Ecuador
Individual - Deductions
Last reviewed - 02 March 2022Employment 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.