Group taxation is not permitted in Ecuador.
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.
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.