Doing Business in Ecuador: Outsourcing Accounting Services
The growth in the demand for the outsourcing of professional accounting services in Ecuador is due in part to the increase in foreign investment and the need for knowledgeable accountants to be on top of the constant changes in regulations in the country. In the following report, we will give an overview of why there has been a growth in the demand for accounting services in Ecuador in relation to the economic outlook and trends of the Andean country and the opportunities and challenges it faces. This will help you understand the projected growth rates for the emerging economy and why accounting services in Ecuador are more important than ever.
Ecuadorian Economy Overview
The Ecuadorian economy grew an average of 4% a year between 2006 and 2014. Growth stunted in 2015 due to a drop in oil prices and the strengthening of the US dollar, the country’s national currency. The president at the time, Correa, set the country on the path to growth with numerous regulatory changes to help Ecuador out of the slump it was in and has seen much progress since then.
Although Ecuador is open to foreign investment in most sectors, foreign direct investment (FDI) has always been lower in the country compared to in other Latin American markets. However, to change this, the government has signed investment contracts with multinational petroleum companies, passed a public-private partnership law, and has changed tax and regulatory policies for mining to better suit foreign investors. Ecuador remains an attractive country to do business in because foreign investors may keep up to 100% of net profits and capital it is responsible for.
The Importance of a Good Accountant in Ecuador
The challenge for businesses in Ecuador is that the country’s commercial and investment policies are subject to frequent changes and can be contradicting at times. Problems also arise in the judicial system, which can sometimes be susceptible to political and economic pressures. When combined, these factors increase both the costs and risks of doing business in Ecuador.
Because of the frequent changes and constant modifications in the law, having a credible accounting service aware of all of the changes in regulations is critical for your business success. Accounting services are more valuable than ever in Ecuador because the professional accountants act as advisers in the decision-making process of the organization. Not only do accountants in Ecuador handle day to day accounting and finance operations, but they also act as consultants for your business which adds much value when forming a company there.
The Future of the Ecuadorian Economy
In the short term, Ecuador is not expected to see exponential growth due to the continued strengthening of the US dollar. This, paired with its debt, might not make it seem like the most attractive economy for investors at the moment. However, there is always opportunity no matter the status of an economy, and the country has put in strong regulatory measures to make sure that doing business in Ecuador is more simple, profitable, and attractive to investors. In the long term, Ecuador looks like a promising country for mergers and acquisitions to happen in, which could be beneficial for professional accounting services in the country. As 2017 comes to an end, Ecuador expects a small contraction in its GDP but is forecasted to show steady growth in the following years, with projections of an increase of 1.3% in the growth rate by 2020. If you are
If you are interested in investing or incorporating a company in Ecuador and have more questions about how valuable an accounting service can be for your business, please feel free to contact David at [email protected]. Our team of local and foreign experts at Biz Latin Hub offer a wide range of professional multilingual market entry and back office services that can help you start your company in Latin America.
If you want to know more about our accounting services and how we can help you do business in Latin America, watch this video: