On 12 January 2024, Ecuador’s Internal Revenue Service (SRI) released Resolution No. NAC-DGERCGC24-00000003. This resolution outlines the withholding tax rates for various economic activities under the newly introduced monthly self-withholding requirement for companies labeled as “large taxpayers.” Originating from the Law on Economic Efficiency and Employment Generation, this obligation functions as a credit against the annual income tax.
The resolution categorizes withholding rates within the range of 1.25% to 10.0%, contingent on economic activities, and specifies applicable rates for certain large taxpayers in 2024. It mandates that all monthly taxable income falls under the self-withholding obligation, excluding specific sources such as contracts related to hydrocarbon exploration, dealings with governmental bodies, decentralized autonomous governments, and social security entities.
Notably, income governed by special tax regimes or another self-withholding regime is exempted. Additionally, large taxpayers adhering to specific income tax regimes, such as those for bananas or agriculture, are not subject to the self-withholding obligation for income within those regimes.
Non-compliance carries severe consequences, including interest charges and a fine equivalent to 100% of the unwithheld tax. This obligation has been in effect since January 2024, underlining Ecuador’s commitment to ensuring fiscal responsibility and compliance among its large taxpayers.
