Unless you are running a business in Ecuador, your tax liability as a foreign resident is very low. If you live in Ecuador but obtain your income from overseas sources, there is no reporting requirement. The practice of monitoring and taxing banking transactions in Ecuador has been abolished.

Income tax in Ecuador

Foreign residents of Ecuador are taxed on their Ecuadorian-sourced income but not on income earned outside of the country. Income taxes are charged at progressive rates, ranging from 5% to 35%. The first $8,570 of an individual’s income is not taxed.

Sales tax

Most of Ecuador’s tax revenue is generated by the IVA, which translates in English as value added tax (VAT). The rate for this tax is currently 12%, and it is added to most purchases.

Property tax in Ecuador

Residential property taxes are based on a percentage of the municipal value of the property, and city and rural properties are taxed at different rates. Even on large properties it is unusual to pay more than $200 a year in property tax. Homeowners over the age of 65 pay half of these rates.

Capital gains tax

The capital gains tax is based on the change in the municipal value between the time you bought the property and when you sell it. Technically, the percentage is 10% of the difference between the municipal value at the time of purchase and at the time of sale. There may be discounts on this fee, based on the amount of time between purchase and sale of the property. A short time span between purchase and sale will result in a higher capital gains tax. There is also a possible 75% tax imposed on “extraordinary gains”, but this may be struck down by referendum vote in early 2018.