Ecuador - Amendments on Withholding Tax Rates

the Ecuadorian Internal Revenue Service published a resolution to amend the previous resolution on the income tax withholding rates at source. The new resolution comes into force since its issue.

Withholding Tax on Residents

As regards resident taxpayers, the tax treatment varies from legal persons to individuals:

  • For legal persons, the capital gains derived through stock exchange in domestic stock market are subject to an income tax withholding at the rate of 0.2%;
  • For individual taxpayers, passive income is to be withheld at source at the rates provided in article 36(a) of the Internal Tax Regime Law. Transactions covered include direct or indirect stock exchange, the alienation of other properties and rights (including the license for exploring and exploiting natural resources), the alienation of companies or permanent establishments located within the territory of Ecuador and listed in Ecuadorian stock market.

Withholding Tax on Non-Residents

As regards non-resident taxpayers, the tax treatment of legal persons and individual taxpayers are both to be withheld at source at the same rate, namely the general rate provided for companies. Taxable events include direct or indirect alienation of shares, other rights (including the license for exploring and exploiting natural resources), companies or permanent establishments located within the territory of Ecuador and listed in Ecuadorian stock market.

Sources: Registro Oficial (in Spanish)

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