RULES FOR INCOME TAX CREDIT FOR PERSONAL EXPENSES
In Resolution No. NAC-DGERCGC2300000020, the Internal Revenue Service (SRI) establishes the rules for applying an Income Tax (IR) reduction for personal expenses.
- Parents, spouses, or common-law partners and children up to the age of 21 or with disabilities of any age may be considered as family dependents, provided that they do not receive taxable income and that they are dependent on the taxpayer.
- In no case may two or more taxpayers consider the same person as a family dependent for the respective tax period.
- Workers must provide the following information on family dependents to their employer.
- Copy of the identity card of the spouse, which constitutes evidence of the marriage.
- Copy of the identity card of children up to 21 years of age.
- Copy of the identity card and disability card of children with disabilities.
- Copy of the certificate of suffering from a catastrophic, rare, and / or orphan disease issued by the Ministry of Public Health or the Ecuadorian Institute of Social Security.
- To register parents as family dependents, they must give their express consent to be included as a family dependent of the taxpayer and present a copy of the identity card where the family relationship is evidenced.
- For the 2023 fiscal year, workers in a dependency relationship may submit a new personal expense projection form in July.
- Employers must reassess income tax considering the personal expenses forecast presented by the worker. Likewise, they must make the withholdings for the values adjusted for the payments of salaries and wages related to the month of July.
For more information do not hesitate to contact our Tax Practice Partner, Iván García (firstname.lastname@example.org).
This article contains information of general interest and does not constitute legal advice about specific matters. Any particular analysis will require the Firm’s legal advice.