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Ecuador ranks low among Latin American countries for tax revenue as a percentage of GDP

Although many Ecuadorians complain about taxes, they pay substantially less than citizens of most other Latin American countries.

In its latest report, the Latin America and the Caribbean Economic Commission for (ECLAC) shows Ecuador’s tax revenue comes to 13.4 percent of the gross domestic product (GDP) while the average among Latin American countries is 17.1 percent.

Ecuador also bucked the norm by experiencing a drop in tax revenue in 2018 from 2017, from 15.7 percent to 13.4 percent of GDP while the regional average increased 1.1 percent. The country’s internal revenue office says the reduction is primarily due to the end of one-year two percent hike in the Value Added Tax (VAT) tax to fund reconstruction from the 2016 coastal earthquake.

The ECLAC reports that Ecuador’s VAT, at 12 percent, is one of the lowest in region. Neighboring countries, Colombia and Peru, charge 19 percent and 16 percent, respectively.