Amendments To Income Tax Rates

(Law No. 41, Supplement of Official Gazette 325 of May 14, 2001)

The Tax Reform Law introduces a rule allowing companies that reinvest their profits in the country to obtain a 10% reduction in the income tax rate on the amounts they reinvest so long as the resulting capital increase is perfected through registration with the Companies Register by December 31 of the fiscal year following the year in which there invested earnings were produced.

Based on the Tax Reform Law, any income remitted outside of Ecuador will be taxed at the sole rate of 25% on taxable income and the tax will be withheld at the source. Previously, income in any form other than profits or dividends remitted, paid or creditor abroad was subject to a sole rate of 33%.