Tax knowledge necessary for emigrating to Ecuador

The current tax law in Ecuador was implemented after the reform of the original tax law in May 20001year. Its tax system is based on the whole world. Individuals and enterprises living in Ecuador must declare and pay taxes on the income and profits they operate around the world, while Ecuadorian individuals and enterprises living in foreign countries or operating in foreign countries must also declare and pay taxes. In Ecuador, the department responsible for implementing tax policy and collecting taxes is the Internal Revenue Service. Tax forms are divided into direct consumption tax and indirect consumption tax. The main tax forms are: 1. Income tax.

1) enterprise income tax, the tax payment period is once a year, and the collection range is from February 3 1 day to 1 day. Income tax is a central government tax, and local governments can no longer collect income tax. The scope of taxation includes the income from production and operation of enterprises and other income, but the following items shall not be included in the scope of taxation:

A. after-tax income

B. Tax refund income

C. Temporary investment income from real estate, stocks and partnerships

D. Daily expenses of enterprises and salary payment of employees

E. Income from investment funds and commercial trusts

F. Insurance compensation

G. Non-monetary investment income of foreign oil companies after signing oil exploration and development service contracts with the Ecuadorian government.

H. Other deductible parts

There are three tax rates for enterprise income tax in Ecuador (including domestic companies and international companies in Ecuador, etc.). ):

A. According to the regulations of the Ecuadorian government, the enterprise income tax in Ecuador is 25%, and the income tax rate for dividend reinvestment is reduced to 15%. All companies must declare their global operating income. If income tax has been paid abroad, it can be paid tax-free at home.

B the income tax rate of oil companies providing technical services in Ecuador is 44.4%, and the income tax rate of dividend reinvestment is 25%.

C the income tax rate paid by beneficiaries of inheritance, gift or donation is 5%.

2) Personal income tax: Ecuadorian citizens and foreigners working legally in Ecuador are required to pay personal income tax (except international organizations, diplomats, soldiers and police). When determining the tax revenue, personal social security, pension and charitable donations should be deducted from the income. Personal income tax is a progressive tax rate with a maximum of 25%. When calculating taxes, it changes according to the amount of income. At the same time, the tax rate changes every year. Take the tax rate in 2003 as an example, the income is increasing at the base of $6,800, and the tax rate is increasing from 0% to 25%.

Second, value-added tax (central government tax)

Enterprises or individuals selling goods, importing goods and providing various services in Ecuador shall pay VAT. Value-added tax is levied once a month. The tax rate is 12%. Exempt from value-added tax under the following circumstances:

A selling or importing commodities such as non-staple food, dairy products, agricultural products, medical supplies and printed matter.

B. passenger transport and international air transport

C. Public utilities services such as power supply, water supply, drainage and garbage disposal.

D. Education, kindergartens, nursing homes and churches

F. Printing industry and public sector

G. Financial and securities industries

H. Road and bridge fees and lottery revenue

3. Special consumption tax (central government tax): This tax is levied on a series of special consumer goods and service industries (tobacco, wine, sparkling drinks, telecommunications and radio services) produced and imported by Ecuador. The tax rate varies according to different commodities.

Motor vehicle tax: this tax is levied once a year and belongs to the central government tax. The tax rate fluctuates between 10%-20% according to different models.