deficit for the end of 2023 will exceed $5 billion, that is, the 5% of the Gross Domestic Product.

"We have the worst history of the fiscal fund with barely 184 million dollars in the single treasury account," lamented Vega when reviewing the situation that has been found when assuming the Economy and Finance portfolio.

The minister indicated that they have inherited pending payments worth $2,872 million from the previous administration with the IESS, local governments and other public and private sector institutions.

Likewise, he pointed out that the total state debt is 63,000 million dollars, between internal and external debt, which is equivalent to 54.7% of the Gross Domestic Product.

He also regretted that the risk premium is close to 2,000 basis points, which "excludes (Ecuador) from access to normal debt markets and additionally complicates the attraction of investments."

Vega pointed out that the country is also "extremely impoverished" due to a 9% drop in per capita income during the last decade, due to "little growth in real terms."

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"We receive an economy that does not generate formal employment (that pays taxes) or adequate employment (equal to or higher than the minimum wage), which becomes a great seed for insecurity and violence, and labor legislation that encourages informality," he added. the minister

Minister of Economy warns about the serious economic situation

And he warned that 2024 will have additional complications for the national economy such as "the end of the equity contribution, the additional decrease in the ISD (tax on foreign currency outflow) and the reversal of the tax reform."

Added to this will be emerging needs such as the El Niño phenomenon, which can cause serious flooding in the coming months, the energy crisis that is currently being experienced with blackouts due to electricity shortages and "increasing costs to combat insecurity."