Ecuador Enforces 12% Digital Services VAT
Ecuador is the latest country to officially introduce VAT on digital services. Foreign businesses providing e-services to Ecuadorian residents, will need to register for VAT in Ecuador in order to remain compliant.
Nonresident businesses can act as collection agents for VAT by registering with the Ecuadorian tax authority. The process for VAT payments to the tax authorities will be as follows:
- The nonresident acts as a collection agent of the VAT if the supplier is registered in Ecuador.
- The VAT is directly assumed by the importer of the service if the supplier is not registered in Ecuador.
- The credit card company will act as a withholding agent if there is an intermediary involved in the payment process. (source)
VATGlobal is able to offer assistance in the registration process and compliance maintenance within Ecuador, for any queries contact firstname.lastname@example.org
How do I know if my business is providing Digital Services?
Digital services or e-services are defined as a service offered to customers over the internet. If your product is a subscription service that is made possible by the internet (such as Adobe suite or Shopify, woo commerce etc) then your business is providing digital services and should look into which countries now impose the need to register for VAT to remain compliant.