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Ecuador VAT digital services update

Ecuador has withdrawn the option to use withholding VAT on digital services purchased via non-resident marketplaces or payment aggregators.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.

  • Advertising
  • 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
Argentina 21% Apr 2018
Bahamas 10% Jan 2015 BSD 100,000
Barbados 17.5% Dec 2019 BBD 200,000
Bolivia 13% Nov 2022 -
Brazil n/a n/a n/a Various proposals
Chile 19% Jun 2020 Nil
Colombia 19% Jan-18 Nil
Costa Rica 13% Oct 2020 Nil Withholding VAT option
Dominican Republic 18% 2023 Nil Currently withholding VAT
Ecuador 12% Sep 2020
El Salvador 13% 2022 - Replace Withholding VAT
Guatemala 12% TBC
Honduras 15% 2022 HNL 250,000
Panama 10% 2022 Withholding VAT
Paraguay 10% Jan-21 Nil Withholding VAT; 4.5% DST
Peru 18% 2022 Nil Withholding VAT
Puerto Rico 10.5% Jan 2020 $100,000; or 200 transactions Marketplaces
Uruguay 22% Jan 2018 Nil VAT and Withholding Tax

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