Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

April 24, 2020
2020-5638

Ecuador’s National Assembly to consider bill that would create new tax to increase funding to combat COVID-19

Ecuador’s President, Lenin Moreno, submitted a bill to Ecuador’s National Assembly that would establish a new tax to fund humanitarian support in light of COVID-19.

The National Assembly will analyze the bill and, once approved, will send the bill to the President for his signature. The bill would be enacted once the final version is published in the Ecuadorian Official Gazette. While the bill is in the National Assembly, it is subject to changes.

New tax contribution for companies

The bill would impose a 5% tax on an entity’s profits of US$1 million or more. The tax would be calculated on the difference between the taxable income and profit available for distribution in tax year 2018. For entities incorporated on or after 1 January 2019, the results of tax year 2019 would be used to calculate the tax.

The bill would grant exemptions only for entities in economic sectors that have been severely affected by COVID-19. The requirements for obtaining an exemption would be set out in the regulations after the bill is enacted.

Failure to pay this tax could result in a 3% fine for each month the tax remains unpaid, plus interest. The fine would be calculated on the amounts not paid. Entities would not be allowed to claim the tax as a credit or a deduction against other taxes.

___________________________________________________________________

For additional information with respect to this Alert, please contact the following:

EY Addvalue Asesores Cia. Ltda., Quito
EY Addvalue Asesores Cia. Ltda., Guayaquil
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

ATTACHMENT

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2023, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct