The Ecuadorian Internal Revenue Service (SRI) issued Circular NAC-DGECCGC25-00000005, published in the Third Supplement of Official Register No. 70 on June 30, 2025, to clarify the application of the Single Income Tax on the direct or indirect transfer of shares, equity interests, or other capital rights of companies domiciled in Ecuador.

Among the key points, it establishes that transactions carried out on Ecuadorian stock exchanges are exempt up to 50 basic fractions, provided they do not exceed 25% of the company’s subscribed and paid capital. If this threshold is exceeded, the excess gain is subject to a 5% tax rate. For off-exchange transactions, a 10% tax rate applies to the capital gain.

All transactions must be reported, even if no tax is due, under penalty of a 5% fine based on the real value of the transaction in case of omission or error. Additionally, undistributed profits cannot be considered part of the acquisition cost for tax purposes.

Buyers are required to withhold tax at the source, even if they are not designated as withholding agents, except in stock market transactions. Lastly, no taxable event is considered to occur in cases of corporate restructuring, such as mergers or spin-offs, as long as the effective beneficiaries remain unchanged.

This directive reinforces legal certainty and tax compliance in equity-related transactions within the country.