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 CIT purposes, and corresponding pre-payments, companies are obligated to follow these accounting principles.
Taxes on corporate income are levied at the following rates:
|Type of income||CIT rate (%)|
|Distributed or undistributed profits of local corporations and branches||22, 25, or 28|
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.
See the Branch income section for a list of countries and territories considered as tax havens by the tax authorities.
Companies with taxable revenues that exceed 1 million United States dollars (USD) in 2018 must pay an annual contribution in 2020, 2021, and 2022.
The contribution rate ranges from 0.10% to 0.20% and must be calculated annually based on 2018's taxable revenue. This contribution will no longer be levied as of 2023.
Temporary post-COVID contribution
Companies that carry out economic activities with a net equity equal to or greater than USD 5 million as of 31 December 2020 will pay a temporary contribution of 0.8% on their net 2020 equity for fiscal year 2022 and 2023. The deadline for filing and payment will be 31 March of each year. This contribution will no longer be levied as of June 2023.
Local income taxes
No local or provincial government taxes on income are imposed on companies.