Ecuador's Constitutional Court issued its decision on 28 October 2022 in response to several different challenges to the Law for Economic Development and Fiscal Sustainability after the COVID-19 Pandemic. While the Court has upheld most of the law, certain measures were found to be unconstitutional. One of the main measures is the new simplified tax regime (RIMPE), which provides progressive rates on gross income and replaces the existing simplified regime (RISE) and the micro-enterprise regime (RIM). The RIMPE regime applies for two groups:

• "Entrepreneurs", defined as natural and legal persons with gross annual income of up to USD 300,000 as of December 31 of the previous year, and
• "Popular businesses", defined as natural persons with gross annual income of up to USD 20,000 as of December 31 of the previous year.

In its decision, the Court addressed each group separately, finding that the RIMPE regime as it applies for entrepreneurs was not unconstitutional. However, the Court did find that the RIMPE as it applies for popular businesses is unconstitutional as it contravenes the principles of taxable capacity and progressivity. The main issue is that although a 0% progressive rate applies under the regime on gross income up to USD 20,000, a fixed tax of USD 60 also applies, meaning that a popular business with income just over USD 0 pays the same as a popular business with income of USD 20,000.

Although a declaration of unconstitutionality generally has immediate effect, the Court determined that, as it is a tax regulation, it is essential to defer the effects of the declaration in order to avoid a regulatory vacuum that would seriously affect legal certainty at the national level and fiscal sustainability. As such, the rate (USD 60) corresponding to popular businesses of the RIMPE regime will remain in force until the end of the fiscal year 2023.