60+ Processed Foods Now Subject to 15% IVA — Full List and What Stays at 0%

Your grocery bill just got more complicated -- and likely more expensive.

On March 26, 2026, the SRI (Servicio de Rentas Internas -- Ecuador's tax authority) issued a circular reclassifying over 60 processed food products that were previously taxed at 0% IVA to the full 15% IVA rate. The change is effective immediately and applies to all retail sales nationwide.

This is not a new tax. It is a reclassification of which foods qualify as "processed" under the existing tax framework. Ecuador raised its general IVA rate from 12% to 15% in 2024 as part of IMF-backed fiscal reforms, but many food items remained at 0% under exemptions for basic necessities. The SRI's March circular narrows those exemptions significantly.

What's Now Taxed at 15%

The reclassification covers a wide range of products that many residents buy regularly. Here are the major categories:

Dairy Products

| Product | Previous Rate | New Rate | |---|---|---| | Lactose-free milk | 0% | 15% | | Skim/low-fat milk | 0% | 15% | | Fortified/vitamin-enriched milk | 0% | 15% | | Cream (crema de leche) | 0% | 15% | | Condensed milk | 0% | 15% | | Flavored milk drinks | 0% | 15% |

Bread, Pastry, and Baked Goods

| Product | Previous Rate | New Rate | |---|---|---| | All bread varieties | 0% | 15% | | Pastries and sweet breads | 0% | 15% | | Cookies and biscuits | 0% | 15% | | Crackers | 0% | 15% | | Packaged cakes | 0% | 15% |

Pasta and Noodles

| Product | Previous Rate | New Rate | |---|---|---| | Instant noodles | 0% | 15% | | Pre-cooked pasta | 0% | 15% | | Filled/stuffed pasta (ravioli, tortellini) | 0% | 15% |

Meat Products

| Product | Previous Rate | New Rate | |---|---|---| | Cooked/prepared meats | 0% | 15% | | Marinated meats | 0% | 15% | | Pre-cooked meats | 0% | 15% | | Sausages and embutidos | 0% | 15% | | Canned meats | 0% | 15% |

Other Products

• Fruit juices with added sugar
• Flavored yogurts
• Processed cereals
• Snack foods and chips
• Canned soups and broths
• Condiments and sauces (ketchup, mayonnaise, mustard)
• Jams and preserves

What Stays at 0%

The exemptions that remain are focused on raw, unprocessed, and minimally processed foods:

• Fresh natural milk (leche natural) -- whole, unpasteurized or pasteurized without additives
• Raw and unprocessed meats -- fresh chicken, beef, pork, and fish as sold at butcher counters and markets
• Fresh fruits and vegetables -- no change
• Eggs -- no change
• Rice, dried beans, and lentils -- no change
• Raw grains and flour -- no change
• Fresh bread from bakeries -- this is a gray area; the SRI circular appears to distinguish between packaged/industrial bread (taxed) and fresh artisanal bread sold directly by bakeries (exempt), but enforcement and interpretation may vary

The general principle: if a food has been significantly processed, flavored, fortified, marinated, pre-cooked, or industrially packaged, it is now taxed at 15%. If it is sold in its raw or natural state, it remains at 0%.

The Math: How This Hits Your Budget

Let's put real numbers on this. For a household that spends $400/month on groceries, the impact depends on how much of your basket consists of processed versus raw foods:

Scenario 1: Heavy processed food buyer ($200/month in now-taxed items)

• Additional monthly cost: $30 (15% of $200)
• Annual impact: $360

Scenario 2: Mixed buyer ($100/month in now-taxed items)

• Additional monthly cost: $15
• Annual impact: $180

Scenario 3: Primarily fresh/raw food buyer ($50/month in now-taxed items)

• Additional monthly cost: $7.50
• Annual impact: $90

The impact is regressive -- it hits lower-income households harder as a percentage of income, since processed foods (bread, pasta, sausages) are often cheaper per calorie than fresh alternatives. For expats on fixed incomes or retirement budgets, the change is meaningful but not dramatic.

Why This Is Happening

The reclassification is part of Ecuador's ongoing effort to expand the tax base as required by its IMF program commitments. The government needs to increase revenue without raising the headline IVA rate further (which is already at a historic high of 15%). Reclassifying exemptions is a way to collect more tax from the existing rate.

The SRI's logic is straightforward: if a product has undergone significant industrial processing, it is not a basic necessity in the same way that raw rice or fresh vegetables are. A bag of fresh potatoes remains tax-free; a bag of potato chips does not. Fresh milk is exempt; lactose-free milk with added vitamins is not.

Whether that logic is fair is debatable -- particularly for items like bread, which is a staple food in Ecuador regardless of whether it is technically "processed." Consumer advocacy groups have criticized the reclassification as effectively taxing basic nutrition.

What This Means for Expats

• Check your grocery receipts. The 15% IVA should now appear on affected items at supermarkets (Supermaxi, Coral, Gran Aki, Mi Comisariato). If you see inconsistencies -- some stores may be slow to update their systems -- the SRI circular is the authoritative document
• Traditional markets may be less affected. If you buy your bread from a local bakery (panaderia), your meat from a market butcher, and your milk fresh -- as many Ecuadorians do -- much of your food basket remains at 0%. The tax hits industrial/packaged products harder than traditional market purchases
• Lactose-free milk is a notable hit. Many expats rely on lactose-free products, and these have moved from 0% to 15% across the board. If you consume significant quantities, you will notice the price increase
• This is part of a broader fiscal tightening. The IVA went from 12% to 15% in 2024. Now the base of products subject to that 15% is expanding. The trend is toward higher effective taxation on consumption. Budget accordingly
• Restaurant meals are a separate calculation. Restaurants charge IVA on prepared food regardless of these changes. The reclassification affects retail grocery purchases, not dining out

Sources: Primicias, Teleamazonas, El Universo