Attention ‘freelancers’: SRI launches controls on those who receive payments from abroad

The SRI points out that it has detected that the income of several ‘freelance’ professionals, and paid from abroad, is not considered in the Income Tax declaration.

Like employers in a dependency relationship, in March, those called ‘freelance’ or those who provide their services independently, must also submit their Income Tax (IR) return.

But, through a statement, the Internal Revenue Service (SRI) warned that it began controlling freelance professionals who receive payments from abroad.

That is, these reviews of IR declarations cover those who work or provide a service remotely and with foreign companies.

According to the SRI, this type of work is configured as ” an export of services for which they must declare and pay their taxes in Ecuador.”

In addition, Internal Revenue assured that it has been detected that the income of these professionals, received from abroad, has not been considered as part of the taxable items in the IR declarations.

Given this anomaly, the entity reminded freelance workers that all economic activity must be reported and registered in the Single Taxpayer Registry (RUC) within a period of no more than 30 days, and comply with tax obligations.

What are these tax duties of freelancers? Here’s what you should know:

• Registration in the RUC with the activity of “Provision of professional services”.
• Issuance of sales receipts: electronic billing.
• Keep records of income and expenses related to economic activity.
• Prepare Value Added Tax (VAT) and Income Tax declarations.

In the case of VAT, workers must declare their income as “Export of Services” in boxes 408 and 418.

While for the IR declaration, the income must be declared in box 612 or “Income Taxed in Free Professional Practice.”