Ecuador currently taxes its citizens and foreigners mostly on their Ecuador-source income, which is defined as any income derived from activities executed in Ecuador, regardless of where the income is received or paid.
Income generated abroad by Ecuador-resident individuals, local or foreign, is taxable. Income tax credit is granted up to the income tax attributable to such income in Ecuador.
Non-residents are subject to tax on their Ecuador-source income regardless of their domicile or place of residence. Non-residents are subject to 25% income tax on income received from local sources, which is withheld at source. Payments made to non-residents occasionally working in Ecuador, when not charged to an Ecuadorian company or branch of a foreign entity, do not give rise to income tax. Foreigners with resident visas are subject to income tax on any earnings and are not entitled to exclusion of income for periods of temporary absence from Ecuador.
Personal income tax rates
The personal income tax (PIT) table applicable for year 2022 is as follows:
|Taxable income (USD)||Tax on column 1 (USD)||Tax on excess (%)|
|Over (column 1)||Not over|
Local taxes on income
There are no local (provincial, county, or municipal) taxes on income.
Note that any individual who performs an economic activity, without a labour relationship, must obtain the commercial registry or ‘patente municipal’. Professionals must pay this tax ranging from USD 10 to USD 700, depending on their economic activity and the condition of being required to keep accounting records or not.