Ecuador’s Internal Revenue Service (SRI) has published Circular NAC-DGECCGC25-00000002 on 21 January 2025, outlining new guidelines for identifying tax havens, preferential tax regimes, and low-tax jurisdictions.
A regime or or jurisdictions shall be considered as a tax havens if it meets at least two of the following conditions:
- Having an effective income tax rate, or taxes of an identical or similar nature, lower than 60% of the applicable rate in Ecuador or an unknown tax rate.
- Allowing economic, financial, productive, or commercial activities to be conducted without substantial development within the respective jurisdiction or regime, in order to benefit from the tax advantages specific to that jurisdiction or regime.
- Lacking effective information exchange mechanisms in accordance with international transparency standards, including the availability and accessibility of information by competent authorities regarding corporate ownership (including legal owners and beneficial owners), reliable accounting records, and banking account information, as well as mechanisms ensuring effective information exchange.
Tax havens have very low tax rates and other tax attributes designed to appeal to foreign investors. The central feature of a haven is that its laws and other measures can be used to evade or avoid the tax laws or regulations of different jurisdictions.
It is essential to identify tax havens when applying specific tax regulations. This includes scenarios such as imposing a higher corporate tax rate when a direct or indirect beneficial owner resides in a tax haven and classifying transactions with entities in tax havens as related-party transactions.
