The Tax Administration (SRI) has already updated the form for the projection of personal expenses so that dependent workers can update their expenses and apply to the new income tax reduction mechanism that came into force with the Organic Law for Strengthening the Family Economy.

The update includes new boxes, one for reporting the number of family responsibilities as this is the key point for accessing the larger reduction from July 2023. The personal expenses cap and reduction will depend on the number of family responsibilities.

Who will no longer pay income tax from July, when the 2023 tax reform is implemented

Previously, the deduction was 10% and 20% of personal expenses, capped at about $5,000; this equated to a rebate of between $500 and $1,000, depending on income level. Now the reduction will be 18%, but the upper limit of expenses and reduction varies depending on family obligations:

The form can be downloaded from the following general link: https://www.sri.gob.ec/formularios-e-instructivos or click directly here.

Income tax: now the reduction will depend on how many family obligations the taxpayer has, not on salary

With the new tax reform in effect, the income tax cut comes immediately as this change is set to take effect for the 2023 fiscal year.

The SRI shows that dependent employees can meet the personal cost projection they presented to their employers last January and benefit from the reduction.

Depending on the income and the number of family obligations recorded in the personal expenditure projection form, the discounts for withholding at the source of income tax that have been achieved by employees in relation to maintenance will be reduced in the following months, and in some cases it will no longer be necessary to carry out the said deductions”, the subject repeats. .

The government points out that the reduction and progressive payment of personal income tax will benefit and strengthen the economy of 460,000 Ecuadorian families, putting $200 million a year back into their pockets.