On 29 February 2024, the Ecuadorian Official Gazette released Resolution No. NAC-DGERCGC24-00000008, which sets forth withholding percentages for taxpayers to apply at the source. The resolution outlines the introduction of the following withholding tax rates:

  • 0% Withholding: A 0% withholding rate is applicable to payments made to taxpayers operating within the Entrepreneur and Popular Business Regime (commonly referred to as RIMPE) categorized as a “popular business,” on the condition that a pre-printed sales receipt has been issued.
  • 1% Withholding rate: The 1% withholding rate is applicable to the following additional scenarios:
    • Purchases of goods and services by taxpayers under the RIMPE Regime (Entrepreneur).
    • Payments made to insurance and reinsurance companies for the entire value of premiums.
  • 1.75% Withholding rate: A 1.75% withholding rate is applied to payments made for construction/ real estate activities involving immovable property, urbanization, and similar endeavors.
  • 2% Withholding rate: The 2% withholding rate is applicable to the following additional scenarios:
    • Collection of non-returnable PET plastic bottles triggers withholding if an individual collector receives an amount surpassing the basic fraction exempt from the 0% income tax rate. For companies, withholding applies regardless of the amount received.
    • Payments made to commercial leasing companies for lease installments and the purchase option are subject to withholding.
    • A 2% withholding rate is applied to payments of interests and commissions related to credit sales. For withholding tax purposes, interests and commissions from credit sales are combined with the merchandise’s value, and the withholding is applied to the total amount.
  • 2.75% Withholding rate: The withholding rate of 2.75% is applicable to payments made for invoices issued by media and advertising agencies.
  • 3% Withholding rate: The 3% withholding is applied to the following:
    • A 3% withholding rate is imposed on payments for professional services offered by domestic corporations.
    • Commissions paid to corporations, whether they are residents of Ecuador or foreign entities with a presence in the country.
  • 8% Withholding rate: The 8% withholding rate is specifically applicable to two categories:
    • Payments made to athletes, coaches, referees, and members of the technical staff.
    • Activities conducted by national or foreign artists who are residents of Ecuador.
  • 10% Withholding rate: A 10% withholding rate is imposed on various types of payments, including fees, commissions, and other compensations disbursed to individuals whose work primarily involves intellectual rather than manual labor, individuals commonly known as “influencers,” notaries, teachers, as well as royalties for franchises as per the Intellectual Property Law, and real estate leasing.

The Tax Authority (SRI) has revised the withholding tax rates applicable for income tax, which will be in effect starting March 2024.