Ecuador’s Financial Reporting Requirements: A Guide for Businesses

Taxation of Resident and Non-Resident Entities

In Ecuador, resident entities are taxed on their worldwide income, while non-resident entities are subject to tax only on Ecuadorian-source income. The country has adopted International Financial Reporting Standards (IFRS) for all entities, and local tax authorities have established that companies must follow these accounting principles for corporate income tax purposes.

Corporate Income Tax Rates

For corporate income tax purposes, companies in Ecuador are required to pay taxes at the following rates:

• Local Corporations and Branches: 22%, 25%, or 28%
  • Distributed or undistributed profits
• Ecuadorian Companies with Resident or Non-Resident Shareholders:
  • Owned by residents: 22% or 25%
  • Owned by non-residents in non-tax-haven jurisdictions: 22% or 25%
• General CIT Rate: 25%
• Increased CIT Rate for Tax Haven Jurisdictions and Ecuadorian Individual Shareholder: 28%

Reduced Corporate Income Tax Rate

In addition, a reduced corporate income tax rate of between 3% to 5% is available for new investments that meet certain conditions.

Single Income Tax on Sports Betting Operators

The country also imposes a single income tax on sports betting operators, introduced in June 2023. This tax regime applies to both resident and non-resident sports bet operators and has a 15% corporate income tax rate. To be eligible for this tax regime, operators must:

• Register with the tax authority
• Pay taxes on their total income, including commissions minus prizes paid to customers

Failure to Comply with Formal Obligations

Failure to comply with formal obligations can result in sanctions.

No Local or Provincial Government Taxes

There are no local or provincial government taxes on income imposed on companies in Ecuador.