The IRS sets new parameters in order to make the payment of income tax more effective, establishing specific self-withholding percentages for large taxpayers.
The General Directorate of the National Internal Revenue Service (SRI), by means of Resolution Nr. NAC-DGERCGC24-00000024 issued the Regulations Applicable to the Self-withholding of Income Tax Payable by Companies Qualified as Large Taxpayers. This resolution fixes the monthly payment of income by taxpayers known as “large taxpayers”, based on the effective tax rate determined according to their economic activity.
Well, the question arises, what is the effective tax rate, this is a rate that is calculated based on the information provided by the taxpayer in the last annual income tax return corresponding to its fiscal year, this is determined by the active subject, that is, the tax administration, which is also in charge of determining the taxpayer's usual economic activity.
Withholding tax base
For self-withholding, the taxable income received monthly by the companies qualified as large taxpayers must be considered; however, this resolution exempts the income of the same companies from the following sources:
- Contracts for the provision of services for the exploration and exploitation of hydrocarbons in payments made by the Ecuadorian State;
- Contracts entered into with entities and agencies of the central government, its decentralized bodies and its public companies;
- Contracts entered into with entities and agencies of decentralized autonomous governments and their public companies;
- Contracts entered into with social security entities;
- Revenues recognized in judicial resolutions or administrative acts with central government entities and agencies;
- Taxable income subject to special regimes; and,
- Income subject to another self-withholding regime.
Sanctions
It is important to add that this resolution lists the names of the "large companies" in Ecuador subject to the provisions and sanctions set forth in this regulation. In such case, if the taxpayers do not generate the self-withholding or perform it partially, they will be subject to interest and surcharges, without prejudice to the fine equivalent to 100% of the withholding.
Finally, this resolution, through its provisions, repeals Resolution NAC-DGERCGC24-00000003, related to income tax withholding for companies considered as large taxpayers.
If you need legal assistance or more information on tax matters, do not hesitate to contact one of our professionals. You can write to us at ace@iurenovum.com or call us at 0990938575 or 0990552880. We will be happy to help you.
