Tax remission has been a lifesaver both for the Ecuadorian State, by generating immediate income, and for taxpayers, by offering them the opportunity to regularize their tax situation without interest or fines. Although it should be an exceptional measure, in Ecuador it is applied almost every three years. In this article we explain what it implies and how you can benefit from it.
What is tax remission?
It is a "tax obligation extinguishment mode", a legal mechanism that allows taxpayers to catch up with their tax debts, eliminating interest, fines and surcharges, which is in force until July 31, 2024.
Legal basis
The legal basis for the referral is currently set forth in the Organic Law of Economic Efficiency and Employment Generation, its Regulations and in Resolution No. NAC- DGERCGC24 - 00000011 published in the Official Gazette supplement 525 of March 25, 2024.
What's new in the current referral
The current referral regime presents important novelties:
Applies only to obligations generated until December 2023.
The only requirement is payment. There is no requirement to withdraw from administrative or judicial proceedings, except in the case of coercive proceedings, unlike in the past.
Payment of 100% of the principal or prepayments and partial payments are allowed.
Payments prior to the effective date of the rule will be applied to principal if the outstanding balance is completed.
In contested coactiva proceedings, the precautionary measures will be lifted upon dismissal of the proceeding or with a judgment.
Obligations not subject to remission
The following games are not included in the regime:
Tax obligations generated from January 1, 2024 of 2024.
Income tax obligations for fiscal year 2023.
Income tax obligations for the period 2023.
Obligations whose taxpayers are the president of the republic, provincial and national assembly members, or their relatives, up to the fourth degree of consanguinity and second degree of affinity - according to the registry submitted by the Civil Registry.
Bonds that do not contain a value of tax payable.
Financial penalties.
Income Tax 2023.
How to benefit?
To take advantage of this remission, taxpayers must:
Verify your debt: Through the IRS services.
In partial payments: Send an official letter to the SRI to issue a liquidation considering the glosses or values that are going to be satisfied through this regime.
Make the payment: Make sure to pay the total amount of the indebted capital or partially pay the same according to the liquidation made by the IRS before July 31, 2024.
Although the current remission has several differences with previous ones, it is key to remember that it extinguishes the tax obligation without implying acceptance of its terms. The payment is based on a financial cost analysis for taxpayers, in accordance with current regulations.
Practice Area News
Circular No. NAC-DGECCGC24 - 0000004. The aforementioned circular was issued by the SRI and published in the RO Supplement 482 of June 19, 2024. In this circular, criteria are issued for the application of partial acceptance and payment of glosses in administrative processes, whether in application or not of tax remission.
The application criteria are as follows:
The partial acceptance of the tax liability, for each determined gloss, implies the imputation of the payments in accordance with the rule provided for in Article 47 of the Tax Code on separate bases.
The partial acceptance of the tax liability, for each determined gloss, requires that the taxpayer makes full payment of that part of the debt, consisting of the capital and proportional accessories, and communicates to the Tax Administration its willingness to allocate the payment to this specific component of the tax.
The taxpayer may initiate the actions or file the appeals allowed by law against administrative acts or judicial resolutions, without prejudice to the acceptance and payment of a part of the obligation.
Any payment without communication will be charged in accordance with article 47 of the Tax Code.
With respect to the application of the tax remission provided for in the First Transitory Provision of the Organic Law of Economic Efficiency and Employment Generation, the partial acceptance of glosses is applicable in all those cases in which the taxpayers make the payment of 100% of the capital of the accepted glosses. If the taxpayer had made previous payments before the publication of the referred law, such payments will be imputed to the capital provided that, in addition, the taxpayer pays what, added to the previous payments, is equivalent to the amount of 100% of the capital.
