Ecuador

Corporate - Tax credits and incentives

Last reviewed - 10 February 2020

Foreign tax credit

There are no provisions in Ecuador for a foreign tax credit. In general terms, income taxed abroad is considered as exempt income, with some special exceptions.

Handicapped employee and new employee hiring incentives

An amount equivalent to 150% and 100% of remunerations of handicapped and new employees, respectively, can be considered as an additional deduction for income tax calculation purposes. In the case of handicapped employees, the deduction will apply over the excess of the minimum handicapped employees that the employer is obligated to hire. New employees must work with the company for at least six months.

Environmental-friendly investments

Additional deductions can be applicable to investments in environmental-friendly assets.

CIT exemptions

CIT exemption is available for new productive investments executed within 'basic industries' or 'prioritized sectors' qualified as such by the Ecuadorian government, as well as investments developed within border cities or outside the cities of Quito and Guayaquil.

Tax credit on remittance tax paid

5% remittance tax paid on imports of raw material and goods, included in a list issued by the Tax Policy Board, and used in productive activities can be considered as tax credit for CIT computation purposes.

Other remittance tax exemptions upon payments of capital and interests derived from foreign loans are available under certain conditions.