Through Resolution No. NAC-DGERCGC21-00000037, the Internal Revenue Service established the rules for the application of one hundred percent (100%) withholding of Value Added Tax (VAT) by entities and agencies of the public sector of the central and decentralized government, its decentralized bodies, public enterprises, universities, and polytechnic schools in the country.
1. Withholding Agents
The regulation states that the following will be qualified as one hundred percent (100%) VAT withholding agents:
- The entities and agencies of the central government, its decentralized bodies, and its public enterprises, under the terms set forth in Article 2 of the Statute of the Legal and Administrative Regime of the Executive Function.
- The entities and agencies of the decentralized autonomous rural parish, cantonal, metropolitan and provincial governments, including their decentralized bodies, and their public enterprises.
- The country’s universities and polytechnic schools, both public and private.
2. VAT withholding
Likewise, taxpayers, in their capacity as withholding agents, will withhold as of August 2021 tax period, to be declared in September 2021, one hundred percent (100%) of VAT, keeping the withheld amounts in their accounts without the need to transfer them to the Internal Revenue Service, in accordance with the law.
3. Informative Statement
The amounts of VAT withheld that have not been deposited in the account of the Servicio de Rentas Internas – SRI (Internal Revenue Service) will be reported monthly through the VAT return form, considering for this purpose box “802” and observing the provisions of article 158 of the Regulations for the application of the Internal Tax Regime Law.
4. Responsibility for the presentation
The information provided shall be the sole responsibility of the taxpayers, without prejudice to the administrative, civil, and criminal actions that may be initiated in accordance with the law for inaccurate or false information that causes damage or misleads or deceives the Tax Administration.
5. New withholding agents
As of August 2021, private universities and polytechnic schools will withhold one hundred percent (100%) of VAT, in accordance with the provisions of articles 62 and 63 of the Internal Tax Regime Law and the rules set forth in this Resolution.