Ecuador

Group taxation is not permitted in Ecuador.

Transfer pricing

The transfer pricing regime in Ecuador is based on the Organisation for Economic Co-operation and Development (OECD) guidelines. Related-party transactions must be carried out at arm’s length. Formal documentation requirements exist.

A regulation has established the procedures to apply for an Advance Pricing Agreement (APA) in regards to transfer pricing methods for related-party transactions. Accordingly, the taxpayer may submit a formal application for a binding rule.

Thin capitalisation

A thin capitalisation rule applies for interest deductibility on loans granted by related parties equivalent to 20% of the fiscal year profit before taxes plus compulsory profit sharing, interest, depreciation, and amortisation expenses.

Controlled foreign companies (CFCs)

There are no CFC provisions in Ecuador.