A Guide to Ecuadorian Taxes for Expats: IVA, Property Tax, and More

Navigating the tax system of a new country can be a daunting task for any expat. Whether you're a consumer, a business owner, or a retiree, understanding your tax obligations is crucial. This guide will walk you through the key aspects of the Ecuadorian tax system, including the Value Added Tax (IVA), property taxes, and other relevant taxes. Plus, we'll cover an upcoming temporary tax reduction that could save you money.

In a move to boost the tourism sector, President Daniel Noboa has announced a temporary reduction of the IVA (Value Added Tax) to 8% for tourism-related services. This reduction will be in effect from Thursday, October 9, to Sunday, October 12, 2025, coinciding with the Independence of Guayaquil holiday.

This temporary discount applies to a range of tourism services, including:

• Accommodation

• Food and beverage services

• Tour packages and travel agency services

• Touristic transport

This is a great opportunity for expats and tourists to explore Ecuador at a reduced cost.

IVA is a tax applied to the value of goods and services. Here’s what you need to know:

• Standard Rate: The general IVA rate in Ecuador is 15%. This rate was temporarily increased in 2024 to address the internal armed conflict.

• 0% Rate: Certain essential products and services are exempt from IVA, including basic foodstuffs, medicines, books, and educational services.

• Who Pays IVA? All individuals and businesses involved in taxable economic activities are required to collect and declare IVA. This includes retailers, independent professionals, and service companies. The seller is responsible for including the IVA in the final price and remitting it to the SRI (Servicio de Rentas Internas), Ecuador's internal revenue service.

• Declaring IVA: For business owners, IVA is declared monthly or bimonthly through the SRI's online portal. The process involves filling out form 104 or 104A, where you can also claim tax credits for IVA paid on your business-related purchases.

A common question for expats looking to buy property in Cuenca is about property taxes. The good news is that property taxes in Ecuador are generally quite low.

While it can be "a little under 1% of their valuation," in practice, it's often much lower. For example, you can expect to pay around $125 per year for a property valued at $200,000, or $85 per year for a $125,000 property.

The exact valuation is determined by the municipality, and it's always a good idea to confirm the current tax rate and valuation when purchasing a property.

Depending on your situation, you may encounter other taxes:

• Income Tax (Impuesto a la Renta): If you earn income in Ecuador, you will be subject to income tax. The rates are progressive, and you should consult with a local accountant to understand your specific obligations.

• Inheritance Tax (Impuesto a la Herencia): As mentioned in our source refinery, inheritance can be a complex and taxed process. Proper planning is essential to avoid fines and unexpected taxes.

• Tax-Exempt Assets: Some assets, like certain life insurance policies, may be tax-exempt. It's worth exploring these options with a financial advisor.

To stay on top of your tax obligations in Ecuador, consider the following:

• Keep Detailed Records: Maintain a thorough record of all your sales and purchases.

• Use Electronic Invoicing: Ecuador's electronic invoicing system is authorized by the SRI and can help you avoid legal and tax issues.

• Consult a Professional: Especially if you're new to the country or running a business, hiring a local accountant or tax advisor is highly recommended.

• Stay Informed: Tax laws and regulations can change. Keep an eye on the official SRI website for the latest updates.

By understanding the basics of the Ecuadorian tax system, you can ensure you're meeting your obligations while taking advantage of any tax benefits available to you.