Ecuador - Update on Indirect Tax Changes

Several changes to Ecuador’s indirect tax rules were made during 2024, including the following:

As from 1 January, individuals and companies may request a refund of VAT paid on the local acquisition or import of goods, as well as the VAT paid on the contracting of services related to the construction of real estate projects. In the latter case, the amount of the VAT to be refunded may not exceed 6.5% of the total project cost.
A decree issued by the president on 12 March allows the VAT rate to be modified provided it is not lower than 13% or higher than 15%. The 15% rate applies during the period 1 April 2024 to 31 December 2025 and local transfers of construction materials are subject to a 5% rate.
Penalties are imposed for failure to issue or deliver sales receipts.
As from 1 April, the Foreign Exchange Outflow Tax rate is 5%.
Individuals and companies engaged in the provision of services that qualify as tourism activities must be registered with the National Tourism Registry to be eligible for the reduced VAT rate of 8%.
An exemption from the Special Consumption Tax is granted for certain alcoholic beverages and the authorities have set the tax rates for other alcoholic beverages, cigarettes, etc.
As from 1 January 2025, the foreign exchange outflow tax rate is reduced from 5% to 0% for tariff subheadings imported by the pharmaceutical sector. With respect to other productive sectors, and exclusively for tariff subheadings to be determined by law, the tax rate is 0% from January to March 2025 and 2.5% as from April.

Nelson Morales
BDO in Ecuador