SRI Limits Credit Note Use to 60% of Tax Obligations — 40% Cash Requirement Takes Effect May 1

The SRI (Servicio de Rentas Internas — Ecuador's tax authority) has implemented Resolution NAC-DGERCGC26-00000015, effective May 1, 2026, restricting how taxpayers can use credit notes to settle tax obligations.

The New Rule

Previously, taxpayers who overpaid could apply credit notes to cover 100% of future tax obligations. The new rule forces a minimum cash component on every payment.

How Credit Notes Work

Credit notes are generated when taxpayers overpay their taxes. The SRI issues a credit note that can be applied against future obligations — effectively an IOU from the government. The alternative is requesting a cash refund, which historically takes months to process.

For many businesses, credit notes have functioned as a liquidity tool: overpay in one period, offset in the next, avoiding the slow refund queue.

Legal Controversy

Tax specialist Roberto Escandón has flagged a potential legal conflict. Article 43 of Ecuador's Tax Code (Código Tributario) permits taxpayers to use credit notes for any tax payment without restriction.

Escandón argues that limiting credit note use requires legislative reform, not an administrative resolution. The SRI's authority extends to implementing tax law, not modifying the substantive rights established in the Code.

The distinction matters: if the restriction is challenged and overturned, affected taxpayers could seek retroactive application of their full credit note balances.

Stated Rationale

The SRI framed the restriction as a measure to prevent risks to public revenue collection, arguing that excessive credit note use creates unpredictability in cash-based tax receipts needed to fund government spending.

What to Watch

• Legal challenges. The Tax Code conflict identified by Escandón provides a viable basis for administrative or constitutional challenge. Watch for injunction filings in the coming weeks
• Liquidity impact on mid-size businesses. Companies that routinely used credit notes to manage cash flow now face a 40% cash requirement that may strain working capital, particularly in sectors with thin margins
• SRI refund processing. If taxpayers can no longer fully offset overpayments, demand for cash refunds will increase. The SRI's historically slow refund pipeline could create a backlog
• Corporate tax planning adjustments. Businesses will likely recalibrate their payment strategies to minimize overpayments, potentially reducing Q2-Q3 advance tax receipts

Source: El Mercurio