Taxpayers in Ecuador have access to several tax incentives designed to reduce their tax burden and support economic activity, employment, and investment. The government continues these measures as part of its strategy to strengthen production, boost key sectors, and create job opportunities nationwide.
A main focus of the current incentives is promoting employment, especially among young people. Employers can apply an additional 50% deduction on income tax for hiring individuals between 18 and 29 years old. This deduction increases to 75% for graduates from public universities, technical institutes, or other public educational institutions. There are also specific benefits for hiring workers in construction and agriculture sectors, as well as for employing individuals who have completed prison sentences.
Investment-related incentives include a 0% income tax rate for operators and users of free trade zones during their first five years of operation. New investments in tourism projects exceeding USD 100,000 may receive up to seven years of exemption from income tax, with a particular focus on rural tourism. Additionally, there is a 15% reduction in withholding tax on foreign payments related to tourism services and artistic or cultural events held within the country.
The government has also introduced measures aimed at increasing female employment through the Violet Economy Law. According to this law: “Employers can apply an additional deduction of up to 140% on salaries and social security contributions for hiring female staff based on length of service,” which aims to promote gender equality and increase women’s participation in the workforce.
Further benefits are available for national production and the popular solidarity economy. Businesses purchasing goods or services from microenterprises or artisans can claim an extra 10% deduction based on the value of those purchases. Donations made to the National Police or Armed Forces—including real estate, equipment, or supplies intended for citizen security—can be deducted up to a limit of 30% of owed taxes. In construction, both individuals and companies may qualify for VAT refunds on real estate projects and access a reduced VAT rate of 5% on certain building materials.
The Internal Revenue Service (SRI) encourages taxpayers to learn more about these ongoing incentives by visiting https://www.sri.gob.ec/incentivos-tributarios or using its official channels.
