Ecuador

Individual - Deductions

Last reviewed - 21 July 2022

Employment expenses

Social security contributions are deductible against income arising from employment.

Personal expenses

The last tax reform incorporates a reduction on  the tax due by personal expenses (applicable before allocating tax credits) applicable as follows:

If the annual gross income (includes exempt income) is less than 2.13 FBD (USD 24,090 for 2022), the maximum amount of the reduction for personal expenses will  be:

  • 20% * (the lower value between "personal expenses declared in the tax year" and the "value of the basic market basket* 7"); (719.65 * 7 = USD 5,037) applicable for 2022.

If the annual gross income (including exempt income) is greater than 2.13 FBD (USD 24,090 for 2022), the maximum amount of the personal expense allowance will be:

  • 10% * (the lower value between "personal expenses declared in the tax year" and the "value of the basic market basket* 7"); (719.65 * 7 = USD 5,037) applicable for 2022.

The result of the calculation as indicated above, would be the amount to be reduced from the tax due.

Personal allowances

An annual personal allowance of USD 11,310 represents the minimum taxable income in the current progressive PIT table, which means that an individual will pay income tax when one's income exceeds USD 11,310.

Business deductions

Independent professionals are allowed to deduct their social security contributions as well as other business expenses.