President Daniel Noboa of Ecuador has enacted a decree reducing the Value Added Tax (VAT) for tourism-related services from 15% to 8% for the Carnival holiday, which will take place from Saturday, February 14 to Tuesday, February 17, 2026. This tax reduction is aimed at encouraging domestic tourism and is part of a broader strategy to stimulate the economy during the festive season. The decree is formalized in Executive Decree No. 304, which was issued on Thursday, February 12.

The decision to reduce VAT is supported by Article 5 of the Tourism Law, which outlines specific regulations for the tourism sector. This legal framework is designed to bolster the tourism industry, which has faced challenges in recent years, particularly due to the economic impact of the COVID-19 pandemic. By lowering tax burdens for tourism businesses, the government aims to make holiday experiences more affordable for both domestic and international visitors, which is crucial during high-traffic periods such as Carnival.

Moreover, the decree mandates the Internal Revenue Service (SRI) to ensure all necessary measures are implemented to comply with the new tax rate. Businesses providing services classified under tourism activities must issue the appropriate sales receipts at the reduced rate, thereby allowing operators to benefit from this fiscal measure while providing consumers with lower prices. This initiative is expected to increase tourism activity significantly, contributing positively to the local economy during the Carnival festivities and beyond.