Ecuador company registration

The unique advantages brought by dollarization:

• No exchange rate risk: No currency exchange is needed for trade with the US, saving 3-5% in costs.
• Financial transparency: Financial statements are easier for international investors to understand.
• Financing facilities: US banks are more willing to provide credit.
• Prices are stable: Inflation remains at 2-3%, the lowest in Latin America.
• Accounting simplification: No need to handle exchange rate adjustment entries

Note: Ecuador prohibits the use of other currencies for pricing; all contracts must be denominated in US dollars.

RIMPE is indeed a revolutionary simplified tax system:

• A single tax rate: 1-2% turnover tax, replacing 25% income tax + 12% IVA.
• Eligibility criteria: Annual income not exceeding US$300,000
• New business incentives: 0% tax rate for the first two years.
• Simplified application process: Applications are submitted quarterly, no monthly applications required.
• Low accounting requirements: Simple bookkeeping is sufficient, saving 90% of accounting costs.

In comparison, the traditional tax system has a total tax burden of about 15-20%, while RIMPE is only 1-2%.

SAS is a new company introduced in 2023:

Comparison Items	SAS	CIA. LTDA.
Minimum number of shareholders	1 person	2 people
Minimum capital	1 dolar	400 dolares
Registration time	3 dias	5 dias
Online registration	100% online	Notarization required

Recommendation: SAS is suitable for startups and individual entrepreneurs.

The processing time is relatively flexible, typically 3-5 business days.

• Required documents: RUC, Articles of Association, Passport of Legal Representative
• Initial deposit: typically $500-$1000
• Recommended banks: Banco Pichincha (largest), Banco del Pacífico (government)
• Special Features: Unlimited USD cash deposits and withdrawals
• Online banking activation: Available on the same day, with full functionality.

Tip: Opening an account at the Quito or Guayaquil headquarters will be more efficient.

Yes, this is a constitutionally guaranteed employee right:

• All profitable businesses must allocate 15% of their pre-tax profits to their employees.
• 10% distributed equally among all employees
• 5% is allocated based on family burden (employees with children receive more).
• Payment must be made before April 15th each year.
• New businesses can apply for an exemption in their first year.

Example calculation: With a pre-tax profit of $100,000, $15,000 needs to be allocated to employees.

Avoidance methods: Legally use management fees, franchise fees, etc. to reduce local profits.

Most industries allow 100% foreign investment:

• Fully open: Manufacturing, services, retail, and technology sectors
• Approval required for: oil, mining, telecommunications, and finance.
• Prohibited areas: Defense-related, certain media (limited to 49%)
• Border restrictions: Land within 50 kilometers of the border requires special permission.
• Coastal restrictions: Beach resource development requires concessions

Advantage: Ecuador has a bilateral investment protection agreement with China.

The regulation is transparent but not overly strict:

• Annual Report: Financial statements must be submitted by April 30 (online submission).
• Information Update: Any changes must be reported within 30 days.
• Compliance costs:
  • - Small businesses: Approximately $500-$1000 per year
  • - Medium-sized enterprises: Approximately US$1,000-3,000 per year
• Penalty mechanism: First offense will result in a warning, with fines starting at $200.
• Convenience features: All procedures can be completed online, with guidance from an AI assistant.

Recommendation: Use accounting firm services; the monthly fee of $100-$300 includes all compliance.-300美元包含所有合规。

Ecuador is a member of the Andean Community and enjoys the following advantages:

• CAN member states: Free trade in Colombia, Peru, and Bolivia.
• Zero tariffs: Most products traded with CAN countries are exempt from tariffs.
• Freedom of service: Services can be provided in member states without additional licenses.
• Personnel mobility: Employees can work freely in CAN countries.
• Double Taxation: Avoiding Agreements Covering All Member States

Extended tip: Establish a regional headquarters in Ecuador to reach the Andean market of 200 million people.