Ecuador

Transfer of property of a vessel performed in Ecuador produces a Value Added Tax of 12% of the price of transfer.

Without prejudice of special provisions or duties contained within bilateral or multilateral Trade Agreements, vessels being imported to Ecuador must pay the following taxes:
1. Customs duties: The Tariff Item for the importation vessels depends on the Vessel's Gross Tonnage and also, on the purpose of its utilization (transportation of goods, passengers, salvage, tug operations, tourism etc). It is usually calculated by a percentage of the CIF value of vessel. In addition to payment of customs duties, it must be paid the following: a) FODIN (Children's fund) of 0.5% CIF value; and, b) CORPEI (Ecuadorian Corporation for the importation promotion) of 0.025% FOB value.
2. I.V.A. (Value-Added Tax): The percentage is 12% calculated on the amount that results for adding to the CIF value of the vessel, the following: a) Custom duty; plus, b) FODIN (0.5% CIF value); plus, c) CORPEI (0.025% FOB value).
3. There is also a tax called ICE (Special Consume Tax) only for luxury goods, usually imposed to the importation of yatchs and pleasure private boats. Subject to the fulfillment of certain requirements, some dispositions contained in various Law provide the possibility of Draw Back of Custom Duties, e.g. the Tourism Law.

Notwithstanding, since the enactment of the recent Law for Development of Maritime Transport and Related Activities, individuals and corporations, national and foreign, previously obtaining the respective "qualification" that to this purpose is to be issued by Merchant Marine National Office (DIGMER), are entitled to exemptions of taxes and custom duties. The recent Law for Development of Maritime Transport and Related Activities was enacted in order to promote the modernization and development of the Maritime Transportation, vessels construction industry and related activities. She is intended to provide the following benefits as to individuals or corporations devoted to commercial maritime carriage of passengers, goods or/and fishing commercial activities:
1. Tariff 0 of Valued-Added Tax and no Custom Duties for the importation of vessels devoted to commercial transportation (cargo or passengers) that have less than 10 years of construction.
2. Tariff 0 of Valued-Added Tax and no Custom Duties for the importation of equipment, engines, communication system devices, radios and other related devices that may be used within the commercial operation of vessels.
3. Tariff 0 of Valued-Added Tax for the construction, maintenance and repair of vessels.
4. Tariff 0 of Valued-Added Tax for bareboat charter, no matter if it is with or without "purchase option".
The respective "qualification" is valid for four years. Once obtained, the beneficiary is subject to the benefits afore mentioned, and afterwards, it would only be needed to provide the documentary requirements, depending of the activity desired, to make effective the importation, construction and repair of vessels, or bareboat charters.

Individuals or corporations obtaining the said "qualification" are entitled to get fuel at international prices for its commercial operation.
Vessels chartered in "bareboat modality" that are intended to have these benefits, must use the Ecuadorian Flag and hire Ecuadorians for at least 70% of the crew.

Vessels imported for bareboat charter purposes under this Law, although require using the Ecuadorian Flag, might not require to be registered within Ecuadorian Registry; however, it should be noted that Customs Authorities has not yet clarified which Special Customs Regimen is to be applied. We expect that this be resolved in the next few months.

It is to be underlined that at this present moment, benefits above mentioned are not being put in practice by Customs Authorities, since the latter considers that the prevailing Law - Customs Law - does not contain exemptions as such detailed within the Law for the Development of Maritime Transport and Related Activities. We also expect that this hurdle be resolved within the next few months.

In regards to registration purposes, the importation of vessels can be basically subcategorized as follows: a) Importation for purposes of Nationalization; and, b) Temporary importation for further exportation in the same condition.

What concerns to the first, the importation for nationalization implies that the vessel will be registered within the Ecuadorian Registry; notwithstanding, as above mentioned, vessels imported for bareboat charter purposes under the Law for the Development of Maritime Transport and Related Activities might have a Special Customs Regimen, but this is still subject of clarification by Customs Authorities.
As to the second case, that is to say, the Temporary importation for further exportation in the same condition, this is specially addressed for vessels being used as part of a concession public contract previously entered with the Government or with privates having public delegation to provide such public services. This is a special regimen whose main idea is that the Temporary Importation of the vessel depends on the duration of the pertaining Concession Public Contract. The Temporary Importation can also be applied to vessels entering to Ecuador for private interests; however, the time period of temporary importation is limited to 180 days, extended only for one 90 day period.

Since the present analysis is basically addressed to registration matters, the information that is detailed below will only refer to Importation for Nationalization.

Individuals or Corporations willing to import a vessel to Ecuador must fulfill requirements from both, Ecuadorian Customs Office (CAE), and Merchant Marine National Office (DIGMER), without prejudice that other Governmental Departments imposes some specific permission or authorization according to the purpose of the importation of vessel, e.g., tourists operation purposes.

In regards to Customs matters, it must first be performed the approval of DUI, which is the document wherein is indicated the class and type of the goods subject of importation to Ecuador. Once the DUI is approved, it proceeds to hire a verification enterprise so that she performs the verification in origin of the vessel.

Concurrently to the fulfillment of the above, it should be performed all steps that concerns to Ecuadorian Maritime Authorities. Vessels being imported to Ecuador are to obtain from DIGMER a provisional Certificate of Registry and a Sea Letter, in order to perform the voyage to Ecuador. These documents are valid for six month, being renewable only once.

If the Sea Letter is obtained for the first time, it must be presented before Maritime Authorities the title of property of the vessel, as well as the previous Certification of Registry or Register duly cancelled. Once is obtained the provisional Sea Letter, it is granted the provisional Certificate of Registry.

Once the verification in origin is effected, and provided that the provisional Sea Letter and the provisional Certificate of Registry is obtained, the vessel is available to sail to any Ecuadorian Port, exempting Galápagos Islands which have a special regimen whether for entrance as for commercial operation.
At the moment of the arrival of the vessel to the respective Ecuadorian Port, she must be received by Customs, Marine, Sanitary and Immigration Authorities with the purpose to verify if the documentation on board is according to respective International and Local Rules and Regulations.

The Registration of the title of property can be effected even before the vessels sails towards to Ecuadorian Port for its nationalization. According to the General Law of Registration, if the pertaining title of property is granted abroad, prior to its registration, a judicial order must be issued declaring the validity of the document as to formalities and its authenticity. After the registration, it proceeds to commence the steps to obtaining the definitive Certificate of Registry and the Navigation Patent.

Once the vessel is registered, it proceeds to request to DIGMER the Navigation Patent by addressing petition enclosing the respective Certificate of Registry. The said Patent should also be registered within the Harbor Master's Office whereby she is registered.