SRI Clarifies: 94 of 115 Basic Basket Foods Retain 0% IVA

SRI Classification — Detailed Breakdown

The Servicio de Rentas Internas (SRI) published a detailed breakdown of the canasta básica alimentaria (basic food basket) confirming that 94 of 115 items retain the 0% IVA treatment, with only 21 items now carrying the 15% IVA rate following the December 2024 tax reform, according to Primicias.

Classification	Item Count	Share
0% IVA (exempt)	94	81.7%
15% IVA (taxable)	21	18.3%
Total canasta básica food items	115	100%

The granular classification reduces interpretation risk for food retailers, processors, and distributors, and provides a clearer framework for consumer price index modeling.

The 94 Items Retaining 0% IVA

The exempt category — 94 items — is concentrated in:

Category	Examples
Fresh proteins	Chicken (whole/cuts), beef cuts, pork, fresh fish (including corvina, dorado), eggs
Fresh dairy	Fresh milk, natural yogurt (unflavored), fresh white cheese, curd
Grains and legumes	Rice, lentils, beans (various), chickpeas, corn, quinoa
Fresh produce	Potatoes (all varieties), plantains, yuca, tomatoes, onions, carrots, lettuce
Fruits	Bananas, apples, oranges, pineapples, papayas, avocados
Basic cooking staples	Wheat flour (plain), sugar, salt, cooking oils (refined vegetable)
Bread (basic)	Artisanal/traditional bread (pan popular), corn-based breads

The 21 Items Now at 15% IVA

The reclassified items are concentrated in processed and packaged categories:

Category	Items Reclassified
Processed dairy	Flavored yogurt, dairy desserts, processed cheeses, sweetened condensed milk
Industrial baked goods	Packaged bread with preservatives, cookies, crackers, packaged pastries
Pre-cooked proteins	Pre-cooked chicken, deli meats, sausages, canned tuna in sauce
Processed grains	Instant noodles, flavored rice mixes, breakfast cereals
Flavored beverages	Juice concentrates, flavored drinks, energy drinks
Snack foods	Chips, extruded snacks, candy

CPI Implications — Revised Estimate

The granular classification enables a more precise CPI impact estimate than earlier preliminary analyses:

Parameter	Value
Canasta básica weight in CPI	~28% (food & non-alcoholic beverages)
Affected items (21) share of basket value	~12-15%
Direct price impact (15% IVA passthrough)	10-12% average
Estimated CPI impact (food component)	+0.5-0.7 pp
Estimated CPI impact (headline)	+0.3-0.5 pp

This is below the earlier preliminary estimate of 0.5-0.8 pp headline impact, reflecting the fact that the majority of basic basket items retain exempt status. The processed food share of the canasta básica — while growing — remains secondary to fresh/natural products by value.

Retail Sector Impact

The contained scope of the reclassification limits margin pressure on major food retailers:

Retailer	Processed Food Exposure	Margin Impact
Corporación Favorita (Supermaxi, Megamaxi)	Moderate — broad processed assortment	100-200 bps on affected SKUs
TIA	High — discount format, more processed share	150-300 bps on affected SKUs
Corporación El Rosado (Mi Comisariato)	Moderate	100-200 bps on affected SKUs
Tiendas de barrio	Lower exposure	Limited impact

Retailers are expected to pass through 70-85% of the IVA increase to consumers within 60 days, consistent with historical patterns.

Consumer Substitution Dynamics

The 0% vs. 15% spread creates measurable substitution incentives:

• Flavored yogurt (15%) vs. natural yogurt (0%) — a 15% price wedge favors unflavored alternatives
• Packaged bread (15%) vs. artisanal bread (0%) — advantage to traditional bakeries
• Pre-cooked chicken (15%) vs. fresh chicken (0%) — shift toward fresh protein preparation
• Instant noodles (15%) vs. rice/plain pasta (0%) — traditional staples gain price advantage

These substitution effects may partially offset the raw CPI impact as consumers adapt purchasing behavior — a pattern observed in Colombia following similar IVA reclassifications in 2019-2020.

Food Retail Sector — Revenue Impact

Metric	Estimate
Ecuador packaged food retail market	~$4.5-5.0 billion annually
Share represented by affected 21 items	~$900 million - $1.1 billion
Incremental IVA revenue (fiscal)	~$135-165 million annually
Volume impact on affected categories	-3% to -6% YoY (first 12 months)

What to Watch

• INEC April CPI data (published mid-May) — the first full month with the reclassified items at 15%; food sub-index movements will confirm or revise the 0.3-0.5 pp headline impact estimate
• Corporación Favorita Q1 2026 earnings — management commentary on processed food category performance, pricing strategy, and volume dynamics
• Consumer substitution signals — shifts in volume toward fresh/natural categories would validate elasticity assumptions
• SRI enforcement posture — audits of retailers applying incorrect classifications; the granular list reduces ambiguity but increases enforcement clarity
• Political pressure — National Assembly members from lower-income coastal provinces have historically pushed back on food-related tax increases; any reclassification reversals or exemption carve-outs would be notable
• Competing retailer pricing — whether TIA (discount format) absorbs more margin vs. pass-through; pricing war dynamics in processed categories

Source: Primicias