Ecuador

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 corporate income tax (CIT) purposes, and corresponding pre-payments, companies are obligated to follow these accounting principles.

Taxes on corporate income are levied at the following rates:

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.

A reduced CIT rate (from 3% to 5% benefit) exists for new investments to the extent some conditions are met.

See the Branch income section for a list of countries and territories considered as tax havens by the tax authorities.

Temporary security contribution

Ecuadorian companies and permanent establishments (PEs) that obtained taxable income in the fiscal year 2022 are subjected to a 3.25% contribution, based on the taxable profits of such year. The deadline for the payment of the contribution is 31 March 2024 and 2025.

The contribution will not be deductible for income tax computation purposes, and the lack of payment within the deadline will result in a penalty equivalent to 3% of the obligation per month plus the corresponding interests.

Temporary contribution on profits of banks and credit unions

A temporary contribution applies for banks and credit unions that are tax residents in Ecuador and obtained taxable profits in the 2023 fiscal year. The deadline for the payment is 31 May 2024.

The percentage rate varies on the taxable profits, from 5% (for profits below 5 million United States dollars [USD]) to 25% (for those exceeding USD 100 million).

The contribution will not be deductible for income tax purposes, and the lack of payment is subject to fines and penalties similar to the contribution for companies.

Single income tax on sports betting operators (Impuesto a la Renta Único a los Operadores de Pronósticos Deportivos)

In June 2023, a new tax regime was created for sports resident and non-resident bet operators. Overall, a 15% CIT rate was established for these activities in effect as from July 2024. Below are some topics to be aware of:

• Resident and non-resident operators must be registered before the tax authority.

• The taxable income for resident and non-resident sports bet operators is the total income including commissions minus the total of the prizes paid, provided that withholding has been made at the time of payment of the prize to the customer.

• Several sanctions are established for the lack of compliance of formal obligations.

Local income taxes

No local or provincial government taxes on income are imposed on companies.