One tax everyone pays is the Value Added Tax, known throughout Latin America by its Spanish acronym IVA (and always pronounced EE-vah). The tax rate in Ecuador is 12%, which is the second-lowest in South America, where IVA rates range from 10% (Paraguay) to 22% (Uruguay). In plain English, this is a sales tax…and, as in most countries outside the US, the tax is included in the marked price, and never added on at the register.
You’ll also be subject to a “capital outflow” tax of 5% on outbound international wire transfers in excess of US$1,000. You can avoid this when you sell your home however—legally—by taking payment outside of Ecuador.
There is a capital gains tax on the sale of property, but it’s calculated as 0.5% on the change in municipal value (rather than the actual gain) and it’s usually negligible.
Ecuador has a graduated income tax on Ecuadorian-source income, ranging from 10% to 35%. The current tax law actually says it applies to “all income” but there’s no implementing regulation to collect tax on personal income generated from outside Ecuador, so expats don’t pay it.
Property taxes are among the lowest in the world, and even on a large house, it’s unusual to see an annual tax bill higher than US$200 per year.