Ecuador

Foreign tax credit

As of November 2021, foreign tax credit is allowed in Ecuador. The tax credit is equal to the tax paid abroad on the foreign income, up to the amount corresponding to the tax attributable to such income in Ecuador.

In May 2022, the ordinary imputation method was formally established by the tax authority by way of Resolution.

Handicapped employees hiring incentive

An amount equivalent to 150% of remunerations of handicapped employees can be considered as an additional deduction for income tax calculation purposes. The deduction will apply over the excess of the minimum handicapped employees that the employer is required to hire.

Environmental-friendly investments

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

CIT rate reduction

A reduction of 3 points on the CIT rate is available for new productive investments executed after the Organic Law for Economic Development and fiscal sustainability after the COVID-19 pandemic for up to 15 years. A reduction of up to 5 points is available in case the taxpayer signs an Investment Agreement with the government.

Tax credit on remittance tax paid

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.

Tax holiday of interest, fines, and surcharges on pending obligations

A tax holiday of 100% of interest, fines, and surcharges on obligations generated until 31 December 2023 was introduced. The effectiveness of the rule ended on 31 July 2024. 

The rule applied on the total or partial payment of tax obligations generated until 31 December 2023.