Discusses pricing formula and other fees, value-added tax (VAT), etc.

Electric power and petroleum products like diesel, gasoline, and natural gas are subject to government price controls, as are telephone tariffs, fertilizers, agrochemicals, and pharmaceutical products. There is a minimum support price for milk, bread, and other agricultural products. Prices for other imported products are defined by supply and demand and for the most part have not been subject to official price controls.

Imported products are subject to import quotas, tariffs, and a variety of taxes, including a special consumption tax, value-added tax, and, indirectly, a capital exit tax.  Moreover, in recent years, the Ecuadorian government has sought to limit imports (and thereby the outflow of U.S. dollars) through additional means, including temporary export surcharges (salvaguardias). Due to the changing import climate, interested parties are encouraged to contact the U.S. Embassy for up-to-date information.

Ecuadorian markets are more concentrated than is typical of larger, more competitive markets. In other words, relatively few players dominate most market sectors. This conveys considerable pricing power to distribution companies and creates the opportunity for collusive pricing practices. In the case of packaged consumer products, retail chains are few in number and well positioned. Vertical integration, where the manufacturer controls its own distribution, is common.

Services, business and commercial transactions, and imports are subject to a 12 percent value-added tax (IVA). (As part of a tax package passed after the April 2016 earthquake, Ecuador has temporarily raised the VAT to 14 percent for one year.  The increased VAT is scheduled to expire on May 31, 2017.) Luxury items are subject to a special consumption tax (ICE). A list of products exempt from paying IVA can be viewed at Ecuador’s Internal Revenue Service (SRI) website (http://www.sri.gob.ec/web/10138/151).

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.