VAT News

Ecuador Enforces 12% Digital Services VAT

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 

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. 

Related articles

HMRC: No VAT on e-Publications for UK Citizens as of 1 May 2020

HMRC has scrapped VAT completely off e-books and e-publications from 20% down to 0%. In an effort to make reading more accessible for the UK public while in self-isolation due to the Coronavirus, HMRC fast-tracked the motion and implemented it seven months ahead of schedule. 

Read more
COVID-19 VAT tips for businesses

These COVID-19 VAT tips for businesses will help companies around the world boost liquidity in times of economic challenges. Learn how to harness VAT refunds and compliance.

Read more
COVID-19 VAT Cashflow Tips (Part Two)

COVID-19 is affecting business in ways no one thought possible. In order to free yourself from the burden of cashflow worry, we’re trying to do our bit to advice you on ways you can inject income into your bottom line.

Read more