Payment on account of undistributed profits in Ecuador: regulatory review, calculation, and official collection

Abstract

This research analyzes the application of advance tax payments on undistributed profits in Ecuador by examining tax regulations, calculation procedures, and official collection data. A qualitative, descriptive, and non-experimental research design was employed, utilizing an analytical method and a systematic review of laws, regulations, resolutions, academic literature, and official statistics from the Internal Revenue Service (Servicio de Rentas Internas), in accordance with the PRISMA 2020 framework. The findings identify similar tax mechanisms in Panama and Uruguay, as well as progressive tax rates ranging from 0% to 2.50% applied to the relevant tax base; the study also documents the initial official tax collection generated by this mechanism. This research provides useful information for the application of such advance payments, facilitating an understanding of this tax mechanism and the accurate calculation of the advance. Its primary contribution lies in synthesizing the analysis of the regulatory framework and the collection data for a mechanism recently introduced into the Ecuadorian tax system, highlighting the need for further research into its financial implications.