Ecuador

Background

Ecuador created a new excise tax category for electronic cigarettes and heated tobacco products which entered into effect on 1 January 2020.

Several amendments to the Impuesto a los Consumos Especiales – ICE, the national excise tax law, were contained in the Organic Law of Simplification and Tax Progressivity, which was published in Supplement number 111 of the Official Register on 31 December 2019. Among these changes were an expansion of the types of tobacco products subject to the excise tax. The new category, which is the same for heated tobacco products (HTP) and e-cigarettes, is defined as “tobacco products, tobacco substitutes or substitutes in any form, including tobacco from heated tobacco consumables, liquid containing nicotine to be administered through nicotine delivery systems.”  

Tax rates and structure

The ad valorem tax for this new category of vapor products is set at 150%, the same rate applied to other tobacco products. According to the revised Article 76 of the Internal Tax Code, the tax will be based on the manufacturer’s selling price net of the Value Added Tax (VAT) and the ICE itself plus a minimum thirty percent (30%) trade margin. In the case of imports, the ex-Customs price replaces the net ex-factory price