Key takeaways
- Ecuador raised its VAT rate from 12% to 15% from April 1, 2024. A later permanent cut to 13% was planned, but the 15% rate stays in force until a new decree changes it.
- The temporary VAT hike aims to generate around $1 billion annually to strengthen national security and combat organized crime.
- Despite the increase, Ecuador will continue to have one of the lowest VAT rates in Latin America.
In short: In February 2024, Ecuador's President Daniel Noboa planned to raise the Ecuador VAT rate from 12% to 15%, with a later permanent rate of 13%. The VAT hike aims to fund the military, police and intelligence services against organized crime. It is expected to raise about $1 billion a year.
Update (October 2026): Ecuador's 15% VAT rate took effect on April 1, 2024, rather than March 1. Ecuador's tax authority (SRI) confirms the 15% rate stays in force until a new presidential decree changes it. SRI guidance issued in April 2026 still applies the 15% rate.
On February 9, 2024, Ecuador's new President Daniel Noboa took decisive action against the parliament's emergency VAT increase attempts. He had first proposed a temporary VAT hike from 12% to 15%. He now plans to apply this increase, followed by a future cut that sets the rate permanently at 13%. Related reading: Estonia Makes Emergency VAT Hike Permanent From July 2025.
This move is part of a wider plan to strengthen national security. The extra revenue from the VAT increase will fund the military, police, and intelligence services. This aims to tackle the growing threat of organized crime.
The president first asked the National Assembly to approve this tax change on January 13, 2024. He aimed for an effective date of March 1, 2024. The VAT hike is expected to bring in approximately $1 billion annually. You can also read Finnish Government Confirms VAT Rate and VAT Threshold Changes.
Ecuador, which reduced its VAT rate to 12% in 2017, has one of the lowest VAT rates in Latin America. We cover this in more detail in Swiss VAT Rate Increases Planned for 2026.
What does this mean for businesses?
Businesses selling in Ecuador should charge 15% VAT unless a lower rate applies. The permanent cut to 13% has not happened, so keep systems on 15% until a new decree changes it.
- Construction materials: a 5% rate has applied since April 1, 2024.
- Basic goods: some basic goods stay at 0%, such as domestic skimmed and semi-skimmed milk. Processed versions, for example with added flavourings or fruit, are taxed at 15%.
- Tourism: the government has used decrees to set a temporary 8% rate for tourism services on specific holiday dates.
Ecuador has changed its VAT rates by executive decree several times since 2023. Watch SRI announcements and update your pricing and invoicing when a new decree is issued.
How do foreign digital service providers pay VAT in Ecuador?
Since September 16, 2020, digital services that Ecuadorian residents buy from non-resident providers are subject to VAT. Either the provider registers with the SRI and collects the tax, or the customer's card issuer withholds it.
- Registered providers: registration is voluntary. A provider that registers in the RUC acts as a VAT collection agent on the total amount paid by Ecuadorian customers. Registering does not, by itself, create a permanent establishment in Ecuador.
- Unregistered providers: credit and debit card issuers withhold 100% of the VAT on payments to providers listed in the SRI's register of digital service providers. The SRI updates this list every quarter.
- No card payment: where no payment intermediary is involved, the Ecuadorian customer that imports the service must withhold the VAT itself.
Registered providers file a VAT return every month, by the 15th of the following month, and pay by the same date. They must file even when they had no Ecuadorian sales. A late return costs 3% of the VAT due for each month or part month of delay, up to 100% of the tax. See the SRI's guidance for non-resident digital service providers.
How often do businesses file VAT returns in Ecuador?
Most VAT-registered businesses in Ecuador file a monthly return. The due date depends on the ninth digit of the business's tax ID (RUC), and falls between the 10th and the 28th of the following month.
- Monthly returns: required when you make sales that carry VAT, or when you withhold VAT.
- Six-monthly returns: apply when you only make 0%-rated sales, when all your VAT is withheld by your customers, or when the SRI designates you. RIMPE entrepreneurs also file every six months.
Example: if the ninth digit of your RUC is 1, your March return is due on April 10. If it is 5, the deadline is April 18, and if it is 0, it is April 28. Six-monthly filers use the same days in July and January. The SRI's VAT page lists every due date.
How Taxually handles this
Taxually’s CrossTax handles VAT registration, VAT, OSS and IOSS returns and fiscal representation in the countries you sell into, and checks your sales data against 250+ validation rules before each filing. OneTax then pays every tax authority with one bulk payment in your chosen currency.
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Frequently asked questions
What is the new VAT rate in Ecuador for 2024?
Ecuador’s President Daniel Noboa announced a VAT increase from 12% to 15%, effective April 1, 2024. The rise is part of a national security funding plan. A later permanent drop to 13% was planned, but the 15% rate stays in force until a new decree changes it.
Why is Ecuador increasing its VAT rate in 2024?
The temporary VAT increase aims to generate around $1 billion annually to strengthen Ecuador’s military, police, and intelligence forces. The move is designed to combat rising organized crime while maintaining long-term economic stability.
What is the VAT rate in Ecuador now?
The general VAT (IVA) rate in Ecuador is 15%. It took effect on April 1, 2024, and stays in force until a new presidential decree changes it.
Which goods have a lower VAT rate in Ecuador?
Construction materials are taxed at 5%, and some basic goods, such as domestic skimmed milk, are taxed at 0%. The government has also set temporary 8% rates for tourism on specific holiday dates.
Do foreign digital service providers have to charge VAT in Ecuador?
Yes. VAT applies to digital services bought by Ecuadorian residents. Non-resident providers can register with the SRI and collect it themselves; otherwise card issuers withhold it from the payment.
When is the VAT return due in Ecuador?
Monthly filers must file between the 10th and the 28th of the following month, depending on the ninth digit of their RUC. Registered non-resident digital service providers file by the 15th.
What is the penalty for a late VAT return from a digital service provider in Ecuador?
Registered non-resident providers pay a penalty of 3% of the VAT due for each month or part month of delay. The penalty is capped at 100% of the tax due.
