Special taxpayers and income tax withholding agents in Ecuador are regulated by the Internal Tax Regime Law (Ley del Régimen Tributario Interno – hereinafter LORTI) and its regulations, which establish certain parameters for the selection of taxpayers by the Tax Administration, as well as the formal obligations they must comply with.
The purpose of this article is to inform the main aspects in relation to special taxpayers.
Who are the Special Taxpayers and Withholding Agents?
A special taxpayer or a withholding agent may be either an individual or a legal entity, provided that it has been designated as such by the Internal Revenue Service as such, by means of a resolution of general nature.
What are the parameters to designate a Special Taxpayer and Withholding Agent?
The following parameters must be taken into consideration for the designation of withholding agents or special taxpayers:
Qualification of Withholding Agent
Taxpayers designated as withholding agents shall comply with the following, in the last two fiscal years:
- Keep complete accounting records.
- Be up to date in their tax returns and payments, as well as their other formal obligations.
- Have no debts related to withholding taxes.
- Are not non-existent companies according to the qualification of the Tax Administration.
- Other parameters indicated by the Tax Administration.
Qualification of Special Taxpayers
The following parameters will be taken into account:
- The level of assets.
- The volume of operations declared in a fiscal year.
- Your percentage of participation in the collection of the tax within a certain period.
What are the obligations of a Special Taxpayer and a Withholding Agent?
Those taxpayers designated as special taxpayers must comply with the following formal obligations:
- Declaration and payment of taxes via web or online.
- Submit Transfer Pricing Schedule, if they exceed the established thresholds.
- Submit the dependency relationship annex.
- Submit the transactional annex.
- Be a Withholding Agent and make income tax and value added tax withholdings.
- Indicate in your payment receipt the denomination “Special Taxpayer”.
In the case of withholding agents, they must comply with the following obligations:
- Make income tax and VAT withholdings.
- Issue withholding tax receipts at the source.
- Indicate in their payment receipts the denomination “Withholding Agent”.
- Submit the declaration of the amounts withheld and make the payment thereof within the deadlines set by the Tax Administration.
What is the term of the qualification of Withholding Agent or Special Taxpayer?
According to Resolution NAC-DGERCGC20-00000057, which issues the rules for the qualification, filing of returns and payment of taxes of withholding agents and special taxpayers, it is stated that the qualification of withholding agent or special taxpayer shall be maintained until it is revoked by the Tax Administration.
Is it possible to consult the qualification of withholding agent and special taxpayer?
Yes, it may be consulted through the SRI’s web page, which contains a list of taxpayers designated as such.
Likewise, it is worth considering that in September 2020, through Resolution No. NAC-DNCRASC20-00000001, it was resolved to qualify the taxpayers listed in its annex as new withholding agents as of October 2020.