Ecuador has withdrawn the option to use withholding VAT on digital services purchased via non-resident marketplaces or payment aggregators. This updates the 16 September 2020 introduction of indirect taxes on non-resident providers.
Previously, if a marketplace or payment aggregators did not manage the VAT due, then any payment provider (credit card, bank transfer, payment acquirers, e-wallet etc) had to make a split payment of the VAT directly to the Servicio de Rentas Internas, SRI.
Now the marketplace or payment aggregator must make the VAT payment to the SRI and file monthly reports. They must not forward the VAT to the original provider of the digital service.
Digital services liable to Ecuadorian VAT
Since September 2020, digital services have been liable to 12% VAT. These include services provided over the internet or adapted protocol or platform. VAT registration includes appointing a local agent. B2B cross-border transactions remain subject to the reverse charge, meaning the provider does not need to VAT register.
- e-books and journals
- Online dating sites
- Streaming or download media
- Web hosting services
- Bookings through gig and sharing economy
- Data hosting and processing
Check VAT Calc’s global VAT and GST on digital services tracker to see which other countries have introduced indirect taxes on electronic services to consumers.
Central and South America VAT on digital services
|Comments (click for details)||Rate||Date||Threshold||Comments|
|Bahamas||10%||Jan 2015||BSD 100,000|
|Barbados||17.5%||Dec 2019||BBD 200,000|
|Costa Rica||13%||Oct 2020||Nil||Withholding VAT option|
|Dominican Republic||18%||2023?||Nil||Currently withholding VAT|
|El Salvador||13%||2022||-||Replace Withholding VAT|
|Paraguay||10%||Jan-21||Nil||Withholding VAT; 4.5% DST|
|Puerto Rico||10.5%||Jan 2020||$100,000; or 200 transactions||Marketplaces|
|Uruguay||22%||Jan 2018||Nil||VAT and Withholding Tax|