Ecuador

Law for Tax Simplification and Progressivity

Through the Law for Tax Simplification and Progressivity, enacted on 31 December 2019, the deduction of personal expenses for individuals earning a net income greater than 100,000 United States dollars (USD) was limited.

Law of Humanitarian Support to Combat the Health Crisis

Due to COVID-19 and the current economic situation, on June 2020 the Ecuadorian government enacted the Law of Humanitarian Support to Combat the Health Crisis derived from COVID-19. This Law introduces, among others, the negotiation of working conditions between employers and employees, new hiring conditions, as well as the possibility to reduce working hours per day, without major changes in tax legislation.

Organic Law for Economic Development and Fiscal Sustainability

The Organic Law for Economic Development and Fiscal Sustainability after the COVID-19 pandemic, enacted in November 2021, foresees several reforms for individuals, specifically related to personal expenses, which are currently considered as tax credit against income tax due.

Decree Law for Family Economy

Within the measures set forth in the Decree Law for Family Economy, a new personal expenses deduction mechanism is included.

For individuals without dependants, the amount of the rebate for personal expenses will be equivalent to 18% of the lesser value between the personal expenses reported in the respective fiscal year and the value of the basic family basket (USD 764.71) multiplied by seven.

For individuals with dependants, the amount of the rebate for personal expenses will be equivalent to 18% of the lesser value between the personal expenses reported in the respective fiscal year and the value of the basic family basket multiplied by the corresponding number of baskets that vary between 9 to 20 as per the number of dependants (between 1 and 5 or more).