13 Jan New Percentages for Withholdings at Source

As of April 1, 2020, some activities that taxpayers carry out must transfer to the Internal Revenue Service (SRI) an additional 0.75% in withholding tax. That will allow the State to raise around USD 426 million.

The complex economic situation that the country is going through forced the Government to adopt a series of decisions, among them the increase of 0.75% in some withholdings to the source, which will allow it to have advanced resources. For this, the Tax Authority issued the respective resolution.

Withholding is a figure by which certain taxpayers collaborate with tax management, by withholding a specific percentage of the taxes that are generated in an economic transaction at their expense. Specifically, the new standard states:

• The acquisition of all types of personal property of a corporeal nature will increase the withholding of Income Tax from 1% to 1.75%.
• Payments or credits on account not contemplated in the specific withholding percentages will be increased from 2% to 2.75%.

 Who should retain?

• Any legal person or natural person obliged to keep accounts that pays or credits any type of income that constitutes taxable income for the person who receives them. This will act as an income tax withholding agent.
• Withholding agents are obliged to deliver the respective withholding receipt, within a term of no more than five days after receipt of the sales receipt, to the persons to whom they must make the retention.
• In the case of payments made by employers to taxpayers who work in a dependency relationship, the withholding receipt will be delivered within the month of January of each year in relation to the income of the preceding year. Likewise, they are obliged to declare and deposit the withheld values ​​on a monthly basis in the entities legally authorized to collect taxes.
• Take into account that, after the approval of the Tax Simplification Law, in December 2019, from this year around 100,000 withholding agents will be eliminated. The decision began to take shape in February, so several companies have already ceased to be withholding agents.

Some current withholdings

Sanctions

Remember that failure to: submit the withholding statement, deposit the withheld values ​​and deliver the vouchers in favor of the withheld, has the following sanctions:

• If the withholding is not made, if it is done partially or if the withholding values ​​are not deposited, the withholding agent will be obliged to deposit the respective fines and default interest in the entities authorized to collect taxes the total value of the withholdings that, having to do them, they were not carried out, or that carried out were not deposited.
• The delay in the presentation of the withholding declaration will be sanctioned in accordance with the provisions of the Internal Tax Regime Law.
• Failure to deliver the withholding receipt to the taxpayer will be sanctioned with a fine equivalent to 5% of the withholding amount, and in the event of a repeat offense it will be considered as fraud.

At UHY Assurance & Services we are experts in this matter, let us advise you. You can communicate through our WhatsApp or by mail: info@uhyecuador.ec