Ecuador's President Daniel Noboa has signed an executive decree maintaining the Value Added Tax (VAT) rate at 15% for 2025. This decision continues the increase from the previous standard rate of 12%, initially implemented eight months ago under a law aimed at addressing internal armed conflict and insecurity.

President Noboa, through Executive Decree 470, justified the measure as a necessary step to ensure fiscal sustainability and support public finances amid challenging economic conditions. The Ministry of Finance provided a favorable recommendation for the extension, citing public finance and balance-of-payment needs.

The VAT increase, introduced earlier in 2024, was part of an urgent economic law designed to address the country's internal security issues. According to the decree, maintaining the higher VAT rate is critical for securing government revenues to sustain public finances and manage the ongoing conflict.

Source: Primicias.

Ecuador and the United Kingdom have signed an agreement to prevent double taxation on income tax. This international instrument is set to significantly boost economic integration between the two countries, fostering commercial, productive, tourism, and investment activities that will benefit the national economy.

The Internal Revenue Service (SRI) plans to temporarily suspend its website ( www.sri.gob.ec) and digital services like SRI Mobile and SRI & Me for scheduled technological maintenance. This interruption will occur between 00:00 and 10:00 on Saturday the 20th.

Seniors and people with disabilities qualify for (limited) VAT refunds.

According to Primicias, the Internal Revenue Service (SRI) has announced that these VAT refunds will only apply to purchases made at establishments authorized by the Internal Revenue Service (SRI). It will publish on its website a list of these authorized establishments. The SRI will only qualify establishments that are up to date with their VAT declarations and payments over the last 12 months.

The legal base for this new policy is the Reglamento General de Aplicación a la Ley Orgánica para el Fortalecimiento de las

Actividades Turísticas y Fomento del Empleo, which came into effect on July 15, 2024.

Note that the SRI is behind on returning VAT. According to the agency, it is now working on refunds for March, but there are also expats who say that they have not yet received any refunds this year.

On December 29, 2023, President Noboa decreed that the rate of the capital outflow tax won't be lowered until at least December 31, 2024. This means that the tax rate will remain at 3.50%. The president has stated that declining tax collections make it impossible to further lower this tax rate.

The capital outflow tax (impuesto a la salida de divisas - ISD) applies to remittances abroad in cash or by check, transfers, and withdrawals of any kind. You must pay this tax, for example, when you send money from Ecuador to a foreign country. The rate of the capital outflow tax used to be 5%. In 2022, the tax rate was gradually lowered from 5% to 4%. In 2023, the tax was gradually lowered to 3.50% on July 1. Ex-President Lasso planned to reduce the rate to 2% on December 31, 2023, to attract more foreign investments. He originally wanted to abolish this tax, but the Ecuadorian parliament didn't support this plan.