On July 20, 2023, the Department of Regulations and Consultations of the General Directorate of the Internal Revenue Service in response to Consultation No. 1170120230744808 issued Official Letter No. 91701202023OCON001932, in which it determines:
- That according to the Labor Code and Circular No. NAC-DGECCGC22-00000004, issued by the Tax Administration, entities may maintain a labor or civil relationship with their Legal Representative.
- In the case of Legal Representatives who maintain an employment relationship with the entity, the amounts for wages, salaries and other remunerations will be deductible if the payment of employer contributions to the Ecuadorian Institute of Social Security, is justified.
- In the case of Legal Representatives who maintain a civil relationship with the entity, the respective fees will be deductible expenses when they are supported by invoices, issued in accordance with tax regulations, therefore, it is not necessary to pay employer contributions to the Ecuadorian Institute of Social Security.
Would you like to receive our newsletters with information like the one you have just read?
Click here and subscribe.