Ecuador

Taxable period

The fiscal year is the calendar year.

Tax returns

The tax system operates on the basis of self-assessment, with subsequent inspection by the tax authorities.

Tax filing deadlines begin on 9 April and continue up to 28 April. The tax return due dates are determined by the ninth digit of the company’s Tax Identification Number (TIN) and taxpayer classification defined by the tax authority.

Payment of tax

Local tax authorities have established that for CIT purposes, and its pre-payments, companies are obligated to follow IFRS accounting principles.

In general terms, most companies are required to keep accounting records and are allowed to make voluntary CIT prepayments based on the following calculation: 50% of the previous year CIT due less income tax withholding applied in such fiscal year.

The final CIT payment is due between 9 April and 28 April.

Self-withholding applicable to major taxpayers

As of January 2024, major taxpayers duly qualified by the IRS are required to file and pay self-withholding income tax based on their monthly taxable income. Percentage is determined by the IRS for each taxpayer through resolution and may vary from 1% to 10%. 

Tax audit process

In general terms, tax authorities look at the consistency of the information delivered by the taxpayers and information reported by third parties. Tax authorities can issue communications in order to require explanations on any detected inconsistency. Additionally, accounting inspections can be performed.

Statute of limitations

Fiscal authorities have four years from the date of filing to start proceedings for tax audits or assessment and collection of taxes.

The statute of limitations is extended from four to six years if the corresponding tax returns have not been filed. A tax audit can be reopened, verified, or amended within one year from the date of completion.

Topics of focus for tax authorities

Tax authorities usually focus on substance, formal compliance requirements, and consistency of information filed.