Buying a book digitally, acquiring an account to have a blog, accessing a football game, acquiring music programs, an antivirus, accessing a dating platform, ordering food or home shopping… are several of the digital services that are becoming more and more daily among Ecuadorians.
In two years, since September 2020, when the register of digital service providers was created, the number of digital service providers or platforms for which a user must pay 12% VAT has grown in Ecuador in 60%. According to data from the Internal Revenue Service (SRI) in September 2020, there were around 200 registered digital platforms or digital service providers. But, currently, the new cadastre reports 321.
Spotify, Amazon, Microsoft, Open English, HBO, Airbnb, Booking, William Hill, OrdensYa, Rappi, DIDI, Netflix, Uber, Kindle, among others, are platforms that provide services and for which the user must pay VAT.
The increase in suppliers in 2022 It has been generated especially by the entry of web page supply services, hosting and cloud computing (cloud storage), explains the SRI. It is that according to the last reform to the Tax Regime Law these already levy a 12% VAT rate. In the previous regulations they had a 0% rate, but in the reform, numeral 26 of article 56 of said law was repealed, which kept them exempt.
Paula AlomÃa, legal coordinator of the Ecuadorian Chamber of Innovation and Technology, that brings together national and foreign digital service providers, considers that yes, there has been a growth in the demand for digital services in Ecuador. This, above all, was leveraged in the pandemic when entertainment, shopping, mobility, education, telemedicine services, among others, grew. However, he regrets that in the last tax reform it was decided to tax 12% VAT on hosting services, web pages and cloud services, when previously they had a 0% rate, he recalls. He considers that this tax measure can become an obstacle to digital transformation, especially for small businesses, since it implies an additional cost. AlomÃa says that they will not give up their request that this decision be reversed.
How does the issue of VAT payment for digital services work?
Napoleón SantamarÃa, president of the Corporation for Ecuadorian Fiscal Transparency (CTFE), explains that the purchase of a digital service such as Spotify or Netflix is ​​done through a commercial operation between an IP (identifier of a computer) from abroad and an IP of the Ecuadorian consumer. Payment for this service, which is normally done by credit card, is transferred abroad, but the State has considered that this service must pay VAT. The way to collect this tax is through the retention of 12% by the credit card, which then sends said value to the SRI. The State has made this decision to balance digital services abroad with those sold in the country that do pay VAT. He explains that in many countries VAT is charged and even others, such as Uruguay, have gone further, charging Income Tax.
According to SantamarÃa, in practice when the decision was made to tax these services with VAT, the companies did not affect their profits, but instead transferred the increase to the customer. That is, if it was paid before $20 for a service, it is not that now you pay $17.6 for the service and $2.4 for VAT, but it has increased to $22.40.
He adds that withholdings can be made by cards or banks, but so that they can take into account which companies VAT should be withheld from, there is a register of digital service providers.
The current castastro has some 700 items. However, the SRI clarifies that not all of them are digital services or platforms, but that this list includes the variants of the names of the more than 300 platforms. According to the SRI, this database seeks to include the largest number of names of payments made through credit and debit cards.
“According to the norm, companies that issue credit and debit cards must withhold VAT from their clients for the payments of these services, therefore, the SRI provides a cadastre to serve as an input to carry out the withholding,” explains the Revenue Entity. This cadastre includes the variants of the names in the most detailed way possible so that the card-issuing companies can retain the tax, he confirms.
For example, in the cadastre Netflix and NETFLIX are found because in both ways customers are charged by digital platforms. Another example, some customers see SPOTIFY on their account statements and others Spotify. That is why the cadastre includes both forms.
Javier Bustos, tax expert and university professor at the Universidad de Especialidades EspÃritu Santo (UEES), explains that the SRI takes into account the consumption made by taxpayers through credit and debit cards to verify what new service is being used. in Ecuador more frequently. “The SRI feeds its base based on the consumption that we Ecuadorians make with credit cards, and those reports reach the SRI and it sees what other applications are domiciled.” And just as many new services enter the cadastre, others are suppressed due to disuse, as it ensures that digital services is a very dynamic market.
These are the digital service providers for which the user pays VAT in Ecuador:
- A2WEBHOST
- ABAENGLISH
- ACTIVECAMPA
- ADOBE
- AERIAGAMES
- AG Cooeperatie Activision Bl
- AGODACOM
- AIRBNB
- AJCLOUD
- ALAMY
- ALEXA SKILLS
- ALLPAGO MCAFEE
- amazon
- AMZN AD
- ANIMOTE
- APPLE COMBILL
- Rebel Asana
- ASPIEGEL
- ASUSCLOUD
- ATLASSIAN
- MEAN ATP
- AUDIBLE
- AVAST
- AVG AVG
- AVIRA
- badoo
- BANDCAMP
- BAYTREE
- BEATPORT
- BEFUNKY
- BET 365
- BETCRIS
- BETFAIR
- BETOBET
- BETSAFE
- betslayer
- BETSSON
- BETWAY
- BITDEFENDER
- BKOOL
- BLIZZARD
- BLOOMBERG
- BLUEHOST
- BOOKING
- BRITISH COUNCIL
- BOOMBLE.COM
- C12 PAYPAL *UBER
- CABIFY
- CANSTOCKPHOTO
- CANVAS
- CANVAPTYLIM
- cbapanda
- CLEANER
- CD BABY
- CHARGE.PREZI
- CHEGG
- CISCO WEBE
- CIVITATIS
- CLIPCHAMP
- LINUX CLOUD
- CLOUD SOUTH
- CLOUDCONE
- CLOUDFLARE
- cloudholo
- CLOUDHOSTIN
- CLOUDLINUX
- CLOUDSERVIC
- CLOUDSPOT
- CLOUDWAYS
- CODECADEMY
- CODEREADR
- COLLEGE BOARD
- COMIXOLOGY
- CONSTANTCONTACT
- POLAR COOLBET
- corner shop
- COUCHSURFING
- COURSE HERO
- COURSE
- CPANEL
- CREATIVIVE
- CREATIVEMARKET
- CREHANA
- CRUNCHY ROLL
- DATABET
- DATACAMP
- DEEZER
- DELIVERY
- DepositPhotos
- DESIGNCROWD
- TAKE OFF
- DGNET LTD
- DIDI
- Digital River
- DIGITALOCEAN
- DIGITAL LIVE
- DIRECTVGO
- DISNEY PLUS
- DISTROKID
- DL – DIDI
- DN PAYPAL *UBER
- DOMESTIKA
- DREAHOST
- DREAMSTIME
- DRI AVG
- DROP BOX
- DUOLINGO
- EB GAMES
- EDESTINOSCOM
- EDX INC
- EIGIPAGE
- ELECTRONIC ARTS
- ENGLISH LIVE
- ENGLISHTOWN
- ENOMCOM
- SHIPPED
- EPIC GAMES
- EPIDEMIC SOUND
- ESPNPlus
- GUTI STUDIO
- EXPEDIA
- FACEB
- fanatically
- FANDANGO
- FBPAY *STARS
- FEDEX
- FINANCIAL TIMES
- FLICKR
- FOREX TRADING HERE
- FORGELARAVEL
- FUNIMATION
- G2A COM
- GAIA INC
- gameforge
- GAMES ROCKS
- GAMESTOP
- GETSMARTQ
- GETYOURGUID
- GITHUB
- GLOVO
- GO DADDY
- GOGCOM
- GOLTV
- GOTINDER
- GRAMMARLY
- GROUPON
- HBO
- HELPCOURSER
- HETZNER
- HOMEAWAY
- HOOT SUITE
- HOSTGATOR
- Hosting
- HOSTPAPA
- HOSTWINDS
- HOTELSCOM
- HULU
- HUMBLEBUNDL
- IDMYCOMMERCECOM
- IFREEICLOUD
- ILOVEPDF
- IN DIDI
- INBETSMENT
- INDRIVER
- INMOTIONHOSTING
- INSTANT GAMI
- INTERSERVER
- INTERWETTEN
- IPAGE
- IQOPTION
- ISKYSOFT
- ISSU
- IVOOX
- JIMDO
- JOTFORM
- KAHOOT
- KASPERSKY
- KINDLE
- LIBELSTUDIO
- LINGODA
- LINGOKIDS
- LINODE
- Linux Academy
- Linux Foundation
- WEB LIQUID
- LONELY PLANET
- loyverse
- MAILCHIMP
- MALWAREBYTES
- mcafee
- MEDIUM TEMPER
- MEDIAFIRE
- MEDIA TOOLKIT
- MEDIUMCOM
- FREE MARKET
- MICROSOFT
- MO TECHNOLOGIES
- mongodbccloud
- MSFT
- NAME-CHEAP
- NAPSTER
- NBA LEAGUE
- NETFLIX
- NETWORK SOLUTIONS
- NEW YORK TIMES
- NINTENDO
- NORTON
- NUUVEMJOGOS
- OASISGAMES
- ODOO INC
- OLX
- ONLYFANS
- OPEN EDUCATION
- OPENABLE
- ORBITZ
- OVH
- PANDA
- PARAMOUNT
- patreon
- PAYPAL
- PAYU DIDI
- PCLOUDCOM
- SIMPLE PDF
- PDFCONVERT
- PDFSIMPLI
- peacock
- Orders Now
- PHOTOFY
- Photoshop
- PICMONKEY
- PIXIESET
- PLACEIT
- PLATZI
- PLAYSTATION NETWORK
- PLURALSIGHT
- POKERSTARS
- POWTOON
- PPPOKER
- PREMIUMBEAT
- PRESTASHOPS
- Prezi Inc.
- Prime Video
- RACKSPACE
- RAPPI
- REALMS PLUS
- REGISTERWEBSITE
- RESELLER CLUB
- RIOT GAMES
- RIOTGAM
- ROCKSTAR GAM
- S12 PAYPAL *UBER
- SALESFORCE
- SCRIBD
- SEMRUSH
- SENDINBLUE
- SENDPULSE
- SERVISKY
- SEVEN CLOUD
- SHOPIFY
- SHUTTERSTOCK
- SITE5
- SITEGROUND
- SiteLock
- SKILLSHARE
- Skype
- SLING.COM
- SMALLPDF
- SMARTIPTV
- SOUNDCLOUD
- SPORTINGBET
- SPOTIFY
- SPREAKER
- SQUARE ENIX
- SQUARESPACE
- STAR PLUS
- STARS
- STEAM GAMES
- STEAM POWERED
- STRAVA
- SURVEYMONKE
- TAGGED
- TEAM VIEWER
- TEMPLATEMONSTER
- TENABLE
- THE BRITISH COUNCIL
- TIDAL
- TINDER
- TIPTI
- TOEFL
- TRAVELOCITY
- TRIP ADVISOR
- TUNE CORE
- TWOO
- Uber
- UDEMY
- UPCLOUD
- SELLING SERVICE
- VENDOR STORE
- VIATOR
- VIMEO
- WALLSTJOURNAL
- WEEBLY
- WILLIAM HILL
- WINZIP
- WIXCOM
- WORDPRESS
- WP-ENGINE
- WWWESETCOM
- XSOLLA
- YAHOO
- YOTTA GAMES
- ZAPIER
- ZOHO
- US ZOOM
- ZWIFT
- 123RF
- 1PASSWORD
- 1XBET
What does the regulation say?
According to article 140.1 of the Regulations of the Internal Tax Regime Law, digital services are all those provided and/or contracted through the Internet, or any adaptation or application of the protocols, platforms or technology used by the Internet:
- The provision and hosting of computer sites.
- Supply of digitized products in general (access and/or download of digital books, access and/or download of designs, components, patterns and the like, reports, financial, data or market analyses).
- Remote preventive or corrective maintenance, in an automated way, of programs and equipment.
- Remote system administration and online technical support.
- Web services (data storage with remote or online access, memory services and online advertising).
- Software services through cloud-based downloads.
- The access and/or download of images, text, information, video, sporting or other events, music, games -including games of chance-.
- Databases and any service generated automatically from a computer, through the Internet.
- Online club services or dating websites.
- The service provided by online blogs, magazines or newspapers.
- The provision of internet services.
- Distance learning or tests (tests) or exercises, carried out or corrected in an automated way.
- Online auction services, labor supply/demand, transportation, accommodation, ordering and delivery of personal property.
- The manipulation and calculation of data through the internet or other electronic networks.
- Others. (YO)
Source: Eluniverso
Paul is a talented author and journalist with a passion for entertainment and general news. He currently works as a writer at the 247 News Agency, where he has established herself as a respected voice in the industry.
