In a complex global tax environment that emphasizes transparency, compliance with Ecuador’s Transfer Pricing regime necessitates thorough technical management from corporations.
Circular No. NAC-DGECCGC26-00000001, issued by the SRI (Servicio de Rentas Internas – Internal Revenue Service) on March 25, 2026, establishes the definitive institutional position regarding recent international simplification trends, specifically concerning the OECD’s “Pillar One – Amount B” approach.
This technical ruling is essential for companies with intercompany transactions, as it reaffirms the absolute validity of the national regulatory framework vis-à-vis optional international adoption schemes.
Regulatory Scope: The Inapplicability of Amount B
The SRI, through an exhaustive analysis of its regulatory powers, has determined that:
- Lack of Legal Recognition: Ecuador has not issued any regulatory act authorizing the implementation of the simplified and optimized Amount B approach for marketing and distribution activities.
- Lack of Binding Nature: In the absence of a general resolution incorporating it, this scheme lacks legal force for taxpayers and the administration.
- Prevalence of the Legal Hierarchy: Transactions must be evaluated strictly under the LRTI (Ley de Régimen Tributario Interno – Internal Tax Regime Law) provisions and its corresponding regulations.
The Arm’s Length Principle as the Backbone
The Ecuadorian government bases its enforcement power on the Arm’s Length Principle, which requires that related-party conditions be comparable to market conditions.
- Taxability: Any deviation in commercial terms that reduces local profit will be subject to adjustment and taxation.
- Analysis Methodologies: Pricing must be based on methods authorized by current regulations and in accordance with the technical hierarchy established by the SRI.
OECD Guidelines and Their Value as a Technical Reference
The circular clarifies the interaction between the local framework and the OECD’s international standards:
- Conditional Technical Reference: Although the OECD Guidelines are recognized as a technical reference, their use is subject to consistency with Ecuadorian legislation and SRI resolutions.
- Exclusion of Safe Harbors: So-called “safe harbors,” such as Monto B, require formal and express adoption to be integrated into the national tax system, a situation that has not occurred in the country.
Risk Management and Technical Compliance
The tax authority’s stance reinforces the need for robust and customized documentation:
- Detailed Comparability Analysis: Compliance cannot be based on standardized international margins but on a technical study of specific functions, assets, and risks.
- Formal obligations: Taxpayers must ensure that their Related Party Transactions Annex and Comprehensive Report reflect the application of the general LRTI methods.
Controversy Prevention: The misapplication of international simplified approaches could lead to the admin
Circular No. NAC-DGECCGC26-00000001 confirms that Ecuador’s Transfer Pricing regime maintains a thorough tax audit approach in accordance with the local economic situation, but without relying on automatic simplified mechanisms.
At TPC Group, we provide strategic advice to ensure that our clients’ Transfer Pricing policies are technically and legally sound. Our team of experts assists organizations in preparing comprehensive studies aligned with the Arm’s Length Principle, mitigating risks with the SRI, and ensuring regulatory compliance in a challenging global environment.
Source: Circular No. NAC-DGECCGC26-00000001, Servicio de Rentas Internas (SRI), Ecuador