Regulation NAC-DGERCGC20-00000011 issued by the Internal Revenue Service and published on February 21, 2020 in the Supplement to the Official Registry 148, establishes the rules for applying the Tax Regime for Microenterprises created by the Law of Simplification and Tax Progressivity.
Microenterprises are those individuals or entities whose annual income is equal to or less than US $ 300,000.00 and, that have 1 to 9 workers.
The Internal Revenue Service is able to include or exclude from the especial regime, taxpayers who meet the conditions to qualify as microenterprises. For this purpose, the Tax Authority is able to update the taxpayer tax ID without prior notice and, it must publish a microenterprises registry on its web page (https://www.sri.gob.ec/web/guest/catastros).
Taxpayers who consider that they should not have been included in the microenterprises tax regimen may request their exclusion until April 7, 2020.
Taxpayers included in the Tax Regime for Microenterprises must comply with the following:
- Issue invoices in accordance with current regulations.
- Request proof of sale to support the acquisition of goods or provision of services.
- Keep accounting books or a record of income and expenses as appropriate.
- File tax returns when appropriate. In the case of VAT and excise tax (ICE), the tax returns must be filed semiannually in the months of July and January of each year.
- Submit the annexes of information when appropriate, and
- Fulfill the other formal duties indicated in the Tax Code.
Taxpayers registered in the microenterprise's registry must apply the regime from February 2020. Therefore, they will not act as withholding agents for income tax or value added tax since said month.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.