Quito

Taxation in Quito, Ecuador

What are the tax rates in Quito, Ecuador? How are corporations taxed? Here’s Teleports overview of personal, corporate and other taxation topics in Quito, Ecuador.

Personal taxation in Quito

Effective personal income tax rate

Annual income$25,000$40,000$80,000$125,000$200,000
Rate6%10%16%21%26%

Teleport city rankings for personal income tax

Personal taxation puts Quito in position 17 of all Teleport Cities.
WORSTBEST

Basis

Resident individuals are taxed on their worldwide income; nonresidents are taxed only on Ecuador-source income.

Residence

An individual is deemed to be resident if he/she is in Ecuador for more than six months in a year, if his/her principal activities or economic interest are in Ecuador or if the individual’s close relatives are in Ecuador. A change in tax residence will not become effective for five years if the individual moves from Ecuador to a tax haven or low-tax jurisdiction unless the individual can demonstrate that he/she was physically present in the new jurisdiction for at least 183 days during the tax year.

Filing status

Married couples or common law spouses living in a common law union must file a combined return if their joint assets exceed 40 times the basic income tax-free allowance. However, if either of the spouses/partners holds assets outside of the conjugal community, returns must be filed separately and include the individual assets and liabilities, as well as the assets and liabilities that form part of the conjugal community or common law union.

Rates

Rates are progressive from 0% to 35%.

Deductions and allowances

Deductions are permitted up to a maximum amount of USD 14,521 for personal expenses (housing, education, food, health, clothing, etc.) and social security paid by the individual.

Taxable income

Taxable income includes income from employment, income from a profession or business, capital gains and investment income, such as dividends.

Capital gains

Capital gains are treated as ordinary income and taxed at the normal rate.

Other taxes on individuals

Real property tax

Urban property tax is levied annually by municipalities on the owner of property at progressive rates ranging from 0.025% to 1%.

Inheritance/estate tax

Inheritance tax is levied at progressive rates up to 35% on donations, inheritances and legacies. A tax-free allowance of USD 71,220 is granted.

Social security

Resident employees are required to make monthly social security contributions in an amount equal to 9.45% of the monthly salary.

Compliance for individuals

Penalties

Interest and penalties apply for late filing, failure to file or filing an incorrect return.

Other

Individuals whose total assets exceed 20 times the basic income tax-free allowance must file information on their net worth in May of each year, stating the beginning balances at 1 January of the relevant year.

Filing and payment

Tax returns must be filed between 1 February and 10-28 March of the year following the tax year.