On 21 November 2019, the Ecuadorian National Assembly presented a new draft of the Tax Reform Bill on “Tax Simplicity and Progressiveness” following the rejection of the previous draft law on economic growth reform submitted to Congress on 18 October 2019. The main tax measures are discussed in below:
- For companies whose taxable income exceeded USD 1 million in fiscal year 2018, a temporary corporation tax will be charged. These companies will apply a progressive tax rate of 0.1%, 0.15% and 0.2%, respectively, for the years 2020, 2021 and 2022;
- Entrepreneurs and micro-enterprises whose annual net turnover does not exceed USD 300,000 are subject to a simplified tax regime. Such entrepreneurs are also subject to a flat tax rate of 2% on gross income;
- Rules on mandatory advance income tax payments will be repealed;
- Dividends paid to non-resident companies are subject to income tax;
- Rules establishing the obligation to make income tax advance payments will be repealed;
- Income from agricultural activities is subject to a uniform tax, with progressive rates between 0% and 1.8% for producers and local traders and between 1.3% and 2% for exporters; and
- A 0% VAT rate will be applied for certain goods.
