ECUADOR: Foreign Supplies of Digital Services to be Taxed in September

Ramón Frias
September 11, 2020

Starting September 16, 2020, the tax administration of Ecuador will begin to enforce the collection of VAT on digital services supplied by providers not domiciled or established in that country. As a result of decree 1114/2020, foreign suppliers have the option of registering at the tax administration and applying 12% on the provision of these services to local customers not registered for VAT purposes (B2C). If a foreign provider fails to do so, the the financial entity used to pay for the services shall retain the applicable VAT. When the customer of the foreign supplier of digital services is a registered taxpayer for VAT purposes in Ecuador (B2B), such a business customer must retain the VAT and issue the corresponding invoice, known locally as “settlement of purchase of goods and provision of services,” which will specify the amount paid for the service and the VAT applied. You may access the decree here.

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Ramón Frias

Ramon is a Tax Counsel on the Regulatory Analysis team at Sovos. He is licensed to practice law in the Dominican Republic and is a member of the Dominican Bar Association. He has a Certificate Degree from Harvard University as well as a J.D. from the Universidad Autonoma de Santo Domingo. Ramon has written a number of essays about tax administration and has won the first prize in the international essays contest sponsored by the Inter American Center of Tax Administrations (CIAT). Prior to joining Sovos, Ramon worked for more than 10 years in the Department of Revenue of the Dominican Republic where he served as Deputy Director. He is proficient in French and Spanish.
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