“LA INCIDENCIA DEL RÉGIMEN TRIBUTARIO DE COMPAÑÍAS FORÁNEAS CONTROLADAS EN EL ECUADOR

Abstract

International taxation faces increasing challenges due to the aggressive tax planning practices, which seek to reduce their tax burden by shifting profits to low-tax or taxfree jurisdictions. In response, Controlled Foreign Corporation (CFC) rules have emerged as a key tool to counter base erosion and profit shifting. These rules, recommended by the Organisation for Economic Co-operation and Development, aim to prevent multinational companies from diverting their income to tax havens. The main goal of CFC rules is to ensure that income generated by subsidiaries in lowtax jurisdictions is taxed in the parent company's jurisdiction. Ecuador, aiming to adapt to international trends, has introduced a CFC regime through the Economic Efficiency Law. This regime seeks to align with Organisation for Economic Cooperation and Development recommendations and strengthen Ecuador's tax system. This research analyzes the impact of the CFC regime in Ecuador, its compliance with international standards, and the effect on the tax practices of individuals and businesses in Ecuador.