Guide to Ecuador VAT Taxability and Rates
Understanding which transactions are taxable, zero-rated, or exempt in Ecuador.Updated 3 months ago
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This article explains Ecuador's standard VAT rate, how it applies to different types of transactions, and how the reverse charge mechanism works for B2B sales involving non-resident sellers.
Ecuador's Standard VAT Rate
Ecuador applies a single national VAT rate of 15% on the sale of taxable goods and services. This rate applies to both domestic resident businesses and non-resident remote sellers providing digital services to consumers (B2C) in Ecuador.
How VAT Applies by Transaction Type
Transaction Type | VAT Treatment | Notes |
Resident B2B Sales | 15% VAT charged by seller | Seller issues a localized e-invoice and remits VAT to the SRI. |
Resident B2C Sales | 15% VAT charged by seller | VAT is collected by the seller and reported in the monthly return. |
Non-Resident B2C Digital Services | 15% VAT charged by seller | Registered non-residents must collect and remit VAT on B2C sales. If unregistered, local banks or payment processors automatically withhold the VAT. |
Non-Resident B2B Digital Services | Reverse Charge applies (0% from seller) | The Ecuadorian business buyer self-assesses and remits the VAT directly to the SRI. The non-resident seller does not charge VAT. |
Understanding the Reverse Charge Mechanism
The reverse charge mechanism shifts the VAT payment responsibility from the seller to the buyer. For non-resident sellers providing digital services to registered Ecuadorian businesses (B2B):
The seller does not charge VAT on the invoice.
The Ecuadorian business buyer is responsible for self-assessing the VAT and reporting it in their own tax return.
If the buyer provides a valid Ecuadorian VAT ID (RUC), the seller should not charge VAT.
If no valid Ecuadorian VAT ID is provided, the seller should charge the 15% VAT.
NOTE: The reverse charge mechanism only applies to non-resident sellers. Resident businesses with physical presence in Ecuador always charge VAT directly on B2B invoices.
Input Tax Credits
Whether you can recover VAT paid on your own business expenses depends on your registration type:
Resident businesses: Can recover VAT paid on qualifying local business expenses (input tax credits).
Non-resident remote sellers: Cannot recover local VAT. Input tax credit recovery is $0.00 USD.
Frequently Asked Questions
Q: What is Ecuador's current VAT rate?
A: Ecuador's standard VAT rate is 15%. This applies to all taxable goods and services sold within Ecuador.
Q: Do I charge VAT on sales to Ecuadorian businesses?
A: It depends on your registration type. If you are a non-resident remote seller and your B2B customer provides a valid Ecuadorian VAT ID (RUC), the reverse charge applies and you do not charge VAT. If no RUC is provided, you should charge 15% VAT.
Q: What happens if I am not registered and I make B2C sales to Ecuador?
A: If you are not registered and continue making B2C sales to Ecuadorian consumers, local financial intermediaries such as banks and credit card processors will automatically withhold 15% VAT from your customer's payment on your behalf.
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