Ecuador

Resident entities are taxed on their worldwide income. Non-resident entities are subject to tax on Ecuadorian-source income only.

International Financial Reporting Standards (IFRS) are in force for all entities. Local tax authorities have established that for corporate income tax (CIT) purposes, and corresponding pre-payments, companies are obligated to follow these accounting principles.

Taxes on corporate income are levied at the following rates:

Ecuadorian companies owned by residents or non-residents located in non-tax-haven jurisdictions are subject to a 22% or 25% CIT rate. The general CIT rate is 25%; however, a 28% rate should apply if non-resident shareholders are located in a tax haven jurisdiction and additionally there is an Ecuadorian individual shareholder in the ownership structure. Such increase is also applicable when the company's ownership structure is not duly disclosed before the Ecuadorian tax authorities.

A reduced CIT rate (from 3% to 5% benefit) exists for new investments to the extent some conditions are met.

See the Branch income section for a list of countries and territories considered as tax havens by the tax authorities.

Payment on undistributed profits

Ecuador imposes an annual tax in advance (“pago en cuenta”) on undistributed profits accumulated as of July 31 of each year. The tax is calculated on the total balance of retained earnings and is subject to a progressive single‑rate table ranging from 0% to 2.5%, depending on the amount of undistributed profits.

For the 2025 fiscal year, the regulation established that this had to be paid in two installments, due in November and December 2025. The amount paid can be used as a tax credit, considering the following:

1. When dividends are distributed: the company may credit the amount paid against the withholding tax triggered upon dividend distribution.
2. When retained earnings are capitalized: the company may credit the amount against its corporate income tax liability, provided certain regulatory conditions are met

If the company does not use the tax credit through dividend distribution or capitalization, it may request a refund within the legally established period and under certain conditions.

However, if within two years the company neither distributes dividends nor capitalizes the retained earnings, the tax credit expires, and it can no longer be used, credited, or refunded.

Single income tax on sports betting operators (Impuesto a la Renta Único a los Operadores de Pronósticos Deportivos)

In June 2023, a new tax regime was created for sports resident and non-resident bet operators. Overall, a 15% CIT rate was established for these activities in effect as from July 2024. Below are some topics to be aware of:

• Resident and non-resident operators must be registered before the tax authority.

• The taxable income for resident and non-resident sports bet operators is the total income including commissions minus the total of the prizes paid, provided that withholding has been made at the time of payment of the prize to the customer.

• Several sanctions are established for the lack of compliance of formal obligations.

Other single income tax regimes:

• Banana Sector: The Single Income Tax for the banana sector applies to the production, commercialization, and export of bananas and other musaceae. Tax is calculated based on gross sales, using an official box‑equivalency system that standardizes different box weights and types for tax purposes. Export operations are taxed at rates of up to 1.25%, and prices cannot be declared below the official minimum export reference.
• Agro-agricultural sector: This regime applies to producers and traders of agricultural goods sold in their natural state, excluding the banana and forestry sectors. Instead of calculating tax on profit, the IRU is assessed on gross sales using predefined rate tables for local and export transactions. Qualifying activities include cultivation and basic handling processes (e.g., packing or refrigeration), provided there is no industrial transformation.
• 10% Capital gain tax: applies to the capital gain obtained from transferring shares or similar equity rights in Ecuador domiciled companies.

Local income taxes

No local or provincial government taxes on income are imposed on companies.