Ecuador’s Internal Revenue Service (SRI) issued a circular in March explicitly clarifying that the country has not incorporated the simplified Transfer Pricing (TP) approach proposed by the Organization for Economic Co-operation and Development (OECD), known as “Pillar One – Amount B”. This mechanism, designed to streamline the application of the arm’s length principle to basic marketing and distribution activities, was published by the OECD in February 2024 as a voluntary adoption option for jurisdictions.
The tax authority emphasized that, in the absence of a domestic rule adopting this framework, its application carries no binding force, neither for taxpayers nor for the Ecuadorian Tax Administration itself.
The SRI further warned that it will monitor compliance with this regulatory provision. Consequently, companies must conduct their TP analyses in accordance with current rules in force, without applying simplified international methodologies that have not been formally adopted in the country.
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