Regulation NAC-DGERCGC20-00000011 issued by the Internal Revenue Service establishes the withholding percentages applicable to the dividends distributed by entities with tax residence or permanent establishments located in Ecuador to: (i) individuals with tax residence in Ecuador; or, (ii) foreign entities which beneficial owners are individuals with tax residence in Ecuador.
The withholding percentage will apply over 40% of the amount of the dividend, according to the following:
| Taxable income from (basic tax bracket) |
Taxable income until (surplus tax bracket) |
Withholding over the basic tax bracket |
Withholding percentage over the surplus tax bracket |
| – | 20.000,00 | 0 | 0% |
| 20.000,01 | 40.000,00 | 0 | 5% |
| 40.000,01 | 60.000,00 | 1.000,00 | 10% |
| 60.000,01 | 80.000,00 | 3.000,00 | 15% |
| 80.000,01 | 100.000,00 | 6.000,00 | 20% |
| 100.000,01 | Forward | 10.000,00 | 25% |
The withholding receipt must be issued with the name of the individual with tax residence in Ecuador even if the amount to withhold is zero.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
