VAT Guide for Businesses with Customers in Ecuador

VAT Rates in Ecuador

The standard Value Added Tax (Impuesto al Valor Agregado - IVA) rate in Ecuador is 12%, with some services exempt from Ecuadorian VAT, such as educational, religious, and health services. Ecuador does not have any reduced VAT rate.

VAT Registration Thresholds in Ecuador

There is no registration threshold in Ecuador. If you habitually or incidentally sell movable property, provide services, or import goods, you must register.

Taxpayers can register under the simplified regime, “RIMPE” if their turnover does not exceed USD 20,000 or USD 300,000 (depending on the person and the type of activity) in the last calendar year.

If a taxpayer is not domiciled or incorporated in Ecuador, they should register as long as they have a physical presence (i.e., permanent establishment) in the country. There is no registration threshold for this requirement.

Ecuadorian VAT Number Format

Once registered, individuals and companies receive an RUC (TIN - Registro Único de Contribuyentes) number. This number is made up of thirteen numerical digits (xxxxxxxxxx 001).

• For individuals
  • Format:
    • The first ten numerical digits make up a personal identification number
    • The last three numerical digits are 001
• For businesses (not owned by the state)
  • Format:
    • The first two digits show the state code where the TIN was issued
    • The third digit is 9
    • The fourth to ninth digits show consecutive numbers
    • The tenth digit is a validation digit
    • The last three digits are 001
• For businesses owned by the state
  • Format:
    • The first two digits show the state code where the TIN was issued
    • The third digit is 6
    • The fourth to eight digits show consecutive numbers
    • The ninth digit is a validation digit
    • The tenth digit is 0
    • The last three digits are 001

• For individualsFormat: XXXXXXXXXX001
• For businessesFormat: XX9123456X001

Ecuador VAT ID Validation

Need to look up and validate VAT numbers in Ecuador?

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VAT on Digital Services in Ecuador

Ecuador introduced special VAT rules for digital services provided by non-residents in 2019, which came into force on July 2020. Under the digital service rules in Ecuador, VAT is not collected and remitted by the supplier. Instead, VAT is handled by an intermediary agent assigned by the Tax Authorities.

If the payment is made by credit card or financial institution, they should act as withholding agents and remit the VAT amount to the tax authority. Otherwise, the supplier should register as a withholding agent, and withhold and remit the VAT to the tax authority.

VAT Rate: 12% VAT is typically applied to the sale of affected digital services

Taxable digital services in Ecuador: A digital service is taxable in Ecuador if it is delivered over the Internet or an electronic network, the nature of which renders the supply essentially automated and involving minimal human intervention, and is paid by an Ecuadorian tax resident, including individuals, companies and permanent establishments.

Will your business need to pay VAT on digital services in Ecuador in 2023?

Learn More About VAT on Digital Services in Ecuador

Marketplace & Platform Operator Rules in Ecuador

Ecuador does not have specific VAT rules for marketplaces or platform operators.

Invoice Requirements in Ecuador

The following details should be displayed on invoices in Ecuador:

• The issuer's RUC (Ecuadorian TIN)
• Surname and first names, name or company name of the issuer, in full or abbreviated form as stated in the RUC. In addition, the commercial name, if any, may be included.
• Name of the document (i.e., invoice, credit note, debit note, etc.)
• Clave de Acceso (Access code - Invoice number)
• Full address of the issuer
• Identification of the acquirer with their names and surnames, denomination or company name, and RUC (or identity card or passport, when the transaction is made with taxpayers who need to support costs and expenses, for purposes of determining income tax or tax credit for value-added tax).
• Description or concept of the good transferred or the service rendered, indicating the quantity and unit of measurement, when applicable
• Unit price of the goods or price of the service
• Net amount
• Discounts, bonifications, or rebates
• VAT amount and VAT rate
• In the case of services provided by hotels, bars, and restaurants, the tip should not be part of the taxable amount for VAT
• Total amount
• Symbol and denomination of the currency in which the transaction is made, only in cases where a currency other than USD
• Date of issue
• Transport Invoice number, where applicable
• In Credit and Debit Notes, the issuance date and the invoice number of the original invoice, as well as a reason for the adjustment i.e, cancellation, return
• For Withholding Invoices, the issuance date of the document and VAT period (month and year) to which that withhold applies

E-Invoicing & Digital Reporting for Ecuador

Ecuador implemented e-invoicing in 2015. Since then, it has become mandatory for an increasing number of taxpayers. From 2022, all taxpayers registered for VAT, except those considered small businesses in the simplified regime, should issue an e-invoice for any transaction higher than USD 4.

Learn more about E-Invoicing and Digital Reporting in Ecuador

Governmental Body Responsible for E-invoicing and Digital Reporting in Ecuador

SRI (Servicio de Rentas Internas - Tax Authority) is the governmental body responsible for invoicing in Ecuador

VAT Payments and Returns in Ecuador

Full VAT Returns

• VAT Return Name: IVA Form
• Filing Frequency: Monthly and semi-annually (only for those businesses that have 0% VAT rate transactions)
• Online filing: Mandatory
• Annual Return: No
• Filing deadline: However, if the deadline falls during the weekend or a public holiday, it moves to the immediate working day.
  • 10th of the following reporting month, if the ninth digit of the RUC (TIN) is 1
  • 12th of the following reporting month, if the ninth digit of the RUC (TIN) is 2
  • 14th of the following reporting month, if the ninth digit of the RUC (TIN) is 3
  • 16th of the following reporting month, if the ninth digit of the RUC (TIN) is 4
  • 18th of the following reporting month, if the ninth digit of the RUC (TIN) is 5
  • 20th of the following reporting month, if the ninth digit of the RUC (TIN) is 6
  • 22nd of the following reporting month, if the ninth digit of the RUC (TIN) is 7
  • 24th of the following reporting month, if the ninth digit of the RUC (TIN) is 8
  • 26th of the following reporting month, if the ninth digit of the RUC (TIN) is 9
  • 28th of the following reporting month, if the ninth digit of the RUC (TIN) is 0
• Payment deadline: Same as the filing deadline
• Payment currency: USD
• Language: Spanish
• Local VAT acronym: IVA

Penalties in case of late filings or misdeclarations

In the case of the late filing of VAT returns and payments, the Ecuadorian Tax Authority should likely enforce the following penalties:

• Late filing: a penalty equal to 3% of the tax due for each month or fraction of a month of delay in filing the tax return, but not exceeding 100% of such tax.