Ecuador reduces VAT to 8% for August holiday

Ecuadorian President Daniel Noboa has signed a decree reducing the Value Added Tax (VAT) on tourist services from 15% to 8%. This exceptional tax measure is designed to reactivate the country's economy by stimulating domestic tourism and consumption during the upcoming national holiday.

The reduced VAT rate will be in effect from Saturday, August 8, to Monday, August 10, 2026, coinciding with the commemoration of August 10th. The Ministry of Economy and Finance issued a favorable opinion on July 27, 2026, supporting the initiative in line with legal provisions to encourage internal travel.

This tax break exclusively benefits establishments and operators engaged in legally recognized tourism activities, as defined by Article 5 of the Tourism Law. Covered sectors include accommodation, food and beverage services, entertainment, and tourist transportation, including air travel. Event organizers, convention centers, banquet halls, tour guides, community tourism centers, theme parks, and recreational facilities are also included, provided they maintain proper registration.

Businesses applying the reduced VAT rate are legally obligated to issue sales receipts reflecting the 8% tariff only during the specified dates. The Internal Revenue Service (SRI) has been instructed to implement operational and regulatory actions to ensure the correct application of this temporary benefit and to monitor that invoicing strictly adheres to the decree. The SRI will coordinate with the Ministry of Production, Foreign Trade, and Investments to ensure the policy effectively increases commercial activity and strengthens medium-term revenue collection.