In Resolution No. NAC-DGERCGC2300000020, the Internal Revenue Service (SRI) establishes the rules for applying an Income Tax (IR) reduction for personal expenses.

• Parents, spouses, or common-law partners and children up to the age of 21 or with disabilities of any age may be considered as family dependents, provided that they do not receive taxable income and that they are dependent on the taxpayer.
  
  
• In no case may two or more taxpayers consider the same person as a family dependent for the respective tax period.
  
  
• Workers must provide the following information on family dependents to their employer.
  
  
• Copy of the identity card of the spouse, which constitutes evidence of the marriage.
  
  
• Copy of the identity card of children up to 21 years of age.
  
  
• Copy of the identity card and disability card of children with disabilities.
  
  
• Copy of the certificate of suffering from a catastrophic, rare, and / or orphan disease issued by the Ministry of Public Health or the Ecuadorian Institute of Social Security.
  
  
• To register parents as family dependents, they must give their express consent to be included as a family dependent of the taxpayer and present a copy of the identity card where the family relationship is evidenced.
  
  
• For the 2023 fiscal year, workers in a dependency relationship may submit a new personal expense projection form in July.
  
  
• Employers must reassess income tax considering the personal expenses forecast presented by the worker. Likewise, they must make the withholdings for the values adjusted for the payments of salaries and wages related to the month of July.

On June 4^th, 2024, the INTERNAL REVENUE SERVICE issued the BULLETIN No. NAC-COM-24-029, which enabled the new version of the annex for the report of the Tax Compliance Report (ICT, in Spanish), for the 2023 tax year. The changes are as follows:

For the registration of the Tax Compliance Report it is included in Annex 2 the columns regarding the specific annual movements of the taxpayer:

Annex 9 also includes the following sections for the registration of the taxpayer:

Companies that have the obligation to have External Audit must submit the Report and its annexes until July 2024 through the web portal www.sri.gob.ec, according to its ninth digit of their tax registration identification.

On May 29, 2024, the Resolution No. NAC-DGERCGC24-00000020 issued by the INTERNAL REVENUE SERVICE was published in the Official Register. This Resolution reformed the contents of the Annex on Transactions with Related Parties and the Transfer Pricing Report whose most relevant content is summarized below:

• Types of taxpayers

The following classification of taxpayers was included for the establishment of the amounts of pecuniary sanctions regarding the report of the Annex on Transactions with Related Parties and the Transfer Pricing Report:

1. Large Taxpayers and Large Estates;
   
   
2. Special Taxpayers; and
   
   
3. Other taxpayers subject to transfer pricing regime.

• Tax penalties for failure to file the report

Taxpayers who do not submit the Transfer Pricing Report or the Annex on Transactions with Related Parties shall be fined based on the following table:

• Tax penalties for registration of the report incompletely

Taxpayers who submit incomplete, inaccurate or erroneous information shall be fined based on the following table:

The Transfer Pricing Report or the Annex on Transactions with Related Parties shall be deemed to contain incomplete, inaccurate or erroneous information when the following are incurred:

• Not taking into consideration the Technical Sheet for the standardization of the transfer pricing analysis and the technical sheet of the Annex on Transactions with Related Parties in force for the evaluated fiscal year.
  
  
• Submit incomplete or inaccurate information, which differs between the Transfer Pricing Report and the Annex on Transactions with Related Parties, for transactions with related parties and the methodology and indicator when applicable.
  
  
• When the values declared in the income tax return, Annex on Transactions with Related Parties and Transfer Pricing Report, show differences between any of them.
  
  
• In the case of the Transfer Pricing Report, when the working papers established in the Technical Sheet for standardization of the Transfer Price Analysis in force to the evaluated fiscal year are not included.

When the taxpayer settles and pays the fine without prior notification by the Tax Administration, it shall be considered a voluntary liquidation.

If the Tax Administration notifies the taxpayer of the breach of its duties, a fine shall be issued based on the above categories.

• Sanctions regime for late registration

Taxpayers who submit information after the deadline shall be fined based on the following table:

• Fiscal year 2023 registration of reports and annexes

1. The Annex on Transactions with Related Parties and the Transfer Pricing Report for the 2023 fiscal year, may be filed until September 2024 on the same due dates as for the monthly tax returns of each taxpayer.
   
   
2. Transfer Pricing Reports for the 2023 fiscal year submitted after this Resolution, must be made in accordance with the Technical Sheet published on the IRS website, on May 27, 2024.