March 2024 Tax Reforms
The SRI established that the TEMPORARY SECURITY CONTRIBUTION (CTS) may be paid until April 1, 2024, given that it is due on a non-working day.
The Internal Revenue Service has published a list of construction materials that will be subject to a 5% fee on your local transfer. During a maximum period of three months, the collection agents may generate electronic vouchers with their own codification, while they adjust the code (5) indicated in the Technical Card of Electronic Vouchers Off-line scheme.
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CATEGORY |
SUBCATEGORY |
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ReinforcingSteel in Bars |
Rod laminatedrod corrugated AS42 of 8mm, 10mm and 12mm diameter |
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Aggregates |
Clay Sand Cal Limestone Stony |
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Concrete |
Ready-mixedconcrete |
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Binders |
Cement and its derivatives Waste cement |
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Materials metallic recyclables |
Scrap ferrous |
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Mortars |
Mortars |
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Cementprecursor |
Clinker Pozzolana Gypsum |
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Precastconcrete and clay |
Cobblestone Blocks Bricks Concrete products |
CIRCULAR No. NAC-DGECCG24-00000001
| CONCEPT | DETAIL |
| DEDUCTIBLE EXPENSES OF INDIVIDUALS | The rebates vary depending on whether they have family responsibilities or if they are dependents of people with catastrophic, rare and/or orphan diseases. A specific calculation based on the value of the basic family basket is established. In addition, it is mentioned that certain personal expenses may be considered, while others should be excluded. It also details who can be considered as dependents. Additionally, it is mentioned that those who received taxable income that does not exceed a certain amount may be considered as dependents for certain tax purposes. |
| INCOME TAX ON EMPLOYEES’ PROFITS | In accordance with the criteria of supremacy and specialty that characterize the tax law, the income obtained by employees in the distribution of profits is subject to income tax, for which reason employers must consider such amounts for the purpose of withholding the corresponding withholding tax as provided in article 43 of the Internal Tax Regime Law. |
| PROVISIONS TO COVER EVICTION OR EMPLOYER RETIREMENT PAYMENTS | Provisions to cover eviction or employer retirement payments in application of accounting regulations that were not effectively paid or used shall be considered as taxable income or not subject to income tax in the same proportion as they would have been deductible or not. |
| DEDUCTIBILITY OF DEPRECIATION | The difference between the depreciation calculated according to the limits for deductibility and the financial depreciation of Property, Plant and Equipment in accordance with the relevant financial regulations, will not be deductible. |
| NON-DEDUCTIBILITY ON SALE OF FINANCIAL ASSETS | The loss or discount generated in the sale of financial assets corresponding to trade receivables or portfolio that are traded outside the stock market or with related parties will not be deductible. |
| DEDUCTIBILITY OF ROYALTIES, TECHNICAL, ADMINISTRATIVE AND CONSULTING SERVICES WITH RELATED PARTIES | The deductibility limit for the sum of royalties, technical, administrative and consulting services expenses with related parties will be up to 5% of taxable income for the tax period. Exceptions: a) Taxpayers who are in the preoperative cycle of the business, whose limit will be up to 10 percent; b) Taxpayers whose only activity is to provide technical services to independent parties must establish their operating margin indicator. The operating margin will be calculated by dividing operating income by operating sales. |
TAX REFORMS-ORGANIC LAW FOR THE STRENGTHENING OF TOURISM ACTIVITIES AND THE PROMOTION OF EMPLOYMENT
| CONCEPT | DETAIL |
| INCOME TAX WITHHOLDING FOR PAYMENTS ABROAD FOR TOURISM SERVICES | Individuals or companies registered in the National Tourism Authority’s registry must withhold 15% income tax on payments abroad for tourist services related to artistic and cultural shows in Ecuador. If the recipient is resident in tax havens or other lower tax jurisdictions, the withholding will be the same as for corporations. |
| CONSTRUCTION MATERIALS TAX CREDIT 5% VAT RATE | Taxpayers have the option to account for uncompensated VAT paid on the local purchase or import of goods intended for the manufacture and/or sale of construction materials taxed at 5% VAT, as a deductible expense in their income tax return for the year in which the VAT payments were made. |
| ISD EXEMPTION FOR DOMESTIC AND FOREIGN AIRLINES | Domestic and foreign airlines operating in, from and to Ecuador may be exempt from certain taxes (not specified, including ISD), provided they comply with the procedures established by the SRI by means of a resolution. This applies to airlines with official designation or operating permit issued by the aeronautical authority. |
CIRCULAR No. NAC-DGECCG24-00000001
| CONCEPT | DETAIL |
| DEDUCTIBLE EXPENSES OF INDIVIDUALS | The rebates vary depending on whether they have family responsibilities or if they are dependents of people with catastrophic, rare and/or orphan diseases. A specific calculation based on the value of the basic family basket is established. In addition, it is mentioned that certain personal expenses may be considered, while others should be excluded. It also details who can be considered as dependents. Additionally, it is mentioned that those who received taxable income that does not exceed a certain amount may be considered as dependents for certain tax purposes. |
| INCOME TAX ON EMPLOYEES’ PROFITS | In accordance with the criteria of supremacy and specialty that characterize the tax law, the income obtained by employees in the distribution of profits is subject to income tax, for which reason employers must consider such amounts for the purpose of withholding the corresponding withholding tax as provided in article 43 of the Internal Tax Regime Law. |
| PROVISIONS TO COVER EVICTION OR EMPLOYER RETIREMENT PAYMENTS | Provisions to cover eviction or employer retirement payments in application of accounting regulations that were not effectively paid or used shall be considered as taxable income or not subject to income tax in the same proportion as they would have been deductible or not. |
| DEDUCTIBILITY OF DEPRECIATION | The difference between the depreciation calculated according to the limits for deductibility and the financial depreciation of Property, Plant and Equipment in accordance with the relevant financial regulations, will not be deductible. |
| NON-DEDUCTIBILITY ON SALE OF FINANCIAL ASSETS | The loss or discount generated in the sale of financial assets corresponding to trade receivables or portfolio that are traded outside the stock market or with related parties will not be deductible. |
| DEDUCTIBILITY OF ROYALTIES, TECHNICAL, ADMINISTRATIVE AND CONSULTING SERVICES WITH RELATED PARTIES | The deductibility limit for the sum of royalties, technical, administrative and consulting services expenses with related parties will be up to 5% of taxable income for the tax period. Exceptions: a) Taxpayers who are in the preoperative cycle of the business, whose limit will be up to 10 percent; b) Taxpayers whose only activity is to provide technical services to independent parties must establish their operating margin indicator. The operating margin will be calculated by dividing operating income by operating sales. |
