Ecuador’s tax authority clarifies that only unprocessed foods are VAT-exempt, while all processed and prepared food products face the standard 15% rate. Businesses must apply the correct VAT for imports and local sales.
Ecuador’s Internal Revenue Service (SRI) has clarified that only foods in their natural state are eligible for the 0% VAT rate. Any food that has been processed, prepared, or transformed is subject to the standard 15% VAT.
This includes fruit juices, prepared meats, flavoured or fortified dairy products, bakery items, instant meals, packaged food mixes and additives. Bundled products are also taxed at 15% if any item in the package is taxable.
Businesses must apply the correct VAT for imports and local sales. Errors require amended returns and payment of any owed tax, interest, or penalties. The SRI will coordinate with Customs to ensure consistent VAT treatment during imports.
