Ecuador’s Tax Administration issues regulations on voluntary estimated income tax payments

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EY Global
16 Mar 2021
Subject Tax Alert
Categories Corporate Tax
Jurisdictions Ecuador

Taxpayers may make voluntary estimated income tax payments. Unlike taxpayers that are required to make estimated tax payments, taxpayers making voluntary payments will be entitled to interest on those payments from the date the payment was made to the income tax payment due date.

Ecuador’s Tax Administration issued regulations on voluntary estimated income tax payments.

Background       

In Ecuador, it is mandatory for companies, including permanent establishments of foreign companies, to pay an estimated income tax for tax year 2020 if they:

  • Are subject to income tax

  • Received US$5 million or more in gross income during tax year 2019

  • Earned a profit from January through June 2020

However, taxpayers also may voluntarily pay estimated income taxes. The voluntary payors will have the same payment options as those required to make estimated payments.

Voluntary estimated income tax payments

Taxpayers that are not required to make estimated income tax payments may voluntarily do so. Taxpayers that voluntarily pay estimated income taxes will be entitled to interest on their estimated payments, with interest running from the date the voluntary payment was made to the due date of the income tax payment. They may pay any amount of estimated tax. The regulations, however, indicate that taxpayers may pay an amount equal to 50% of the income tax incurred in the previous tax year, minus the income tax withholding made during the tax year. This provision allows taxpayers that are not required to make estimated tax payments to make payments that are equal to the payments made by those required to make estimated tax payments.

For additional information with respect to this Alert, please contact the following:

EY Addvalue Asesores Cia. Ltda., Quito

  • Javier Salazar 

EY Addvalue Asesores Cia. Ltda., Guayaquil

  • Carlos Cazar 

  • Eduardo Góngora 

Ernst & Young LLP (United States), Latin America Business Center, New York

  • Ana Mingramm 

  • Enrique Perez Grovas 

  • Pablo Wejcman

Ernst & Young Abogados, Latin America Business Center, Madrid

  • Jaime Vargas 

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

  • Lourdes Libreros 

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

  • Raul Moreno, Tokyo

  • Luis Coronado, Singapore

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.