By Executive Decree No. 551, dated March 3, 2025, the President of the Republic of Ecuador issued the Regulations to the Law for Financial Relief and Economic Strengthening of Generations in Ecuador (hereinafter “LOPAFFE”). Below, we summarize the most relevant provisions:
- Tax Credit for Employers
To apply the tax credit for maintaining employment as provided in LOPAFFE, the employer must have retained workers under the same salary conditions applicable in September 2024 during the months of October to December 2024.
The tax credit percentage depends on the employer’s size and the increase or decrease in their gross income in 2023 compared to 2022. Therefore, the following categories are established to define the company size:
| CATEGORY | ANNUAL GROSS INCOME (USD) |
|---|---|
| Microenterprise | Gross incme equal to or less than $300.000 |
| Small enterprise | Gross income between $300.000,01 and $1.000.000 |
| Medium enterprise | Gross income between $1.000.000,01 and $5.000.000 |
| Large enterprises | Gross income exceeding $5.000.000 |
To determine whether gross income increased or decreased, the following criteria apply:
- Gross income is considered higher if it increased by more than 10% in 2023 compared to 2022.
- Gross income is considered similar if it increased or decreased by up to 10% between 2023 and 2022.
- Gross income is considered lower if it decreased by more than 10% in 2023 compared to 2022.
- Transfer of Real Estate
LOPAFFE establishes that income derived from the occasional transfer of real estate by individuals or legal entities shall be considered exempt from income tax, provided that no more than two real estate transfers per year are made.
The regulations specify that such transfers include accessory assets (e.g., parking spaces, storage units, etc.), provided that their transfer occurs in a single transaction.
Andrea Moya, Partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144
Mateo Bravo, Associate at CorralRosales
info@corralrosales.com
+593 2 2544 144