Since August 2025, Ecuador taxes dividends to non-residents at a flat 10% — if you disclose who owns the company. Here are the rates, the full cost of one profit, the reporting that sets your rate, and where a Paraguayan holding stands.
Ecuador rewrote its dividend tax in August 2025. Dividends paid to non-resident shareholders now bear a flat 10% on the gross amount, replacing an effective-rate formula that few could calculate. The rate goes up when the real owner is an Ecuadorian resident, when the chain runs through a tax haven, or when the company has not told the tax authority who owns it.
Add the 25% corporate tax and the employees’ 15% profit share, and the full cost of getting profit out of Ecuador is easier to model than before — provided the ownership reporting is in order. This guide covers the rates, the reporting, the tax-haven test and whether a Paraguayan holding makes sense.
Law and practice: Ley Orgánica de Transparencia Social (Registro Oficial, 3rd Suppl. 112, 28 August 2025), amending arts. 39.2 and 39.2.1 of the Internal Tax Regime Law (LRTI); Executive Decree 191 of 27 October 2025. A constitutional challenge filed in September 2025 was pending at the time of writing.
| Who receives the dividend | Ecuadorian tax withheld |
|---|---|
| Non-resident company or individual | 10% of the gross dividend |
| Non-resident whose beneficial owner is an Ecuadorian resident | 12% |
| Chain through a tax haven, with an Ecuadorian beneficial owner | 14% |
| Portion of ownership not reported to the SRI | 14% |
| Shareholder in a treaty country (e.g. Chile, Canada, Spain) | Treaty rate, typically 5–10% |
| Ecuadorian company | Exempt |
The tax is withheld in full when the shareholders resolve to distribute. Loans and advances to shareholders are treated as early dividends, so lending profit to the parent instead of paying it out does not avoid the tax.
Law and practice: LRTI art. 39.2. Sources differ on whether an Ecuadorian-resident beneficial owner always means 14% or only with a tax haven in the chain; we follow the reading of the major advisers (12%, or 14% with a haven).
| US$1,000,000 profit before profit-sharing, all paid out | Amount | Running total |
|---|---|---|
| Employees’ 15% profit share | US$150,000 | US$850,000 |
| Corporate income tax, 25% | US$212,500 | US$637,500 |
| Dividend tax to a non-resident owner, 10% | US$63,750 | US$573,750 |
| ISD on the transfer (no Ecuadorian owner in the chain) | US$0 | US$573,750 to the owner |
| Total taken before the owner | US$426,250 | 42.6% |
| If ownership is not reported: 28% corporate tax and 14% on dividends | — | about 47.4% |
For profit that stays in the company, Ecuador now charges a small advance tax on undistributed earnings — from 0% on the first US$100,000 to 2.5% at the top — which can be credited against later dividend tax if the profit is distributed or capitalised within two years.
Law and practice: LRTI art. 39.2.1. Illustrative figures; the profit share is deducted before corporate tax.
Every Ecuadorian company files an annual report of its full ownership chain, up to the individuals at the top, with the SRI. The report is known as REBEFICS. It is filed in February, by the ninth digit of the tax number, with changes reported by the 28th of the following month.
Not filed on time
Corporate tax rises from 25% to 28% on the whole profit.
Incomplete
28% on the unreported share — or on everything if half or more is unreported.
Dividends
14% on the part of the dividend linked to undisclosed owners.
Penalties
Separate fines for late or inaccurate reports.
Foreign groups trip on this more than on any rate: a holding company abroad that cannot produce its own shareholder register costs its Ecuadorian subsidiary three points of tax.
Law and practice: SRI Resolution NAC-DGERCGC24-00000033, in force 30 September 2024, arts. 15–16.
In August 2025 the SRI removed its list of preferential regimes and told taxpayers to apply the legal test themselves. A jurisdiction counts as a tax haven if it meets two of three conditions.
| Test (two of three make a tax haven) | Paraguayan holding with real substance | Paraguayan shell |
|---|---|---|
| Effective income tax below 60% of Ecuador’s (under 15%) | Met: IRE is 10% | Met |
| Activity not carried out substantially there | Not met | Met |
| No effective exchange of tax information | Not met: Paraguay applies the OECD multilateral convention | Not met |
| Result | Not a tax haven (1 of 3) | Tax haven (2 of 3) |
Paraguay is not on Ecuador’s list and, for a holding with real activity and management in Paraguay, does not meet the test. A Paraguayan shell would. Tax-haven status matters less for dividends to a foreign owner than for loans, royalties and the 28% rate, but it is a risk the taxpayer now carries alone.
Law and practice: LRTI, second unnumbered article after art. 4; SRI Resolution NAC-DGERCGC25-00000021 of 15 August 2025.
Ecuador has no tax treaty with Paraguay, so a Paraguayan holding pays the same 10% as any non-treaty shareholder. Paraguay then taxes the foreign dividend in the holding, with a credit for the Ecuadorian tax, and charges its own dividend tax (IDU) when the holding pays out: 8% to a Paraguayan resident, 15% to a foreign one.
Foreign owner, profit paid out
A Paraguayan layer adds cost. A holding in a treaty country such as Spain, Chile or Canada may cut the 10%.
Owner living in Paraguay
The Paraguayan layer costs 8% on distribution, not 15%; model it against holding directly.
Profit reinvested in the region
The holding can keep Ecuadorian dividends and fund other markets before any IDU.
Substance
Real management in Paraguay keeps the holding outside Ecuador’s tax-haven test.
For the treaty side of the region, see our Chile–Paraguay treaty analysis.
10% of the gross dividend since the August 2025 reform, withheld when the distribution is resolved. Treaties can reduce it.
When the ownership has not been reported to the SRI (on the undisclosed portion), or when the chain runs through a tax haven and the beneficial owner is an Ecuadorian resident.
No, if paid to a non-resident with no Ecuadorian residents in the ownership chain.
The SRI’s annual beneficial ownership and shareholding report. Late or incomplete filing raises corporate tax from 25% to 28%.
Not on the SRI’s former list, and a Paraguayan company with real substance does not meet Ecuador’s two-of-three test. A shell company could.
No. Ecuador’s treaties include Spain, Chile, Canada, Mexico, Brazil, Uruguay, the UK and the Andean Community, but not Paraguay.
Yes, a small advance tax of 0–2.5% on undistributed profits, creditable if they are distributed or capitalised within two years.
Why dividends usually leave without the 5% outflow tax.
Ecuador and 16 other countries on one profit.
Tell us who owns the company and where the profit should go. We model the full chain and keep the reporting straight — fixed quote within one business day.
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