Thanks to the inter-institutional cooperation agreement between the Institute for Fiscal Studies (IEF) of the Ministry of Finance and Public Administration of Spain and the CIAT, the tasks of review and validation of the income tax of legal entities micro-simulation model (IRPJ) developed by the Center for Fiscal Studies (CEF) of the Internal Revenue Service (IRS) in Ecuador were recently completed.

Mr. César Pérez and Ms. Lucia Torrejon from the Statistics IEF Unit moved to Quito in January of this year to provide the aforementioned technical assistance, particularly with regard to the treatment and cleansing (consistency) of data from the tax returns statements and to transverse and longitudinal sampling techniques .

The tool, which source code is written entirely in Stata but presents the results and graphics in simple Excel spreadsheets, performs descriptive statistical analysis of the data, explores patterns of behavior, makes deterministic and stochastic simulations and allows distributional impact and structural analysis of possible reforms in the IRPJ.

Through The CIAT Study Network areas, the SRI simulator is available to all member countries tax administrations which are interested in adapting the referred model to their tax reality. For technical assistance please contact the Tax Studies and Research Director, Econ. Miguel Pecho.

It is worth mentioning that since 2010, the CIAT has been promoting the use of micro-simulation techniques in the study and research areas because their involvement is increasingly common in tasks of policy evaluation or preparation

of tax reforms, making imperative to take advantage of the benefits of this type of quantitative techniques, and thus provide better recommendations to policy makers.

The disinterested cooperation of SRI and IEF supports the CIAT efforts to have unified micro-simulation models for all Latin America, a course of action that was presented in late 2011 to the of Planning and Coordination Committee of the Eurosocial II Program as part of the Thematic Area of Public Finance, replicating the successful experience of the EUROMOD project that now applies to all European countries.

In the photo, Ms. Ximena Amoroso and Mr. Mauro Andino, SRI Ecuador handling the IRPJ simulator to the CIAT Tax Studies and Research Director, Ecom. Miguel Pecho		Photo: Ms. Lucia Torrejón and Mr. Cesar Perez from the IEF, with the CEF team of the SRI of Ecuador