Overview of Ecuador’s Double Taxation Agreements

Ecuador’s double taxation agreements prevent taxes from being applied to commercial transactions that have been taxed in another jurisdiction, representing a financial incentive to foreign companies and individuals considering investing.

Ecuador has double taxation agreements in force with 23 countries around the world, which have bolstered trade and secured greater foreign direct investment. If you are considering starting a business in Ecuador, or expanding your commercial operation into the Andean nation, you will undoubtedly want to know how Ecuador’s double taxation laws could benefit you.

Ecuador’s double taxation agreements in LatAm

Ecuador is part of the Andean Community (CAN), which also includes Bolivia, Colombia and Peru. In 2004, an agreement to eliminate double income taxation was signed by CAN. Only citizens, residents or companies legally established in any of the member countries can access those benefits.

Argentina, Brazil, Chile and Mexico have all also maintained double taxation agreements with Ecuador for more than a decade.

The most recent of Ecuador’s double taxation agreements to be signed with a Latin American country was with Uruguay in 2013.

Ecuador’s double taxation agreements in Asia

People’s Republic of China

Ecuador signed a double taxation agreement with China in 2015. The agreement includes gains derived from the sale of real estate or movable property, and taxes on the total amount of wages paid by companies.

Almost $6 billion (USD) of goods pass between Ecuador and China each year, according to the World Bank, meaning agreement has been beneficial for many involved in trade between the two.

Japan

Over recent years, trade between Japan and the Andean nation has increased, and Ecuador’s double taxation agreement with the Asian powerhouse was signed and came into force in January 2020.

Within Ecuador, it only eliminated the imposition of income tax when that has been paid in Japan. However, in the case of Japan, it includes:

• Income tax
• Corporate tax
• Special income tax for reconstruction
• Local corporation tax
• Local taxes on inhabitants

Ecuador’s government has suggested it would like to establish similar agreements with other Asian countries.

Take advantage of business opportunities in Ecuador with the help of local experts

At Biz Latin Hub, our team of legal specialists are equipped to help you take advantage of Ecuador’s double taxation agreements with key markets in Latin America. Through our full suite of multilingual market entry and back-office services, we can ensure the proper expansion of your company.

Our team of professionals offer advice and support to improve your company’s corporate compliance, increase its value and manage its risks.

Reach out to us now to receive personalized assistance focused on resolving your possible conflicts and maximizing benefits.

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