Every year, the Internal Revenue Service ("SRI" according to its Spanish initials) partially modifies the annual income tax return Form 101. Such changes are due to the companies' requirements in respect of their financial information reports. However, the new Form 101 – applicable to the 2015 fiscal year – includes major changes in comparison with the forms used in previous years because, partly due to having adopted the International Financial Information Standards ("IFIS"), certain principles for presentation and measure of assets, liabilities, equity, income and expenses have changed significantly in relation to the accounting principles generally accepted in Ecuador previously.
The new Form 101 must be filled out on line and is structured with boxes that will be displayed in accordance with each taxpayer's requirements, i.e. not all the boxes will necessarily be shown as in the previous form. The SRI's main objective is to facilitate the companies' submission of their financial information in accordance with the IFIS. That is why a new "generation/reversion of temporary differences" section has been included in the tax reconciliation for correct presentation of deferred taxes.
The boxes are named in keeping with the nomenclature used by the IFIS for different groups of accounts. The new form includes more boxes than in previous years. Now, for instance, the taxpayers must report revaluations (increases or decreases) and re-expression of assets and other specific adjustments, such as adjustment for reasonable value and the participation or proportional equity method. They must also report the amount of any values excluded from the advance tax payment calculation. Another important change is the addition of more boxes in the income area. Now, for example, there are boxes for reporting net gains from reversion of provisions and income that must be considered "not subject to income tax".
It should also be noted that the income tax advance payment is automatically calculated. Therefore, it is recommended to check the amounts carefully and to compare the automatic calculation with the calculation performed by each taxpayer.
In view of these changes, the SRI has made available a new and rather lengthy manual that includes technical references based on IFIS.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
