Ecuador reforms its resolution on tax havens and tax regimes
Regulatory update 3 minute read

Ecuador reforms its resolution on tax havens and tax regimes

03 October 2017

The Internal Revenue Service of Ecuador modified Resolution No. NAC- DGERCGC15-00000052, which establishes the list of tax havens and the regulations that regulate the classification of lower tax jurisdictions and preferential tax regimes.

As part of the tax actions that the administration of Ecuador is taking in order to avoid tax evasion, the SRI published Resolution No. NAC-DGERCGC17-00000433. It reforms the provisions of Resolution No. NAC- DGERCGC15-00000052 published in the Second Supplement of the Official Gazette No. 430 dated on February 3, 2015, which establishes the list of tax havens and the rules that regulate the qualification of jurisdictions of lower taxation and preferential tax regimes.

The Resolution includes new countries that will be considered as tax havens for Ecuador, which are: Hong Kong and The Netherlands, the United Kingdom, New Zealand and Costa Rica, for certain activities and conditions, as listed below.

The Netherlands:

  • The tax regime applicable to investment companies that are exempt or qualified for a zero rate of income tax.
  • Regimes subject to advance tax decisions or "tax rulings".
  • Regimes of "innovation box".

United Kingdom:

  • Regimes that allow companies to maintain capital representative rights with nominal or formal owners that do not support the economic risk of the property and of which it is not known who their effective beneficiaries are.
  • Regimes of "innovation box".

New Zealand:

  • Tax regimes applicable to trusts.

Costa Rica:

  • Regimes of private companies, created under their laws but not registered before the Costa Rican Tax Administration.

All companies and entities that have subsidiaries or conduct business in the countries and in the aforementioned activities, should review how the reform affects their businesses since, among other things, the withholding percentage would increase from 22% to 35%.

TMF Group can support its clients by reviewing the feasibility of making such transactions from other sources with whom they have treaties to avoid double taxation, and at the same time consider these reforms for companies that are starting businesses or activities in the country.

Contact us to receive more information.

Written by

Diego Mantilla

Director, Client Services

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