Draft Double Taxation Relief and International Tax Enforcement (Ecuador) Order 2024

Richard Fuller Excerpts

Monday 9th December 2024 General Committees

[Richard Fuller (North Bedfordshire) (Con)]

I echo the Minister in saying it is a pleasure to serve on the Committee under your chairmanship, Mrs Harris.

The Minister will be pleased to know that it is not the intention of the official Opposition to divide the Committee on this tax treaty. However, I have a number of questions —he may be able to answer them today, but I am perfectly happy if he wants to reply in writing subsequently.

This treaty follows on from the agreement signed in Quito on 6 August this year. Can the Minister provide us with an update on the status of Ecuador’s ratification of this treaty? As I understand it, that will be subject to its National Assembly, but there are elections to the National Assembly coming up in March next year and the President only holds a majority through a coalition. I would be grateful for any update on the status and expected date of ratification.

I echo the Minister’s comments about the importance of stimulating exports and trade with Ecuador. We have very limited trade at the moment, and hopefully this agreement will help from the point of view of both imports and exports, and of direct investment.

The Minister mentioned that this agreement was based on the OECD model tax convention. That model, as hon. Members probably know, has been in place for 30 or 40 years—maybe even longer—and many tax treaties around the world are signed around these conventions. However, there is a slight deviation in part of this agreement. In paragraph 5.16 of the explanatory memorandum, relating to article 5 on permanent establishment, it says that the agreement

“has a wider scope than the OECD Model, reflecting Ecuador’s preference. In particular, it has a lower threshold of 183 days for a building site to give a PE. It also deems there to be a PE where services are provided by an enterprise in the other territory for more than 183 days in total in a 12-month period.”

As there is very little for the Committee to note that is different from the OECD model, I hope the Minister does not mind me asking about that one point I have highlighted.

Furthermore, Ecuador is, as best I know, not a member of the OECD, or certainly has not signed up to pillar 2, the agreement on global minimum taxation for multinational enterprises. Any implication in this tax treaty relating to Ecuador’s status on that question would be of interest, but again that is not a matter for us to divide the Committee on today.