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Taxation in Ecuador

Corporate Tax

Main rate: 25%

Resident companies are taxed on their worldwide income; non-resident companies are taxed on income sourced in Ecuador only. A company is resident if it is organised and incorporated under the laws of Ecuador. The tax of 25% is applied to aggregate income, with the exception of a few items, such as dividends received and certain capital gains that are not subject to tax. Companies are entitled to a 15% reduced tax if profits are reinvested.

Individual Tax

Progressive rates up to 25%

Resident individuals are subject to tax on their worldwide income with a credit for foreign tax paid; non-residents are taxed on income sourced in Ecuador only. A person is considered to be a tax resident if living in Ecuador for at least six months in a particular calendar year. Tax is charged at progressive rates, rising to 25% on income over US$58,800. Dividends and other profit distributions received, and interest on savings deposits, are tax-exempt. Work-related travel and meal allowances are also exempt.

Capital Gains

Taxed as income
Capital gains of companies and individuals are generally taxed as income. Individuals are exempt from gains from the occasional (non-business) transfer of immovable property, shares and similar interests, and gains distributed by investment funds.

Indirect Tax

Standard rate: 12%, exports are zero-rated

Value-added tax (VAT) applies to most transactions at the standard rate of 12%. Registration is compulsory for businesses. Exports are zero-rated. Exemptions include housing, financial and investment services, education and health.

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