April 26, 2021
Ecuador and the United States sign Tax Information Exchange Agreement
The tax information exchange agreement will allow Ecuador and the United States to exchange tax information, which tax authorities from both countries believe will achieve tax transparency and prevent tax evasion.
On 7 April 2021, Ecuador and the United States signed a Tax Information Exchange Agreement (TIEA).
According to the tax authorities from both countries, this agreement will allow both countries to effectively exchange information to achieve tax transparency and prevent tax evasion.
The TIEA is not in force yet. It is under the review of the Constitutional Court in Ecuador.
Information to be exchanged
The competent authorities of the contracting parties will provide assistance to each other by exchanging information that is relevant to the administration and enforcement of the domestic tax laws of each country. The competent authorities must provide the information upon request. The information must include information that is relevant to (1) the determination, assessment and collection of taxes, (2) the recovery and enforcement of tax claims, or (3) the investigation or prosecution of tax matters. The competent authorities must treat the information as confidential according to the confidentiality article established in the TIEA.
The information must be exchanged, regardless of whether the conduct being investigated would constitute a crime. If the competent authorities of one contracting party are unable to comply with a request because the information is not sufficient, the competent authorities must use all relevant information-gathering measures to provide the information needed by the competent authorities of the other contracting party. Each contracting party must determine whether it has the authority to obtain and provide information held by banks and information on the ownership of companies.
The competent authorities may automatically transmit information to each other. They also may determine the items of information to be exchanged. One contracting party may spontaneously transmit to the other information that has come to the attention of the first contracting party that it considers relevant. A contracting party may allow representatives of the other contracting party to interview individuals and examine records in its territory with the written consent of the persons involved. It also may allow representatives of the competent authority to be present at the appropriate part of the tax examination.
A contracting party does not have to provide information that is neither held by its authorities nor in the possession or control of persons who are within its territorial jurisdiction. For information held by its authorities or in the possession or control of persons who are within its territorial jurisdiction, the contracting party must provide information in accordance with the TIEA regardless of whether the person to whom the information relates is a resident or national of a contracting party.
The TIEA covers the following taxes:
The TIEA also will apply to taxes that are established after the agreement is signed but are substantially similar to, and are substitutes for, existing 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 America Business Center, New York
Ernst & Young Abogados, Latin America Business Center, Madrid
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific