This article outlines the availability and conditions of operating as a sole proprietor in Ecuador under the Régimen Impositivo Simplificado (RISE). The information focuses on statutory criteria, tax obligations, and practical considerations as of 2025.
Availability of Sole Proprietorship in Ecuador
Sole proprietorship status is recognized and widely accessible in Ecuador. Individuals wishing to run their own business without incorporating a separate legal entity may register under the RISE regime. The RISE is designed to simplify tax compliance for individual entrepreneurs and small-scale businesses, offering a streamlined process for registration, reporting, and payment.
Key Features of the RISE Regime (2025)
The RISE regime offers a practical alternative for those seeking simplified tax treatment. Below is a summary of the main features relevant to sole proprietors in 2025:
| Feature | Description / Value (USD) |
|---|---|
| Status Name | Régimen Impositivo Simplificado (RISE) |
| Legal Form Required | None; operates as individual (no separate legal entity required) |
| Annual Gross Income Limit | $60,000 (USD) maximum |
| Tax Payment Structure | Fixed monthly fee based on gross turnover |
| Monthly Fee (2025) | $2 to $62 (USD) per month (depending on turnover) |
| VAT & Income Tax Under RISE | Replaced by fixed fee; standard VAT and income tax not applicable |
| Can Issue Receipts for VAT Credit | No (RISE receipts do not allow for VAT credit) |
| Registration Authority | Servicio de Rentas Internas (SRI) |
Eligibility and Registration
RISE registration is open to Ecuadorian residents with annual gross income up to $60,000 (USD). The process is managed by Ecuador’s tax authority, Servicio de Rentas Internas (SRI). Registration is relatively straightforward, and the regime is broadly used among local entrepreneurs due to its simplicity and predictable tax obligations.
Taxation and Compliance
Under RISE, participants are exempt from standard VAT and income tax filings. Instead, a fixed monthly fee is charged, based on gross annual turnover. This system is structured to reduce both reporting complexity and administrative burdens, but individuals must adhere to the income ceiling and are restricted from issuing receipts that grant VAT credit to business clients.
Summary Table: RISE Monthly Fees (2025)
Monthly fees under the RISE regime as of 2025 are stratified based on total annual gross income:
| Annual Gross Income (USD) | Monthly Fee (USD) |
|---|---|
| Up to $60,000 | $2 – $62 |
For more precise brackets, refer to the main SRI RISE page.
RISE Regime: Main Conditions and Restrictions
- Sole proprietorship/individual registration (no separate company required).
- Annual gross income limit strictly enforced at $60,000 (USD).
- Not available for those needing to issue VAT credit invoices to business customers.
- Fixed fee regime replaces normal VAT and income tax reporting.
Pro Tips for Using RISE Effectively
- Keep thorough records of all income to ensure compliance with the $60,000 (USD) annual gross limit. The SRI routinely checks for excess turnover.
- Take advantage of the simplified fixed-fee structure to reduce both compliance costs and time invested in tax preparation.
- If your business intends to serve other businesses requiring VAT credit, consider formal incorporation instead of RISE registration, as RISE does not support VAT credit issuance.
- Always verify your eligibility and registration status directly through the official SRI website to ensure you meet current year requirements.
References and Useful Links
- Servicio de Rentas Internas (SRI) – RISE
- SRI – RISE: Frequently Asked Questions
- SRI – RISE: What is it?
In summary, Ecuador’s RISE regime provides an effective and widely used framework for individuals seeking sole proprietorship status with low regulatory burden. Its fixed fee structure simplifies compliance, but there are limits on annual turnover and restrictions regarding the issuance of VAT-credit invoices. Staying within the stated thresholds and adhering to the RISE-specific conditions allows for straightforward operation under Ecuadorian tax law in 2025. Always consult the official SRI site for up-to-date procedural guidance and requirements.