Through Circular NAC-DGECCGC25-00000002, published in Official Register 727, Fourth Supplement, on January 22, 2025, the Internal Revenue Service reminded taxpayers of the criteria to determine whether a jurisdiction is considered a tax haven.
For this purpose, taxpayers must analyze each case to determine whether at least two of the following conditions, established in the second unnumbered article following Article 4 of the Internal Tax Regime Law, are met:
- Having an effective income tax rate lower than 60% of the rate applicable in Ecuador or where the rate is unknown.
- Allowing the performance of economic activities without substantial development in the jurisdiction to qualify for tax benefits.
- The absence of effective information exchange in accordance with international transparency standards, such as information on legal owners and beneficial owners, reliable accounting records, and banking information.
Therefore, even if a jurisdiction is not explicitly included in the lists issued by the Internal Revenue Service, it may still be considered a tax haven.
Andrea Moya, Partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144