Ecuador’s president and the tax administration recently announced the following changes to the VAT rules and the tax on foreign currency:
- The VAT rate on tourist activities is reduced from 12% to 8% on holidays and weekends.
- The import of fuel from hydrocarbons, biofuel and natural gas destined for domestic consumption by companies or individuals authorised to import such goods is exempt from VAT.
- Imports and the local acquisition of goods for use in the agricultural, aquaculture and fishing sectors are subject to a 0% VAT rate.
- Investment contracts concluded with the Ecuadorian state are exempt from the tax on foreign currency (ISD);
- The ISD rate is gradually being reduced from 4% to 2% as follows:
- 1 February – 30 June 2023: 3.75%;
- 1 July – 30 November 2023: 3.5%; and
- As from 31 December 2023: 2%.
Nelson Morales
BDO in Ecuador