Legal interests have characteristics that distinguish them from other types of interests. The most important are: This interest represents an amount to be paid by analogy to the damages of the creditor for whom you have an outstanding debt. Although there is a relationship between the two types of interests, there is one essential difference. Conversely, the tax administration must also be accountable to its taxpayers if it is in debt. In this case, the calculation is also carried out taking into account the statutory interest. The maximum rates of this interest vary for general, tax and commercial debt. The latter are the ones with the most interest, founded in 2022 with a maximum of 8%. If a person does not fulfill his obligations to the Ministry of Finance, that is, does not pay his debts, he will be punished by the tax administration. The statutory interest serves as the basis for the calculation of the penalty and the subsequent calculation of the penalty that may be applicable to the taxpayer.
Legal interest rates are statutory interest rates that are not agreed between the creditor and the debtor. Legal interest is that which applies to late payments between individuals, in particular with companies, with the tax administration, with the public administration in general or vice versa. The first condition is that no default interest already agreed between the parties is due. Default interest is based on the percentages set by the Central Bank of Ecuador of a maximum of 10% and can be consulted in www.bce.fin.ec. In practice, the fixed legal interest rate can be very important when calculating large penalties, compensation, etc. One of the conditions for the use of legal interest is that it is applied in cases where no interest has been established for non-compliance or illegal collection. The main assumptions for the application of legal interests are as follows: Legal interests are determined by the General Law on State Budgets. These are those applied by the judge in a judgment for violation of the responsibility of a monetary debt. 9.3. Interest rate by type of loan (valid until July 2007). 2 AVERAGE EFFECTIVE PASSIVE INTEREST RATES PER INSTRUMENT Save my name, email address, and website in this browser for the next time I comment. The new methodology was developed by the ECB and approved by the Fiscal Policy Regulatory Board on 12 December 2021.
12.1. Legal basis: Regulation No. 153 of the Board of Directors of the Central Bank of Ecuador. 4. MAXIMUM EFFECTIVE PASSIVE INTEREST RATES FOR PUBLIC SECTOR INVESTMENT For example, loans to productive enterprises increased from 10.21% to 9.89%, consumer loans from 17.30% to a maximum of 16.77%, and performing loans to SMEs from 11.83% to 11.26%. Interest rates are one of the most important tools used by central banks to conduct monetary policy. Financing costs at Chulco can reach 5% per day or up to 1,300% per year starting in August 2021, according to an Equifax study. The new method of calculation is specified in accordance with the Organic and Financial Code, which entrusts the Finance Commission with the responsibility of establishing a system of maximum rates.
In the auditorium of the Central Bank, the director of the company, Guillermo Avellán, explained the new methodology on December 13, 2021. Photo: César A. Sosa / EL COMERCIO 11.1. Evolution of credit and interest rates (valid until July 2007) In 2022, the maximum legal interest rate will be 8%. This rate applies to commercial late payments, i.e. those that occur between companies. 10.1. Interest rate statements – Contains examples The Central Bank of Ecuador (ECB) has presented the new methodology for calculating interest rates, which will be in force in the country from 1 January 2022 and will be applied to new loans. Between 2007 and 2019, the number of bank credit transactions decreased by an average of 0.6% per year, while the average amount increased by 10.1%.
That is, more money was lent to a smaller group of lenders, excluding a large number of people who had to resort to informal loans (chulco). In two other segments, the CFO will apply standard deviations from the active interest rate benchmark, namely: A range of variations is added that allows maximum interest rates to be set. And in the other five segments, the current maximum rate will be maintained (see table). In these last five segments, there are no changes, because they are related to public order, Avellán added. Entrepreneurs are the biggest victims of this kind of policy. Productive and consumer microloans have high operating costs because you have to visit clients frequently and travel long distances. And they have a higher risk because they are more sensitive to unforeseen events such as illness or accidents, according to a study by Análisis Semanal.