Ecuador

On December 20, 2023, the Economic Efficiency and Employment Generation Law proposed by the President of the Republic came into effect, with the purpose of boosting employment, increasing tax collection and promote investment. Below, some of the most relevant changes:

• Self Income Tax withholding by “Large taxpayers” on a monthly basis over their total taxable income.
• New additional deductions for Income Tax purposes.
• New productive investments in projects focused on tourism will be entitled to Income Tax exemption for 7 years.
• 10 years Income Tax exemption for new productive investments focused on the transition to renewable energy generation.
• Creation of the Free Trade Zone regime. Users and operators will have access to tax benefits such as 0% Income Tax rate for 5 years and fixed rate of 15% as from the 6th year; Income Tax exemption for dividends distributed to shareholders; VAT exemption; exemption from foreign exchange tax; exemption from all foreign trade taxes; among others.
• Changes to the Public-Private Partnerships regime.
• Taxpayers may stabilise their Income Tax regime for 5 years, provided they pay an additional 2% over the income tax rate applicable.
• Taxpayers that pay its tax obligations to the IRS, generated up to December 31, 2023, will receive a 100% remission of interest, penalties, fines and surcharges on the capital paid to the extent the payment is made as of July 31, 2024.
• Changes to the Single Income Tax Regime for sports betting operators.
• New Controlled Foreign (CFC) Companies regime.