Transfer Pricing in Ecuador

The legal framework

Ecuador's transfer pricing regime is statutory and administered end to end by the Servicio de Rentas Internas (SRI). The core sits in the Ley de Régimen Tributario Interno (LRTI), in the unnumbered articles inserted after Article 15 by the Ley Reformatoria para la Equidad Tributaria (Registro Oficial Supplement 242, 29 December 2007): the arm's length principle in its OECD Article 9 formulation, the comparability criteria, the prior valuation consultation and the technical reference to the OECD Guidelines. Operative detail lives in the Reglamento (RALRTI), Articles 84 to 91. Numbering has shifted across codifications, so cite the article headings, not the numbers alone.

Relatedness arises on 25% direct or indirect ownership, 25% common shareholding, or concentration of 50% or more of sales or purchases with a single counterparty, with family links reaching the fourth degree of consanguinity. Separately, any counterparty resident in a tax haven, preferential regime or lower-tax jurisdiction is deemed related irrespective of ownership.

The old exemption for taxpayers whose income tax caused exceeded 3% of taxable income was repealed by the Ley Orgánica de Eficiencia Económica y Generación de Empleo (Registro Oficial 461, 20 December 2023), and Resolution NAC-DGERCGC24-00000020 removed the matching administrative exemption from filing. Many practitioner pages still describe that exemption as live. It is not.

Ecuador is neither an OECD member nor one of the 148 members of the OECD/G20 Inclusive Framework as at 5 December 2025. That single fact explains most of what is absent from the regime.

Methods, comparables and benchmarking

RALRTI Article 85, as substituted by Decreto Ejecutivo 973 (Registro Oficial Supplement 736, 19 April 2016), admits five methods: comparable uncontrolled price, resale price, cost plus, profit split and transactional net margin. The residual profit split was dropped in that 2016 substitution and is no longer available. Ecuador does not operate a best-method rule either. Resolution NAC-DGERCGC16-00000532 (Registro Oficial Supplement 913, 30 December 2016) imposes a prelación: CUP first, then resale price and cost plus, and only then the profit-based methods. A file that opens with TNMM must dispose of the higher-ranked methods on the facts, and any change of method must be explained.

The Ficha Técnica requires internal comparables of the analysed party to be exhausted before any external search. Ecuador's own market for company financials is thin, so external sets are usually regional or foreign; that is accepted, but the search strategy, the geographic scope and the behaviour of the local industry must be argued rather than assumed.

Comparables located in tax havens must be excluded, and loss-makers must be excluded unless the losses are explained by identifiable business or market conditions. Only audited annual financial statements qualify as the source, and public-domain data is taken as at 10 April of the year following the year under review.

No adjustment is routine. Resolution NAC-DGERCGC16-00000532 requires every accounting, capital or working capital adjustment to be justified qualitatively and quantitatively, with its effect on the indicator and on the range demonstrated. The range itself is codified: RALRTI Article 87 runs it from the first to the third quartile and deems the median to be the value independent parties would have used where the taxpayer falls outside it. Two local mechanics matter alongside that: segmentation of manufacturing from distribution is permissible and has been upheld judicially, and the statutory 15% worker profit participation together with income tax must be stripped out of the operating margin used as the profit level indicator.

Documentation: what the SRI expects

Where accumulated related-party transactions exceed USD 3,000,000 in the fiscal year, the Anexo de Operaciones con Partes Relacionadas falls due; above USD 10,000,000 the full Informe Integral de Precios de Transferencia falls due as well. That threshold was cut from USD 15 million by Resolution NAC-DGERCGC23-00000025 of 13 September 2023, with effect from fiscal year 2023. The superseded figure still appears on the official gob.ec procedure sheet, so do not rely on it.

Both filings are due within two months of the income tax return deadline (RALRTI Art. 84), which in practice means June, staggered from roughly the 10th to the 28th by the ninth digit of the RUC. SRI has extended the window twice: Resolution NAC-DGERCGC24-00000020 moved fiscal year 2023 to September 2024, and Resolution NAC-DGERCGC25-00000012 of 7 June 2025 moved fiscal year 2024 to September 2025. Plan to the June date and treat any extension as a windfall.

Content is dictated by the Ficha Técnica para la Estandarización del Análisis de Precios de Transferencia, revised for fiscal year 2023 and reissued on 27 May 2024. It demands transaction tables reconciled to the profit and loss account, the balance sheet and specific Form 101 boxes; licence and financing terms; and working papers containing acceptance and rejection matrices, adjustment calculations and the interquartile range computation.

Ecuador has not adopted BEPS Action 13: no master file, no OECD-form local file, and no country-by-country reporting of any kind. Once SRI has begun exercising its determination power for a year, the taxpayer may no longer file a new or corrected Informe for that year.

Audits, penalties and the enforcement climate

Documentation failures are charged per obligation. The unnumbered article following LRTI Art. 22 and RALRTI Art. 84 set a ceiling of USD 15,000, and Resolution NAC-DGERCGC24-00000020 (Registro Oficial 567, 29 May 2024) stratified it by taxpayer category. Non-filing of the Informe costs USD 15,000 for grandes contribuyentes, USD 7,500 for contribuyentes especiales and USD 3,750 for others; the Anexo, USD 10,000, 5,000 and 2,500. There is no percentage penalty on the adjustment itself. Instead, where SRI determines the obligation, Article 90 of the Código Tributario adds a 20% surcharge on the principal, alongside default interest. Ecuador offers no documentation-based penalty protection: an immaculate Informe avoids the fines but buys no shield against an adjustment or that surcharge.

The Global Forum's Tax Transparency in Latin America 2026 progress report describes an SRI case in which an Ecuadorian importer bought agricultural inputs through a foreign related intermediary while shipments originated elsewhere; the intermediary performed no significant functions, EUR 5.1 million of expenses were disallowed and EUR 1.7 million of tax assessed. It is an exchange-of-information case study rather than an OECD transfer pricing publication: those channels are now used routinely to test offshore substance.

The recurring battlegrounds are familiar: intragroup services and management fees, where SRI wants evidence of actual delivery, concrete benefit and no duplication of local functions; royalties and technical assistance, where it wants proof of use in Ecuador and functional substance in the foreign licensor; working capital adjustments driven implausibly to zero; and plain coherence between Form 101, the Anexo, the Informe, the auditor's tax compliance report and the ledgers. Discrepancy is itself a trigger.

Dispute resolution and advance certainty

Advance certainty runs through the consulta de valoración previa (CVP), Ecuador's unilateral APA, resting on the LRTI prior-valuation article and RALRTI Art. 88, with procedure in Resolutions NAC-DGERCGC14-00001048 and NAC-DGERCGC15-00000571. Two uses dominate: approval of a pricing methodology, and authorisation to exceed the regulatory deductibility cap on royalties and technical, administrative and consultancy services paid to foreign related parties.

A CVP is free to file and covers the three fiscal periods following the current one, plus the current year and, as rollback, the immediately preceding year where its return deadline has not passed: up to five years of coverage. The holder files an annual application report while the resolution stands. Silence beyond the resolution period is treated as rejection.

Bilateral certainty is treaty work only. Ecuador has around twenty-one comprehensive treaties in force — the United Kingdom's was ratified in Registro Oficial Supplement 724 of 17 January 2025 — plus Andean Community Decision 578 for Bolivia, Colombia and Peru. There is no domestic MAP guidance, no OECD MAP profile, and no Multilateral Instrument coverage; correlative relief depends entirely on the Article 9(2) and 25 machinery of the relevant treaty. Nor is there any secondary adjustment mechanism, so a primary adjustment increases the Ecuadorian base and stops there.

Domestically, a determination act may be met with an administrative reclamo within 20 days of notification under Article 115 of the Código Tributario, or with a juicio de impugnación before the Tribunal Distrital de lo Contencioso Tributario within 60 days under Article 306 of the COGEP, with cassation to the Corte Nacional de Justicia. SRI's power to determine lapses under Article 94 of the Código Tributario four years from filing, and six years only where no return was filed at all. Two Tribunal Distrital judgments, of 20 October 2020 in steel and 28 May 2021 in automotive, are the working authorities, and both went to the taxpayer.

Pillar Two, Amount B and what changes in 2026

Circular NAC-DGECCGC26-00000001 of 25 March 2026 sets out SRI's position on the Pillar One Amount B simplified and streamlined approach: Ecuador has issued no regulatory act adopting it, so it carries no legal force for taxpayers or administration and cannot operate as a safe harbour or displace a comparability analysis. OECD material is technical reference only, in the version in force at 1 January of the fiscal period and only so far as it is consistent with the LRTI, treaties, the Reglamento and SRI resolutions. Groups importing a global Amount B margin into an Ecuadorian file should expect it to read as an audit flag.

Pillar Two is equally absent: no income inclusion rule, no undertaxed profits rule, no domestic minimum top-up tax and no identified draft legislation. Ecuadorian subsidiaries remain exposed to top-up tax charged elsewhere, which makes the Ecuadorian effective rate a group-level datapoint even though no local obligation attaches. The adjacent developments that do bite are domestic: the CFC regime effective 1 January 2024 and the 20% EBITDA-style limit on related-party interest.

How practitioners should respond

Four priorities. First, rebuild the method narrative to Ecuador's five-method list and its order of precedence; a file that reaches for TNMM without disposing of CUP, resale price and cost plus is exposed however sound the benchmark, and one that still runs a residual profit split is applying a method repealed in 2016. Second, run and document the internal comparables search before any database work, then justify geography, screens and every rejection, remembering that tax haven and loss-making comparables must go and only audited statements qualify.

Third, treat the Ficha Técnica as a compliance checklist rather than a style guide, and reconcile the figures across Form 101, the Anexo, the Informe and the auditor's compliance report before filing. Most Ecuadorian assessments begin with an inconsistency, not a margin, and once determination starts the file is frozen. Where the tested result falls outside the first-to-third quartile range, remember that Article 87 deems the median to be the arm's length value — the adjustment is statutory, not negotiable.

Fourth, use the CVP where the numbers justify it, particularly on royalties and service fees near the deductibility cap. It costs nothing to file, runs up to five years with rollback, and is the only mechanism in Ecuadorian law that converts documentation effort into real protection from adjustment. Finally, verify article numbers and thresholds against the live consolidated texts on www.sri.gob.ec before advising: the codification has been renumbered more than once, and superseded figures survive even on official pages.