On January 10, 2023, the President of the Republic of Ecuador established through Executive Decrees Nos. 643, 644, 645 the tax rate reductions for year 2023, as follows:
1. VAT reduction on tourism services
Executive Decree No. 643 set a general VAT rate reduction from 12% to 8%, on tourism services activities for individuals or companies, national or foreign, during the following national holidays:
• Carnival Holiday
• Easter Holiday
• Cuenca Independence and All Souls Holidays
2. Progressive reduction of Foreign Currency Outflows Tax (ISD)
Executive Decree 644 provided a progressive reduction of ISD, according to the following schedule:
• As from February 1st, 2023, the rate of ISD is reduced from 4% to 3.75%.
• As from July 1 st, 2023, the rate of ISD is reduced from 3.75% to 3.50%.
• As from December 31 st, 2023, the rate of ISD is reduced from 3.50% to 2%.
The Internal Revenue Service, before the indicated dates, shall modify any relevant general resolution and update the corresponding forms to apply the tax reduction.
3. Modifications to the Special Consumption Tax (ICE)
Executive Decree 645 provided the modification of the ICE, in the following proportions:
Tobacco and tobacco consumables
Firearms, sporting weapons and ammunition
Airplanes and helicopters, except those destined for commercial transportation of passengers, cargo and services; jet skis, three-wheelers, four-wheelers, yachts and pleasure boats
Alcohol (per liter of pure alcohol)
Craft Beer (per liter of pure alcohol puro)
Plastic bags (per liter of pure alcohol)
The prices for (ii)cigarettes; (ii) soft drinks and carbonated beverages containing more than 25 grams of sugar per liter of beverage; and, (iii) industrial beverages, remain at US$0.16 (per unit), US$0.18 (per 100 grams of added sugar), and US$13.08 (per liter of pure alcohol), respectively.
For more information do not hesitate to contact our Tax Practice Partner, Iván García (firstname.lastname@example.org).
This publication contains information of general interest and may not constitute a legal opinion on specific matters. Any particular analysis, shall require legal advice from the Firm.