IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i5p2537-d755913.html
   My bibliography  Save this article

Income Tax for Microenterprises in the COVID-19 Pandemic: A Case Study on Ecuador

Author

Listed:
  • Maribel Paredes-Torres

    (SISAu Research Group, Facultad de Ingeniería y Tecnologías de la Información y la Comunicación, Universidad Tecnológica Indoamérica, Ambato 180103, Ecuador
    Facultad de Contabilidad y Auditoría, Universidad Técnica de Ambato, Ambato 180104, Ecuador)

  • Ana del Rocío Cando-Zumba

    (Facultad de Contabilidad y Auditoría, Universidad Técnica de Ambato, Ambato 180104, Ecuador)

  • José Varela-Aldás

    (SISAu Research Group, Facultad de Ingeniería y Tecnologías de la Información y la Comunicación, Universidad Tecnológica Indoamérica, Ambato 180103, Ecuador)

Abstract

In this work, we analyze the income tax in Ecuador in 2020, which was affected simultaneously by two factors: the economic crisis caused by COVID-19 and the implementation of a new tax system. The objective is to evaluate the effects of these factors on the economic status of a group of taxpayers and the difference in tax payments compared with previous periods. A quantitative study was carried out, collecting financial data from 30 microenterprises for three fiscal periods. We also analyze the relationship between sales and the taxes paid in the same year, as well as the difference between the previous regime and the system applied in the first year of the pandemic to determine income tax. The results indicate an increase in the tax paid despite a noticeable decrease in sales due to confinement and other sanitary measures. In addition, we verified a significant difference between the two analyzed regimes, mainly because the pandemic regime calculates the tax based solely on income and does not consider expenses. We conclude that 43.33% of the microentrepreneurs we analyzed concluded the fiscal year with an accounting loss. This implies a debt for the following period and the risk of bankruptcy in the future.

Suggested Citation

  • Maribel Paredes-Torres & Ana del Rocío Cando-Zumba & José Varela-Aldás, 2022. "Income Tax for Microenterprises in the COVID-19 Pandemic: A Case Study on Ecuador," Sustainability, MDPI, vol. 14(5), pages 1-20, February.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:5:p:2537-:d:755913
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/5/2537/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/5/2537/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yao-Chin Lin & Chun-Liang Chen & Cheng-Fu Chao & Wei-Hung Chen & Henry Pandia, 2020. "The Study of Evaluation Index of Growth Evaluation of Science and Technological Innovation Micro-Enterprises," Sustainability, MDPI, vol. 12(15), pages 1-25, August.
    2. Syed Abdul Rehman Khan & Pablo Ponce & Muhammad Tanveer & Nathalie Aguirre-Padilla & Haider Mahmood & Syed Adeel Ali Shah, 2021. "Technological Innovation and Circular Economy Practices: Business Strategies to Mitigate the Effects of COVID-19," Sustainability, MDPI, vol. 13(15), pages 1-17, July.
    3. Larrimore, Jeff & Mortenson, Jacob & Splinter, David, 2022. "Earnings shocks and stabilization during COVID-19," Journal of Public Economics, Elsevier, vol. 206(C).
    4. Andrew V. Stephenson, 2018. "The Impact of Personal Income Tax Structure on Income Inequality for Belgium, Bulgaria, Germany, Lithuania, and Poland: A Comparison of Flat and Graduated Income Tax Structures," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 46(4), pages 405-417, December.
    5. Cardoza, Guillermo & Fornes, Gaston & Farber, Vanina & Gonzalez Duarte, Roberto & Ruiz Gutierrez, Jaime, 2016. "Barriers and public policies affecting the international expansion of Latin American SMEs: Evidence from Brazil, Colombia, and Peru," Journal of Business Research, Elsevier, vol. 69(6), pages 2030-2039.
    6. Thiemo Fetzer & Lukas Hensel & Johannes Hermle & Christopher Roth, 2021. "Coronavirus Perceptions and Economic Anxiety," The Review of Economics and Statistics, MIT Press, vol. 103(5), pages 968–978-9, December.
    7. Jesús Huerta de Soto & Antonio Sánchez-Bayón & Philipp Bagus, 2021. "Principles of Monetary & Financial Sustainability and Wellbeing in a Post-COVID-19 World: The Crisis and Its Management," Sustainability, MDPI, vol. 13(9), pages 1-11, April.
    8. Marcela Benites & Romel Ramón González-Díaz & Ángel Acevedo-Duque & Luis Armando Becerra-Pérez & Graciela Tristancho Cediel, 2021. "Latin American Microentrepreneurs: Trajectories and Meanings about Informal Work," Sustainability, MDPI, vol. 13(10), pages 1-16, May.
    9. Bing Xu & Lili Li & Yan Liang & Mohib Ur Rahman, 2019. "Measuring Risk Allocation of Tax Burden for Small and Micro Enterprises," Sustainability, MDPI, vol. 11(3), pages 1-20, January.
    10. Stella Bvuma & Carl Marnewick, 2020. "Sustainable Livelihoods of Township Small, Medium and Micro Enterprises towards Growth and Development," Sustainability, MDPI, vol. 12(8), pages 1-17, April.
    11. Yoonkyung Choi & Hyun-ju Kim & Yoon Lee, 2022. "Economic Consequences of the COVID-19 Pandemic: Will It Be a Barrier to Achieving Sustainability?," Sustainability, MDPI, vol. 14(3), pages 1-16, January.
    12. Rasa Kanapickiene & Renatas Spicas, 2019. "Credit Risk Assessment Model for Small and Micro-Enterprises: The Case of Lithuania," Risks, MDPI, vol. 7(2), pages 1-23, June.
    13. Jeremy Phillipson & Matthew Gorton & Roger Turner & Mark Shucksmith & Katie Aitken-McDermott & Francisco Areal & Paul Cowie & Carmen Hubbard & Sara Maioli & Ruth McAreavey & Diogo Souza-Monteiro & Rob, 2020. "The COVID-19 Pandemic and Its Implications for Rural Economies," Sustainability, MDPI, vol. 12(10), pages 1-9, May.
    14. Jonathan Karnon, 2020. "The Case for a Temporary COVID-19 Income Tax Levy Now, During the Crisis," Applied Health Economics and Health Policy, Springer, vol. 18(3), pages 335-337, June.
    15. Inna Cabelkova & Lubos Smutka, 2021. "The Effects of Solidarity, Income, and Reliance on the State on Personal Income Tax Preferences. The Case of the Czech Republic," Sustainability, MDPI, vol. 13(18), pages 1-22, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francesco Capozza & Ingar Haaland & Christopher Roth & Johannes Wohlfart, 2021. "Studying Information Acquisition in the Field: A Practical Guide and Review," CEBI working paper series 21-15, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    2. Brodeur, Abel & Clark, Andrew E. & Fleche, Sarah & Powdthavee, Nattavudh, 2021. "COVID-19, lockdowns and well-being: Evidence from Google Trends," Journal of Public Economics, Elsevier, vol. 193(C).
    3. Miescu, Mirela & Rossi, Raffaele, 2021. "COVID-19-induced shocks and uncertainty," European Economic Review, Elsevier, vol. 139(C).
    4. Linlin Zheng & Yashi Dong & Jineng Chen & Yuyi Li & Wenzhuo Li & Miaolian Su, 2022. "Impact of Crisis on Sustainable Business Model Innovation—The Role of Technology Innovation," Sustainability, MDPI, vol. 14(18), pages 1-28, September.
    5. Louis-Philippe Beland & Abel Brodeur & Taylor Wright, 2020. "COVID-19, Stay-at-Home Orders and Employment: Evidence from CPS Data," Carleton Economic Papers 20-04, Carleton University, Department of Economics, revised 19 May 2020.
    6. André de Abreu Saraiva Monteiro Alves & Fernando Manuel Pereira de Oliveira Carvalho, 2022. "How Dynamic Managerial Capabilities, Entrepreneurial Orientation, and Operational Capabilities Impact Microenterprises’ Global Performance," Sustainability, MDPI, vol. 15(1), pages 1-23, December.
    7. Mohammed, Mikidadu & Barrales-Ruiz, Jose A., 2020. "Pandemics and Oil Shocks," EconStor Preprints 222268, ZBW - Leibniz Information Centre for Economics.
    8. Heyden, Kim J. & Heyden, Thomas, 2021. "Market reactions to the arrival and containment of COVID-19: An event study," Finance Research Letters, Elsevier, vol. 38(C).
    9. de Palma, André & Vosough, Shaghayegh & Liao, Feixiong, 2022. "An overview of effects of COVID-19 on mobility and lifestyle: 18 months since the outbreak," Transportation Research Part A: Policy and Practice, Elsevier, vol. 159(C), pages 372-397.
    10. Nikolaos Apostolopoulos & Panagiotis Liargovas & Stavros Stavroyiannis & Ilias Makris & Sotiris Apostolopoulos & Dimitrios Petropoulos & Eleni Anastasopoulou, 2020. "Sustaining Rural Areas, Rural Tourism Enterprises and EU Development Policies: A Multi-Layer Conceptualisation of the Obstacles in Greece," Sustainability, MDPI, vol. 12(18), pages 1-19, September.
    11. Cotofan, Maria & Matakos, Konstantinos, 2023. "Adapting or compounding? The effects of recurring labour shocks on stated and revealed preferences for redistribution," LSE Research Online Documents on Economics 121297, London School of Economics and Political Science, LSE Library.
    12. Ingar Haaland & Christopher Roth & Johannes Wohlfart, 2023. "Designing Information Provision Experiments," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 3-40, March.
    13. Ester Faia & Andreas Fuster & Vincenzo Pezone & Basit Zafar, 2024. "Biases in Information Selection and Processing: Survey Evidence from the Pandemic," The Review of Economics and Statistics, MIT Press, vol. 106(3), pages 829-847, May.
    14. Nicholas Bamegne Nambie & Philomena Dadzie & Dorcas Oye Haywood-Dadzie, 2023. "Measuring the Effect of Income Inequality, Financial Inclusion, Investment, and Unemployment, on Economic Growth in Africa: A Moderating Role of Digital Financial Technology," International Journal of Economics and Financial Issues, Econjournals, vol. 13(4), pages 111-124, July.
    15. Sonia OREFICCE & Climent Quintana-Domeque, 2021. "Gender inequality in COVID-19 times: evidence from UK prolific participants," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 87(2), pages 261-287, June.
    16. Diana Escandon-Barbosa & David Urbano-Pulido & Andrea Hurtado-Ayala, 2019. "Exploring the Relationship between Formal and Informal Institutions, Social Capital, and Entrepreneurial Activity in Developing and Developed Countries," Sustainability, MDPI, vol. 11(2), pages 1-20, January.
    17. Lucia Freira & Marco Sartorio & Cynthia Boruchowicz & Florencia Lopez Boo & Joaquin Navajas, 2021. "The interplay between partisanship, forecasted COVID-19 deaths, and support for preventive policies," Palgrave Communications, Palgrave Macmillan, vol. 8(1), pages 1-10, December.
    18. Dräger, Lena & Bui, Dzung & Nghiem, Giang & Hayo, Bernd, 2021. "Consumer Sentiment During the COVID-19 Pandemic," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242375, Verein für Socialpolitik / German Economic Association.
    19. Al Rababa'a, Abdel Razzaq & Alomari, Mohammad & Mensi, Walid & Matar, Ali & Saidat, Zaid, 2021. "Does tracking the infectious diseases impact the gold, oil and US dollar returns and correlation? A quantile regression approach," Resources Policy, Elsevier, vol. 74(C).
    20. Mathias Huebener & Sevrin Waights & C. Katharina Spiess & Nico A. Siegel & Gert G. Wagner, 2021. "Parental well-being in times of Covid-19 in Germany," Review of Economics of the Household, Springer, vol. 19(1), pages 91-122, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:5:p:2537-:d:755913. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.