On December 31, the Executive published the Tax Simplification and Progressive Law in a Supplementary edition of the Official Gazette Nº 111, levying a 12% VAT rate on digital services which is set to come into force 180 days following enactment.

The initiative states that when a digital service provider is not registered in Ecuador, the VAT resulting from such services must be paid by the service importer as a taxpayer, and any payment intermediary will act as withholding agent.

It is worth mentioning that this occurred after the National Assembly passed a resolution to publish the Tax Reform originally approved on December 11 in the Official Gazette with 61 votes in favor.

The resolution was passed after the National Assembly discussed the Executive branch’s veto on December 17, and backed 11 out of 13 objections, overruling one and leaving the other without enough votes to be approved. The process casts doubts over the legality of enacting a law before the expiry of the 30-day period following the introduction of the veto, as dictated by the Constitution of Ecuador.