Tax incentives remain available to taxpayers in Ecuador, aiming to lower tax burdens while supporting economic growth, employment, and investment. The government has maintained these measures as part of a broader strategy to boost production, support key sectors, and create new job opportunities across the country.
One major incentive targets job creation, especially for young people entering the workforce. Current regulations allow employers to claim an additional 50% deduction on income tax for hiring individuals aged 18 to 29. This deduction increases up to 75% when hiring graduates from public universities, technical institutes, or state-run schools. Additional incentives are available for hiring workers in construction and agriculture sectors, as well as for individuals who have completed prison sentences. These measures aim to encourage reintegration into the labor market.
Investors can also benefit from several incentives. Operators and users in free trade zones receive a 0% income tax rate during their first five years of operation. New investments in tourism projects worth over USD 100,000 may qualify for up to seven years of tax exemption, with special focus on rural tourism. There is also a 15% reduction in withholding income tax on payments abroad related to tourism services and cultural or artistic events held in Ecuador.
Efforts to increase female employment are supported through the Violet Economy Law. Employers can apply an additional deduction of up to 140% on wages and social security contributions for hiring women, depending on their length of employment. This seeks to promote gender equity and women’s participation in the labor force.
Further benefits extend to national production and the popular and solidarity economy sector. When acquiring goods or services from microenterprises or artisans within this sector, businesses may apply an extra 10% deduction based on the value of those purchases. Donations made to the National Police or Armed Forces—whether real estate, equipment, or supplies for citizen security—can be deducted up to 30% of total tax owed. In construction, both individuals and companies are eligible for VAT refunds on real estate projects and may access a reduced VAT rate of 5% on certain building materials.
The Internal Revenue Service (SRI) encourages taxpayers to learn about these current tax incentives and take advantage of them. Details regarding eligibility and requirements can be found at https://www.sri.gob.ec/incentivos-tributarios through SRI’s official channels.
