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Regulation NAC-DGERCGC20-00000036, issued on May 27, 2020 by the General Director of the Internal Revenue Service establishes the following rules for applying the Executive Decree 1030, which allows taxpayers the deferral of its tax obligations:

1. Which taxpayers are eligible for deferral of its tax obligations?

The following taxpayers are able to defer the payment of 2019 corporate income tax and VAT to be declared in the months of April, May and June:

  1. Micro, small and medium enterprises understood as those that obtained gross revenues of up to US$5,000,000.00 during fiscal year 2019.
  2. Taxpayers who during the fiscal year 2019, obtained gross revenue higher than US$5,000,000.00, provided that they meet at least one of the following conditions:
    • Taxpayers that, before March 27, 2020, have registered in their Tax ID one of the following as their main or secondary economic activity: operation of airlines, agricultural activities, provision of accommodation and/or food services.
    • Taxpayers that, before March 27, 2020 have registered in their Tax ID the province of Galapagos as their main tax address.
    • Taxpayers that are regular exporters of goods, or that 50% of their income derives from the export of goods.

Small and medium-sized enterprises that, on April 1, 2020, have registered any of the following as their main economic activity in their Tax ID, will not be eligible for the deferral.

  • Financial services ancillary activities; and/or,
  • Financial service activities, except insurance and pension funding activities.

2. How can taxpayers benefit from the deferral?

In order to apply the deferral, taxpayers are able to submit an original or substitute tax return and pay any fines and interests applicable.

If the taxpayer has already filed the tax return, they are able to apply the deferral if they have outstanding tax obligations. Any payments made by the taxpayer prior to the date on which the substitute tax return is filed, these will be applied in accordance with article 47 of the Tax Code (first to interest, then to the tax amount and finally to fines).

3. Until what date can the income tax return be filed?

For purposes of tax deferral, taxpayers must file their original or substitute income tax return according to the following schedule:

 

Corporate Income Tax
fiscal year 2019
Ninth Digit of Tax ID Date of submission
(until)
1,2 and 3 4th of June, 2020
4,5 and 6 5th of June, 2020
7,8 and 9 8th of June, 2020
0 9th of June, 2020

Taxpayers domiciled in the province of Galapagos may file the return until June 9.

Taxpayers must pay the first instalment of the tax plus interests and fines, if applicable at the date the tax return is filed. The second instalment must be paid within the same deadlines, through the Multiple Payment Form.

The payment of the remaining four installments must be made according to the following percentages, through the Multiple Payment Form:

 

Quota Month of Payment Rate of
payment
3 June 2020 20%
4 July 2020 20%
5 August 2020 20%
6 September 2020 20%

4. Until what date can the VAT returns be filed?

For the purposes of tax deferral, taxpayers must file their original or substitute VAT returns according to the following schedule:

VAT  – March 2020
Ninth Digit of Tax ID Date of submission
(until)
1,2 and 3 4th of June, 2020
4,5 and 6 5th of June, 2020
7,8 and 9 8th of June, 2020
0 9th of June, 2020

 

VAT  – April 2020
Ninth Digit of Tax ID Fecha de presentación
(hasta)
1,2 and 3 4th of June, 2020
4,5, 6 and 0 5th of June, 2020
7,8 and 9 8th of June, 2020

Taxpayers domiciled in the province of Galapagos may file the return until June 9.

Taxpayers must pay the first instalment of the tax plus interests and fines, if applicable at the date the tax return is filed. The second instalment must be paid within the same deadlines, through the Multiple Payment Form.

The payment of the remaining four installments must be made according to the following percentages, through the Multiple Payment Form:

VAT – Month Payment quota: Month of
Payment
Rate of
Payment
March 2020 3 June 2020 20%
4 July 2020 20%
5 August 2020 20%
6 September 2020 20%
April 2020 3 June 2020 20%
4 July 2020 20%
5 August 2020 20%
6 September 2020 20%

According to Executive Decree 1030, taxpayers that layoff their workers during the emergency will not be eligible for tax deferral. The Ministry of Labor shall notify the Tax Authority of any dismissals made during such period.

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DISCLAIMER: The preceding text has been prepared for general information purposes only. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any given situation requires the specific opinion and view of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES