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Special Taxpayers in Ecuador

Special taxpayers and Income Tax withholding agents in Ecuador are regulated by the Ley del Régimen Tributario Interno – Internal Tax Regime Law (hereinafter LORTI) and its regulations, which establish certain parameters for the Tax Administration to select the taxpayers that will form part of them and the formal obligations to be met.

This article describes the main aspects related to special taxpayers.

Who are Special Taxpayers and Withholding Agents?

A special taxpayer or a withholding agent can be either a natural person or a legal entity, designated as such by the Internal Revenue Service through a general resolution.

What are the requirements to designate a Special Taxpayer and Withholding Agent?

The following parameters must be taken into consideration to designate withholding agents or special taxpayers:

Withholding Agent

Taxpayers designated as withholding agents shall comply with the following in the last two fiscal years:

  • To keep complete accounting records.
  • To keep their tax returns and payments up to date, as well as their other formal obligations.
  • Do not have debts related to tax withholdings.
  • Not being a non-existent company, according to the Tax Administration.
  • Other parameters indicated by the Tax Administration.

Special Taxpayers

The following parameters will be taken into account:

  • The level of assets.
  • The volume of operations declared in a fiscal year.
  • Their share percentage in terms of tax collection within a given period.

What are the obligations of a Special Taxpayer and a Withholding Agent?

Taxpayers designated as special taxpayers must comply with the following formal obligations:

  • Tax return and payment via web or online.
  • To file Transfer Pricing annex, if exceeding the established thresholds.
  • To file the dependency relationship annex.
  • To file the transactional annex.
  • To be a Withholding Agent and withhold income tax and value-added tax.
  • To indicate in your payment voucher the denomination “Special Taxpayer”.

Withholding agents must comply with the following obligations:

  • To perform income tax withholdings, as well as VAT withholdings.
  • To issue withholding vouchers at the source.
  • To indicate in their payment vouchers the denomination “Withholding Agent”.
  • To file the statement of the amounts withheld and pay them within the deadlines established by the Tax Administration.

What is the effective term to qualify as a Withholding Agent or Special Taxpayer?

According to Resolution NAC-DGERCGC20-00000057, which issues the rules to qualify, file returns, and pay taxes of withholding agents and special taxpayers, these latter will maintain such qualification until the Tax Administration revokes it.

Is it possible to consult the qualification of a Withholding Agent and Special Taxpayer?

Yes, a list of the taxpayers designated as such can be consulted through the SRI website.

In addition, it is worth considering that in September 2020, through Resolution No. NAC-DNCRASC20-00000001, the taxpayers listed in its annex will be qualified as new withholding agents as of October 2020.

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