On December 20, 2023, the Organic Law for Economic Efficiency and Job Creation was issued. This law established the obligation for Large Taxpayers to apply the monthly self-withholding of income tax on their total taxable income. If it is not possible to differentiate taxable income from exempt income, the self-withholding must be applied to the total income received in the period. Pursuant to this law, Large Taxpayers will not be subject to withholding at source, except for those transactions made with the State and its institutions.
On January 12, 2024, the Ecuadorian Tax Authority issued Resolution No. NAC-DGERCGC24-00000003. This establishes the percentages of self-withholding that Large Taxpayers must apply as of January 2024. This self-withholding must be declared and paid on a monthly basis, in the month following the month to which the self-withholding corresponds, with the Code 3481 “Self-withholding Companies - Large Taxpayers”.
The self-withholding percentages for companies classed as Large Taxpayers were established by ranges according to the economic sector:
|
ECONOMIC SECTOR |
SELF-WITHHOLDING PERCENTAGE RANGES |
|
AGRICULTURE, LIVESTOCK, FORESTRY AND FISHERIES |
From 1.25% to 5% |
|
AGRO-INDUSTRIAL AND EXPORT MANUFACTURING INDUSTRY |
From 1.25% to 2.25% |
|
AUTOMOTIVE |
From 1.25% to 4% |
|
WHOLESALE AND RETAIL TRADE OF GOODS |
From 1.25% to 10% |
|
CONSTRUCTION |
From 1.25% to 8% |
|
MANUFACTURING INDUSTRIES |
From 1.25% to 7% |
|
INFORMATION, TECHNOLOGY AND COMMUNICATION |
From 1.25% to 10% |
|
INFORMATION, TECHNOLOGY AND COMMUNICATION (MOBILE TELEPHONY) |
From 4% to 5% |
|
DAIRY |
From 1.25% to 3% |
|
NON-RENEWABLE RESOURCES CEMENT INDUSTRY |
From 2.25% to 7% |
|
NON-RENEWABLE RESOURCES MINES |
7% |
|
NON-RENEWABLE RESOURCES DOWNSTREAM PETROLEUM |
From 3% to 8% |
|
NON-RENEWABLE RESOURCES OIL, SALE OF FUELS (SALE OF LIQUIFIED PETROLEUM GAS) |
From 2% to 3% |
|
HEALTH |
From 1.25% to 9% |
|
SERVICES |
From 1.25 to 10% |
|
FINANCIAL SYSTEM (BANKS) |
From 4% to 5% |
|
FINANCIAL SYSTEM (COOPERATIVES) |
From 3% to 4.5% |
|
FINANCIAL SYSTEM (INSURANCE) |
From 1.25% to 10% |
Resolution No. NAC-DGERCGC24-00000003 establishes the specific percentage that each company classed as a Large Taxpayer must apply, as shown in Annex 1.
Companies classed as Large Taxpayers that are subject to special income tax regimes, such as the banana and agricultural sector, will not be required to apply self-withholding with respect to the income subject to such regimes.
Editorial Board
