Becoming Cuenca

“Go with the Flow”

Mar 21, 2024

For some reason, I have always thought of Elton John’s sixth studio album that was released in 1973 when I have bad news to report: “Don’t Shoot Me I’m Only the Piano Player.”

Yes, I have always been a tad different.

The album that was released over a half-century ago came to my mind last month when I presented bad news to the expat community in Ecuador.

Some of you may not know that I write articles for CuencaHighLife, the online English-speaking newspaper. I write the articles non gratis as it is my way to give back to my community.

The subjects I write about are across the board from Ecuadorian artists to local restaurants to Fundación GRACE to ECU911. My 78th article for the newspaper was the bad news: Ecuadorian income tax.

A Harvard University study confirmed what happened to me with that informative and accurate article: People tend to take a dim view of someone who brings us bad news. This is true even when the person is an innocent messenger with no control over the situation.

I am not kidding when I say my article created a firestorm.

And numerous people across the country vented about what I wrote.

Though accurate and concise, one expat claimed on Facebook my article made things muddier about the mandatory Ecuadorian income tax.

Several expats became instant experts and shot from the hip, challenging what I wrote on Facebook.

Paraphrased, one expat without any expertise on the subject said, “If you say it starts this year, I think it will never stand up because they say you have to have facturas for every deduction. Every taxpayer would have been denied because of not getting hold of their 2023 facturas. Filing an income tax return really can’t start this year.”

Factura is a term you need to know if you move to Ecuador. A factura is an official itemized receipt that Servicio de Rentas Internas (SRI) has approved. SRI is the Ecuadorian version of the U.S. Internal Revenue Service (IRS).

Its main function is the collection of taxes, based on a database of taxpayers. The SRI was created on the basis of the old General Directorate of Revenue.

When a purchase of over a certain amount has been made or a service has been rendered, a factura is created electronically. That factura is emailed to you, so there is no excuse to not have the necessary facturas for your 2023 return.

It is a pain pulling them all up. Trust me. But because I kept all of my facturas in my Gmail account, I was able to provide them quickly to send to my Ecuadorian accountant for my 2023 income tax return.

Other expats quickly claimed they could not pay the income tax and were looking elsewhere. One stated on Facebook he was looking at Mexico to avoid paying income tax.

According to PricewaterhouseCoopers International Limited (PWC), one of the Big Four accounting firms in the world, residents of Mexico are subject to Mexican income tax on their worldwide income, regardless of their nationality.

And PWC says Mexico taxes you from the first Peso. Ecuador is once you have a net income over $11,722.

Shooting from the hip with that Mexico idea.

There were some expats that said on Facebook they were not going to file an income tax return nor were they going to pay any income tax to Ecuador. They said it was double taxation, so they shouldn’t pay and won’t pay.

Calmer and resourceful expats chose to find out more and confirm what I wrote (Excellent! Please get more than one source.).

Apparently, there was a Google videoconference with an Ecuadorian accountant. That accountant confirmed my information, and an expat who sat in on that videoconference, wrote a shorter version of my article for a local Facebook group.

It is fantastic that an American expat publicized and has organized a breakfast meeting for late-March to discuss the new income tax. I thank him very much for doing it. That is a lot of work, and he should be commended for it as it is a wonderful public service.

It is interesting to note that the tax expert for the meeting is one of the Ecuadorian accountants I talked to for my article. She should be able to confirm most of what I said in my article.

Unlike the United States, where the tax filing and payment deadline is April 15th, the deadlines for filing and paying any taxes owed in Ecuador is based on the ninth digit of your cédula:


1: March 10th

2: March 12th

3: March 14th

4: March 16th

5: March 18th

6: March 20th

7: March 22nd

8: March 24th

9: March 26th

0: March 28th


So, what is this income tax that this messenger of bad news that got hundreds, if not thousands, of expats in Ecuador so worked up about?

On February 7th, President Daniel Noboa Azin issued Executive Decree #157: “The General Regulations for the application of the Law of Economic Efficiency and Employment Generation.” It is 188 pages long.

Since then, the SRI has been more aggressive in collecting taxes as the country is deeply in debt. The other day it stated on social media and through the media that digital nomads must declare their income from outside of Ecuador even if they are living here.

Word started getting out that any foreigner with a visa and residing in Ecuador has to state their income from around the world and pay any taxes, if any are owed.

This was a surprise to me and my friends as there was nothing being said about foreigners filing income tax returns. My friend, Ralph, had to tell me about it after his accountant told him about it.

To help get the word out, I interviewed Jacqui Guerrero, a certified public accountant (CPA) and owner of G & G Asesores en Tributación y Contabilidad. She is Ralph’s and my accountant.

Jacqui told Joanna and me there is double taxation involved if our net income is over a certain amount. Everything we earned in 2023 was subject to taxation.

“The United States does not have a tax treaty with most of the world,” Jacqui told us. “There are a few countries the U.S. has a tax treaty with, but Ecuador is not one of them.”

The tax table for Ecuador is similar to the United States, but does not increase as quickly at the lower amounts:


Up to $11,722: 0 percent

$11,722.01 to $14,930: 5 percent

$14,930.01 to $19,385: 10 percent

$19,385.01 to $25,638: 12 percent

$25,638.01 to $33,738: 15 percent

$33,738.01 to $44,721: 20 percent

$44,721.01 to $59,537: 25 percent

$59,537.01 to $79,388: 30 percent

$79,388.01 to $105,580: 35 percent

Over $105,580.01: 37 percent


Just like the U.S., one is able to make deductions for their expenses. There are six categories: 1 – Food; 2 – Education, Art, and Culture; 3 – Health; 4 – Clothing; 5 – Housing (Rent, Maintenance, Utilities, Alícuota); and 6 – Tourism (Ecuadorian invoices only).

Tercera Edad comes into play with income taxes. For 2023, the senior deduction is $11,722. This means that someone who is at least 65 years old will not have to pay any income tax for net income up to $23,444.

In December 2023, the average Social Security check was $1,767.03, which means that the average recipient received $21,204 last year. With that amount, there would be no Ecuadorian income tax.

Remember me telling you about those expats who were basically giving the middle finger to SRI?

On April 7, 2021, Ecuador and the United States signed a Tax Information Exchange Agreement (TIEA). It will allow the two countries to exchange tax information, to achieve tax transparency and prevent tax evasion.

The TIEA is not in force yet. It is under the review of the Constitutional Court in Ecuador.

If the highest court in Ecuador approves it, those expats have potentially left themselves wide open for some bad consequences.

“If you don’t file, you’ll end up on SRI’s radar,” Jacqui told me. “I have customers who have been fined by SRI for not filing.”

Fines start out small but can be rather big if a resident of Ecuador ignores communications from SRI. And the Ecuadorian government can freeze one’s bank account.

You may not think two accountants’ opinions are enough for verification. That is why several expats in Quito went to their accountant, Henry Padilla, who they greatly respect. Padilla totally agreed with the accountants I talked to in Cuenca.

One of those expats is Judith.

The American posted on Facebook, “Ok, Ecuador taxes done! If you want a stress-free experience and live in or near Quito, get ahold of Henry Padilla ASAP! He totally knows his way around this stuff.”

But for Ecuador, all of these opinions and research may not be enough to have a clear-cut answer.

A Canadian expat wrote to his followers after my article was published and said, “The SRI official showed me the lines on the tax return where retirement income is exempt from taxes. She also made it clear to us that if you pay taxes in another country, you do not pay taxes on that income in Ecuador.”

Right after sending out his newsletter, the Canadian posted his interpretation of the new income tax law at CuencaHighLife.

A few days later, he wrote a second article that did not completely jive with the first one. More confusion.

For Canadians, it is absolutely true that they do not have to pay taxes on income from Canada as their country has a tax treaty with Ecuador. Not for Americans. The graphic above shows the only countries with a tax treaty with Ecuador. You will see Estados Unidos (United States) not on that list.

As with many things in Ecuador, tax rules and laws are open to interpretation. An agreement among experts and officials can sometimes be all over the place.

An expat said online about the income tax debate, “It’s so true that if you ask different experts about anything in Ecuador you get different answers. Welcome to Ecuador!”

I still remember when Ecuador made the ruling during the Covid pandemic that a person with a two-year temporary visa could not leave the country before getting their permanent visa.

The migration office in Azogues interpreted that to mean anyone with a two-year visa, including those prior to the new rule.

Other offices in Ecuador interpreted it to mean anyone here prior to the change was grandfathered in. I was told by a reliable source that each regional office has autonomy to make their own interpretations of the law.

I don’t know the Canadian’s sources at SRI, although I understand he deals with them on a regular basis. And he has not had any tax problems. But neither have I.

The managing editor and owner of CuencaHighLife, David Morrill told me, “When he sent the first column, he said his SRI contact said the information in your article was mostly correct. The problem was with Jacqui’s opinions (he didn’t say which ones).”

David added, “It may be a matter of one hand not knowing what the other is doing.”

That is why expats in Cuenca have to be flexible. The cliché, “Go with the Flow” is very much alive and well in Ecuador.

Here’s an excellent personal example of there’s nothing I can do about the problem, so I might as well accept the things as they come: Getting my property taxes at the tercera edad (65+ years old) rate.

With our Cuencano facilitator, I went to four different offices with our property deed to get the reduced rate and to pay our 2024 taxes. I was told to submit a written request with a copy of our property deed to get my identification changed from my old U.S. passport number to my cédula.

I went with the flow despite having my cédula in hand. Upon their request to show up in four to six weeks because of a backlog, I returned nearly two months later.

Joanna, the same facilitator, and I had to go to three different offices, with the final one being a new one for us. At that fifth and final governmental office, we were told that they could not process the property deed because I had not paid my taxes.

Focusing on what I could control, I made the next best decision from there. I told our facilitator I would pay the full rate this year, so the government could put my cédula number on the property deed to get tercera edad for future property tax payments.

I had accepted the scenario presented to me because it was the easiest thing to do. There was no need to fight it.

That is the way to do things in Ecuador, be it your property taxes, setting up automatic monthly payments, or filing an income tax return for all income. Just go with the flow.


I checked my property online two weeks ago. My cédula number is on it.

David told me the other day about my income tax article, “You’ve put the information out there and folks can do with it what they want.”

And Jacqui has left it up to her clients if they will file an income tax return.

“I think the main takeaway from all of this is that expats need to file a tax return whether they owe anything or not,” David added.

I hope what I have written helps you.

At least, this post shows you what the government is like, and how to deal with it.

“By the way, I owed nothing in taxes,” said Judith.

A lot more information on life in Cuenca can be found in my book, “Una Nueva Vida – A New Life.” Some say it is the most thorough book out there concerning moving to and living in this beautiful city.

You may want to sign up to be notified when I post new information and photos. By doing this, you will get the latest as soon as it goes online.

And please! Have several reliable sources of information before making any decision about moving to Cuenca.

Reliable information must come from dependable sources. According to the University of Georgia Libraries, a reliable source will provide a “thorough, well-reasoned theory, argument, etc. based on strong evidence.”

I consider myself a trusted source with my “strong evidence,” but you definitely need more than me for your big resettlement.

Salud, mi amigo.

Una Nueva Vida – A New Life

- by Stephen Vargha

There are over 80 professional-quality photos shot by me to give you a clear ‘picture’ about life in this historic mountain city.