Taxation of international executives
Individuals are classified either as resident or non-resident tax payers. Residents are taxed on worldwide income. Non-residents are taxed on Ecuadorian-source income only. Ecuadorian-source income includes income received by Ecuadorians and foreign nationals in respect of work, professional, commercial, industrial, agricultural, mining services, and others of an economic nature carried out in Ecuadorian territory.
Income tax is calculated by applying a progressive tax rate schedule, from 5 percent to a maximum of 35 percent of taxable income. In 2012 income greater than USD9,720; in 2013 income greater than USD10,180; in 2014 income greater than USD10.410 and in 2015 income greater than USD10.800 are subject to tax payment.
Non-residents performing temporary services are taxed at a flat rate of 22 percent regardless of where paid. Non-residents performing permanent services are taxed at the progressive tax rates of a resident that is, taxed in the same way as services rendered by an individual residing in the country.
Beginning in 2008, the deduction of expenses over the taxable basis of the income tax is permitted for individuals; this deduction corresponds to a maximum of 1.3 over the base in effect or maximum 50 percent of taxable income, whichever is first.
The official currency of Ecuador is the U.S. Dollar (USD).
Herein, the host country refers to the country where the expatriate is going on assignment. The home country refers to the country where the expatriate lives when he/she is not on assignment.
© 2018 KPMG del Ecuador Ca. Ltda., a Ecuador limited liability corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.