Ecuador: Taxes and Costs
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Rental income tax is high in Ecuador
Effective Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | |||
| Click here to see a worked example | |||
Source:
Disclaimer
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INDIVIDUAL TAXATION
Non-residents are taxed only on their Ecuadorian-sourced income. Married couples are taxed separately.
INCOME TAX (impuesto a la renta)
Income tax is administered by the Servicio de Rentas Internas. Foreigners who do not reside in Ecuador are subject to a flat tax of 25% on the gross income generated from within the country. It is withheld by the tenant.
Capital Gains Tax
Gains on the occasional sale of real property are exempt from income tax.
CORPORATE TAXATION
INCOME TAX
All income and capital gains earned by companies are taxed at a standard 25% rate. Income-generating expenses are all deductible to arrive at the taxable income.
Depending on the transaction type, income is liable to withholding taxes. Gross income from lease transactions is subject to 8% withholding tax. This tax is deductible against income tax liability.
If the profits are capitalized (i.e. expansion of capital) before 31 December of the assessment year and with the condition that the capitalization of profits must be completed the following year, the corporate income tax is levied at the rate of 15% on the amount reinvested.
PROPERTY TAX
Municipal Property Tax (impuesto de propiedad de bienes inmuebles or impuesto a los predios urbanos)
Municipal property tax is levied on land and buildings based on official appraisals reflecting the property’s commercial sale value or the cadastral value. The tax rates are progressive from 0.025% to 0.5%, varying annually in order to cope with inflation.
Allowable deductions are mortgage loans for the acquisition, construction or improvement of the property between 20% and 40% of the principal but it must not be more than 50% of the property’s cadastral value. This deduction is available upon request.
Ecuador - more data and information
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