Guidelines for the Registration of Equity Plans

By Ministerial Agreement No. MDT-2024-013 subscribed on January 19, 2024, the Ministry of Labor issued the following guidelines for the registration of Equity Plans:

  • The Ministry of Labor will provide a certificate of registration of the Equity Plan, hereby the “Plan”.
  • The employer has the obligation to disseminate and socialize the Plan with its employees for its effective compliance.
  • If the Plan should be renewed due to one of the causes established for its mandatory renewal, it must include the reason for the review and update.
  • Failure to register the Plan may be reported to the Regional Directorate of Labor and Public Service.
  • The “Equity Plan” will be valid for 4 years from the date of registration before the Ministry of Labor. Once the registration period has expired, the employer must carry out a new diagnosis of the situation.
  • Failure to comply with the obligation to register the Plan will result in a sanction.
  • The registration of Plans must be made from January 20, 2024, to July 31, 2024.

The Agreement is in force since its signing date regardless of its publication in the Official Gazette.

 

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Self-Withholding – Large Taxpayers

On January 12, 2024, the Internal Revenue Service issued Resolution NAC-DGERCGC24-00000003 which regulates the income tax self-withholding regime applicable for large taxpayers.

For calculating the self-withholding amount, all taxable income must be considered except:

1.    Revenue subject to special income tax regimes,

2.    Revenue subject to another self-withholding regime established by law, and

3.    Revenue derived from the following sources:

a.    Contracts for the provision of services for the exploration and exploitation of hydrocarbons if the payment is made by the Ecuadorian Government,
b.    Contracts with the central government and its entities,
c.    Contracts with local governments and its entities; and
d.    Contracts with Government social security entities.

If the taxable income cannot be segregated from exempt income, the self-withholding must be calculated over the total income received monthly.

Large Taxpayers must issue a withholding certificate monthly. The self-withholding percentage applicable to each taxpayer can be reviewed at the following link:
LINK

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

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Law on Energy Competitiveness

The Law on Energy Competitiveness (“LOCE”) was published in the Second Supplement of the Official Registry on January 11, 2024. Below, we summarize the most important energy and tax matters:

1.    Projects included in the Master Plan for Electricity (“PME”) may be delegated to private entities through public selection processes in the following cases:

a.    When it is necessary to meet the public interest, or
b.    When the service cannot be provided by entities wholly or partially owned by the Government, according to the needs of the electric system.

2.    Projects not included in the PME based on unconventional renewable energies that have been identified by the private sector may be delegated to their promoter if the project does not exceed 10MW in power. Larger projects must be delegated through a public selection process, and benefits will be recognized for the promoter’s participation.

3.    The construction, operation, and maintenance of public lighting systems may be delegated to private companies.

4.    All projects delegated to the private sector must be developed by companies established in Ecuador.

5.    The delegation to the private sector of existing infrastructures financed with the General State Budget is prohibited. Entities wholly or partially owned by the Government Public shall be responsible for managing such infrastructures.

6.    Private entities may build new networks and distribution infrastructure to supply electricity for commercial and industrial clients isolated from the electric distribution grid. Expenses incurred for this purpose will be considered deductible for calculating the applicable income.

7.    Regulated and non-regulated consumers may install distributed generation systems for self-supply (“SGDA”). These systems must use unconventional renewable energies and can be owned by the consumer or a third party.

The depreciation and amortization value of the equipment, and technology acquired for SGDA implementation will be deductible with an additional 100% for income tax purposes.

8.    Energy block transactions may be conducted through the sale of energy via contracts signed by participants in the electric sector or through short-term transactions.

9.    Clients who make payments for public electricity and lighting services until June 30, 2024, will not be subject to interest payments. Clients located in Manabí and Esmeraldas will not be subject to paying any amount due for the services received during the state of emergency caused by the 2016 earthquake. These benefits do not apply to industrial clients.

10.    Other tax regime amendments include:

a.    0% VAT rate will apply to the transfer of equipment and accessories for solar photovoltaic generation and wastewater treatment plants.

b.    Electric vehicles are described as those propelled solely by electric power sources, with batteries charged exclusively using this type of energy and that produce zero direct polluting emissions. Electric vehicles shall not be understood as those that have self-generation systems with an internal combustion source.

c.    The remission regime is amended, payment must be made by July 31, 2024.

d.    The Foreign Trade Committee (COMEX) shall tax agricultural machinery that works with clean energy sources with a 0% tariff. This amendment must be carried out until May 10, 2024.

e.    Payments made abroad by private financial institutions for credits and financial returns from fixed-term deposits or investments, will not be exempt from the payment of Outflow Tax (ISD) until January 11, 2025.

The President of the Republic must issue the applicable regulations by February 10, 2024.

 

carlos-torres

Carlos Torres, Senior Associate at CorralRosales
ctorres@corralrosales.com
+593 2 2544144

 

Mario Fernández, Associate at CorralRosales
mfernandez@corralrosales.com
+593 2 2544144

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Suspension of deadlines – Internal Revenue Service

On January 10, 2024, the Internal Revenue Service issued Resolution NAC-DGERCGC24-00000001 suspending the terms and deadlines of all tax administrative procedures from January 10 to January 12, 2024, including the latter.
DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

A conversation with Maria Cecilia Romoleroux, partner at CorralRosales

DETAILS

DATE: 01-12-2023

PROFESSIONALS INVOLVED IN THE ARTICLE:

Maria Cecilia Romoleroux

“My law degree and specialization in Intellectual Property were not choices I made, but rather a destiny that chose me.”

It was with these words that María Cecilia Romoleroux —recognized through multiple international awards and appointments, including the Chambers Women in Law Awards— dove into an exclusive conversation with Ekos Violeta Magazine.

Her journey in the legal world began when a family member, surprisingly and without consulting with her, enrolled her in law school. At the time, she could never have imagined that she would become a distinguished attorney with a career spanning more than three decades.

Maria Cecilia’s story begins in the 1990s when, at the age of 20, started an intellectual property practice with a friend and fell in love with intellectual property. However, as so often happens in life, challenges arose, and Maria Cecilia experienced difficult times that included harassment and discrimination, which ended up triggering her decision to find her way in the profession. Although it was a rocky path, she never doubted that her potential would lead her to break glass ceilings.

“At the age of 24, young and afraid, I decided to seek my independence and not stand idly by in a world that often resists women having prominent roles,” she said. Although some people frowned at her way forward, Maria Cecilia leaped into the unknown, not knowing what awaited her, but always confident of herself.

More than two decades ago, María Cecilia first began working at the CorralRosales law firm and contributed to its growth, demonstrating that women can reach high positions in the legal world.

Impactful Strategies

From her position as a firm partner, she has implemented programs and workshops to promote gender equality and empower women. One of them is the Entrepreneur Program, which seeks to support new ideas and business models, launched by entrepreneurs, that contribute to the dynamization of the Ecuadorian business ecosystem. The program pays special attention to initiatives generated by female talent, minority groups, and the LGTBQ+ community. Support is provided to them through the firm’s pro-bono program and specialized legal counsel with preferential conditions.

Maria Cecilia has not only achieved her own personal success, but also advocates to empower future generations. “I have always had a special focus on social facets because for me, the right thing to do is pave the way and work to make things easier for other young women and future generations, generating a new reality, one with fewer obstacles to overcome,” she says.

She concludes with a powerful piece of advice: “The world has evolved, and there is no turning back. We need to educate and train ourselves, trust ourselves, and change our mentality. We women are not victims, and we can be the protagonists of our lives.

Maria Cecilia’s story reminds us that, with determination and self-confidence, it is possible to reach heights and positions traditionally thought to be reserved for.

If you want to read the complete article, click here (pages 34 and 35).

Extension of the validity term of the disability card

By Resolution No. 002-CONADIS-2023 signed on December 28, 2023, the National Council for the Equality of Disabilities (CONADIS) determined:

1.      To extend the validity of the species “CONADIS disability card” until December 31, 2024.

2.      To extend the validity of the species “Ministry of Public Health (MSP) disability card” until December 31, 2024.

The Resolution has not been published in the Official Gazette yet.

Edmundo Ramos, Partner at CorralRosales
eramos@corralrosales.com
+593 2 2544144

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Does Mickey Mouse belong to everyone? NO

On January 1st, Mickey Mouse, the most famous mouse in the world, made headlines worldwide, mentioning he entered the public domain as the copyright protection term on STEAMBOAT WILLIE expired. Many people believed anyone could use the iconic character without authorization from its owner, Disney.

First, we must define the term “public domain”. The World Intellectual Property Organization, WIPO, has defined it as:

“As far as intellectual property (IP) law is concerned, “public domain” is generally understood as any intangible asset that is not subject to exclusive IP rights and can therefore be freely used or exploited by anyone.”[1].

This means that all intangible assets that do not have a holder of rights entitled to prevent their exploitation or to demand the payment of compensation are in the public domain.

Does this open the door for anyone to use the Mickey Mouse figure? No, not at all.

It is important to clarify that the most famous work that entered the public domain is STEAMBOAT WILLIE, which many of us will not identify by its name, but by its iconic scene: Mickey Mouse captaining a boat while whistling. This scene is included at the beginning of many Disney productions. Other less famous scenes, henceforth, can also be reproduced and exploited by anyone[2].

Are there people taking advantage of this opportunity? Of course, we can already find on YouTube uploads of the scene which, because of what we have just explained, cannot be removed from this platform based on copyright infringement. On the contrary, they would be able to benefit commercially from the number of views, which are not few, largely due to the publicity given to this event.

One example is a video uploaded to this platform on January 1st by CORRIDOR, which in less than 48 hours was close to reaching one million views.

https://www.youtube.com/watch?v=hmzO–ox7X0

To sum up, can STEAMBOAT WILLIE be used freely, without any authorization, or without having to pay or retribute in any way to Disney? The answer is YES.

Can Mickey or Minnie Mouse be used freely? The answer is NO. Their protection extends far beyond this short scene. All works created subsequently are still protected and maintain rights around the world.

This iconic character’s presence in the market makes its isolated and indiscriminate use impossible without proper authorization from Disney. Its notoriety is evident and will be protected by the legislation of each country for a very long time.

Mickey is the boss in the Disney world and will continue to be for many years to come.

 

[1] Comité Intergubernamental sobre Propiedad Intelectual y Recursos Genéticos, Conocimientos Tradicionales y Folclore – WIPO/GRTKF/IC/17/INF/8 (24/11/2010) https://www.wipo.int/edocs/mdocs/tk/es/wipo_grtkf_ic_17/wipo_grtkf_ic_17_inf_8.pdf

[2] Plane Crazy, The Gallopin Gaucho

 

 

Eduardo Rios
Partner at CorralRosales
eduardo@corralrosales.com

Outflow tax rate and other tax amendments

On December 29, 2023, the President of the Republic issued two Executive Decrees with tax amendments:
  1. The Executive Decree 98 by which it is established that the outflow tax (ISD) rate will remain at 3.50% until December 31, 2024.
  2. The Executive Decree 99 which amended the following regulations:
a.    The Internal Tax Regime Law Regulations.
  • The voluntary income tax advance payment may be performed until January 31 of each year. Before the reform, such payment was allowed until December 31.
  • Veterinary services are included as health services subject to 0% Value Added Tax (VAT).
  • It is clarified that taxpayers must keep the documents that support the accounting for 7 years.
b.    Regulation of Invoices, Withholding Certificates, and Complementary Documents.
  • Taxpayers classified as Large Taxpayers must include the legend “Large Taxpayer” in their invoices.

Andrea Moya, Partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Update – Income Tax Rate

On December 21, 2023, the Internal Revenue Service issued the Regulation NAC-DGERCGC23-00000036 whereby:

1.    The chart establishing the income tax rates applicable to individuals for the fiscal year 2024 is updated, as follows:

Basic Fraction Excess up to (USD) Tax over the Basic Fraction (USD) Tax over the Excess (%) 0 11.902 – 0% 11.902 15.159 – 5% 15.159 19.682 163 10% 19.682 26.031 615 12% 26.031 34.255 1.377 15% 34.255 45.407 2.611 20% 45.407 60.450 4.841 25% 60.450 80.605 8.602 30% 80.605 107.199 14.648 35% 107.199 Onwards 23.956 37%

2.    The chart establishing the inheritance, and gift tax rates applicable for the fiscal year 2024 is updated, as follows:

Basic Fraction Excess up to (USD) Tax over the Basic Fraction (USD) Tax over the Excess (%) 0 76.558 – 0% 76.558 153.115 – 5% 153.115 306.231 3.828 10% 306.231 459.379 19.139 15% 459.379 612.515 42.112 20% 612.515 765.630 72.739 25% 765.630 918.725 111.018 30% 918.725 Onwards 156.946 35%
DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES