Ecuador National Assembly approves Tax Code reforms

The Ecuadorian National Assembly has approved reforms to the Tax Code, which now await approval or objection from the Executive branch. While the changes are not considered structural, experts note they improve administrative clarity and legal certainty by granting the Tax Code ‘organic’ status.

One major update involves coercive collection processes. Instead of immediate account freezes, taxpayers will receive a prior notification and a 20-day window to settle outstanding debts. This change requires enhanced technological integration between the Internal Revenue Service (SRI), financial institutions, and the Superintendency of Banks.

The reform also introduces significant changes to asset declarations. Natural persons with assets exceeding approximately USD 244,160 (for single individuals) or USD 488,520 (for those in a marital partnership) are required to report their assets and liabilities.

Failure to comply with these declaration requirements could result in heavy penalties. Fines for non-compliance are set between 1,000 and 2,075 Unified Basic Salaries, which translates to a range of roughly USD 482,000 to over USD 1 million. Additionally, omitting assets held abroad may incur a fine of 0.5% of the unreported value. Some experts have criticized these high fines as being “excessively counterproductive” to the goal of preventing money laundering.