Ecuador

On 20 December 2023, the Economic Efficiency and Employment Generation Law proposed by the President of the Republic came into effect, with the purpose of boosting employment, increasing tax collection, and promote investment. Below are some of the most relevant changes:

• Self-income tax withholding by ’large taxpayers‘ on a monthly basis over their total taxable income.

• New additional deductions for income tax purposes.

• New productive investments in projects focused on tourism will be entitled to income tax exemption for seven years.
• Ten-years income tax exemption for new productive investments focused on the transition to renewable energy generation.

• Creation of the Free Trade Zone regime. Users and operators will have access to tax benefits, such as 0% income tax rate for five years and fixed rate of 15% as of the sixth year, income tax exemption for dividends distributed to shareholders, value-added tax (VAT) exemption, exemption from foreign exchange tax, and exemption from all foreign trade taxes, among others.

• Changes to the public-private partnerships regime.

• Taxpayers may stabilise their income tax regime for five years, provided they pay an additional 2% over the income tax rate applicable.

• Taxpayers that pay their tax obligations to the Internal Revenue Service (IRS), generated up to 31 December 2023, will receive a 100% remission of interest, penalties, fines, and surcharges on the capital paid to the extent the payment is made as of 31 July 2024.

• Changes to the single income tax regime for sports betting operators.
• New controlled foreign companies (CFCs) regime.