Resolution NAC-DGERCGC24-00000008 issued by the Tax Authority and published in the Supplement of the Official Gazette No. 508 on February 29, 2024, updated the income tax withholding percentages. Below, we detail the main changes:
1. 0% Withholding
Applies to the acquisition of goods and services provided by taxpayers subject to the RIMPE Regime (Popular Business), if a preprinted voucher has been issued.
2. 1% Withholding rate
The 1% withholding rate applies to the following additional concepts:
a. The acquisition of goods and services by taxpayers subject to the RIMPE Regime (Entrepreneur).
b. Payments made to insurance and reinsurance companies over the total value of the premiums.
3. 1.75% Withholding rate
The 1.75% withholding rate applies to the following concepts:
a. Payments for the construction of real estate, urbanizations, or similar activities.
b. Acquisition from marketers (non-producers) of agricultural, poultry, livestock, beekeeping, rabbit farming, aquaculture, forestry, and meat products in natural state.
4. 2% Withholding rate
The 2% withholding rate applies to the following additional concepts:
a. Reception of non-returnable PET plastic bottles when a single collector (individual) receives an amount higher than the basic fraction subject to 0% income tax rate. In the case of companies, the withholding applies to any amount.
b. Payments to commercial leasing companies over the lease installments and the purchase option.
c. Payments for interest and commissions for credit sales. To establish the taxable base, these payments will be added to the value of the goods.
d. The issuance of purchase settlements for goods and services in transactions with individuals who have their TAX ID suspended.
4. 2.75% Withholding rate
The 2.75% withholding rate applies to payments for invoices issued by media and advertising agencies.
5. 3% Withholding rate
The 3% withholding applies to the following concepts:
a. Professional services provided by corporations.
b. Commissions paid to corporations, whether national or foreign residents in Ecuador, and permanent establishments domiciled in the country.
6. 8% Withholding rate
The 8% withholding rate applies exclusively to the following concepts:
a. Payments to athletes, coaches, referees, and members of the technical staff.
b. Activities carried out by national or foreign artists residing in Ecuador.
7. 10% Withholding rate
The 10% withholding rate applies to the following additional concepts:
a. Fees, commissions, and other payments made to individuals providing services where intellect prevails over manual labor, regardless of whether the service provider holds a professional title.
b. Fees, commissions, royalties, and other payments made to individuals and corporations with tax residence in Ecuador for activities related to the use of their image, including artists, athletes, coaches, referees, members of the technical staff, and “influencers”.
c. Fees and other payments made to individuals with tax residence in Ecuador providing teaching services.
d. Payments made to notaries for activities inherent to their position.
e. Fees, royalties or any other payment made to individuals and corporations related to the ownership, use, enjoyment, or exploitation of intellectual property rights.
f. Lease of real estate under any contractual modality.
Withholding certificates that must be made between March 1 and March 15, 2024, can be issued until March 30, 2024.
Andrea Moya, Partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144
DISCLAIMER: The previous text has been prepared for informational purposes. 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 additional determined situation requires the specific opinion and concept of the firm.