Ecuador Tax Code reform and asset declaration

The Ecuadorian National Assembly approved reforms to the Tax Code, granting the code ‘organic’ status to improve administrative clarity and legal certainty. The reforms include new procedures for coercive collection, providing taxpayers a 20-day window to settle debts following notification, rather than immediate account freezes.

A central component of the reform involves mandatory asset declarations for individuals with assets exceeding approximately USD 244,160 or marital partnerships exceeding USD 488,520. These declarations, which cover real estate, investments, and debts both domestically and abroad, serve as a tool for the Internal Revenue Service (SRI) to monitor asset evolution and detect unjustified increases.

Following concerns that original penalty structures were “excessively counterproductive” and disproportionate, the National Assembly approved a partial objection from the Executive branch. This adjustment modifies how penalties are applied to taxpayers who fail to declare or incompletely report assets held abroad.

Instead of the previously proposed fixed sanctions, taxpayers will now face a fine equivalent to 0.5% of the value of the undeclared assets, capped at a maximum of 2,075 Unified Basic Salaries. To encourage compliance, the law includes a provision to reduce the penalty by 50% for individuals who voluntarily regularize their tax situation before receiving notification from the Tax Administration. The reform has been sent to the Official Registry for publication and implementation.