VAT Rate in Ecuador Set to Rise to 15%

On February 9, 2024, Ecuador's new President Daniel Noboa took decisive action against the parliament's emergency VAT increase attempts. Originally proposing a temporary hike in VAT from 12% to 15%, he now plans to implement this increase but with a future reduction setting the rate permanently at 13%.

This move is part of a broader strategy to bolster national security. The additional revenue from the VAT increase will fund improvements in the military, police, and intelligence sectors to address the growing threat of organized crime.

The president initially sought approval from the National Assembly on January 13, 2024, for this tax adjustment, aiming for an effective date of March 1, 2024. The VAT hike is expected to bring in approximately $1 billion annually.

Ecuador, which reduced its VAT rate to 12% in 2017, has one of the lowest VAT rates in Latin America.

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