Monthly Archives: July 2024

CorralRosales > 2024 > July

Donation of equipment to the Police for applying tax benefits

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Through Official Letter DADM-MP-01, the Ministry of Home Affairs issued the “Donation Process Manual”, which regulates the process to donate equipment and supplies to the National Police and access the 150% additional deduction for the calculation of income tax.

Article 10 of the Internal Tax Regime Law provides an additional deduction of 150% on the taxable base of income tax for donations of equipment and supplies to the National Police, aimed at protecting public order.

According to the Manual, the donor must meet the following general requirements:

  1. Not be subject to legal prohibitions for contracting with the Government.
  2. Have an “active” status in the Single Taxpayer Registry.
  3. Be the owner, possessor, manufacturer, or buyer of the equipment and supplies to be donated.

The donation request must include the following documents:

  1. Declaration of the legality of funds in the format provided in the Manual.
  2. Letter of intent to donate, which should include the general data of the donor and the technical specifications of the equipment or supplies to be donated.

In the case of weapons, ammunition, explosives, and accessories, the corresponding permits must be attached, and the import documentation if applicable.

In the case of used equipment and supplies (tangible or intangible), a report must be attached that establishes the state of the used good, its conditions, and useful life.

 

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

© CORRALROSALES 2024
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

American Privacy Rights Act: a bill that promises a radical change for privacy in the United States

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Respect for the privacy of personal data has become particularly important in the digital era. Companies and governments collect and process information about our daily activities, which makes it essential to have rules that adequately protect the privacy of citizens.

A step towards data protection in the United States.

Although the United States does not have a specific federal law on data protection, an important step was taken on April 7, 2024[1], Republican Congress Cathy McMorris Rodgers and Democratic Senator Maria Cantwell, both from the state of Washington, introduced a federal privacy bill called the American Privacy Rights Act (APRA).

This bill creates a comprehensive regulatory framework for the protection of personal data in the United States. It is a significant step forward towards greater privacy protection for U.S. citizens.

Key aspects of APRA and its relationship with Ecuador.

APRA[2] addresses various aspects contained in most of the laws on the subject, including that of Ecuador, among them:

  1. Data Minimization: Limits the collection of personal data to the minimum necessary for the intended purpose.
  2. Transparency in privacy policies: Requires companies and suppliers to provide clear and accessible information about their data collection, use, and disclosure practices.
  3. Rights management: Grants individuals the right to access, rectify, and delete their personal data. In addition, the right to opt out of receiving targeted advertising.
  4. Designation of a Privacy or Data Security Officer: Establishes the obligation to designate an officer responsible for data security, who must be qualified and have the experience to perform the position effectively.

APRA news.

The APRA federal bill incorporates aspects related to artificial intelligence (AI) and data. These include:

  • Restricting the volume of data used in AI development: Applies the minimization principle to limit the amount of personal data used in the training and operation of AI systems.
  • Concept of “covered algorithms”[3]: Defines “covered algorithms” as any computational process that decides or facilitates human decision-making using data. This definition covers a wide range of AI systems, from the simplest to the most complex.
  • Obligations for entities using covered algorithms: Entities using covered algorithms will have multiple obligations, among which the most important are:
  1. Design evaluation: Evaluate the design of the algorithm to identify and reduce the risk of potential damage.
  2. Impact assessment: Evaluate the impact of the possible effects of the algorithm on individuals and society.
  3. Notice and opportunity to opt out: Provide the ability to opt out of the use of a covered algorithm if it is used to make “consequential decisions” (decisions that significantly affect an individual’s access to or enjoyment of essential goods or services).

Implications for Ecuador.

The enactment of APRA would have a significant impact in Ecuador, especially in the following aspects:

  1. Transborder data flow: It will facilitate the transfer of data between the United States and countries with equivalent data protection standards, such as Ecuador. This translates into:
  • Simplification of processes: Administrative and legal burdens are reduced for companies transferring data between the two countries.
  • Cost reduction: Costs associated with data transfer, such as implementing additional security measures, are minimized.
  1. International cooperation: It will allow international cooperation on data protection between the United States and other countries, including Ecuador. This will allow Ecuadorian authorities to:
  • Safer information sharing: Collaborate on investigations and data protection cases involving U.S. companies.

In conclusion, once approved, the APRA bill will represent a significant advance towards data protection in the United States and will have clear impacts in other countries, including Ecuador, as expressed in previous paragraphs.

[1]  https://energycommerce.house.gov/posts/committee-chairs-rodgers-cantwell-unveil-historic-draft-comprehensive-data-privacy-legislation

[2]https://d1dth6e84htgma.cloudfront.net/American_Privacy_Rights_Act_of_2024_Discussion_Draft_0ec8168a66.pdf

[3]  https://www.whitecase.com/insight-alert/proposed-american-privacy-rights-act-seeks-establish-comprehensive-national-framework

 

Thalía Ordoñez
Associate at CorralRosales
tordonez@corralrosales.com

Bitter victory: Delayed justice in the patent system in Ecuador

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Delayed Justice…

The Administrative Litigation Court ruled in our favor in a patent proceeding, correcting a mistake made by the local IP Office; we achieved protection, a victory, no doubt, but a bittersweet one.

This patent application was filed on January 23, 2006, under a political regime acting against patentability.

In the first instance, and within the absurdly long period it takes for the local IP Office to resolve a patent, patent protection was denied on February 9, 2012, to which we filed an administrative appeal with a new set of claims.

Contrary to the law and ignoring jurisprudential provisions, the IP Office considered that a new claim set could not be submitted in this instance and again denied protection using the same previous arguments, taking almost seven additional years.

We appealed judicially, trusting that the existing illegalities would be sufficient to correct the error and grant protection. This happened because we were fortunate enough to have competent Judges in the Court.

Unfortunately, the favorable ruling was issued when only three days of protection remained for the invention sought to be patented.

The question then arises: Is the justice obtained fair? Obviously not.

The need to press for the application of the accelerated patent system is now becoming imperative. Without patents, there is no development or investment. Once and for all, it is necessary to adopt the solutions already in the Law or compensate with additional protection time patents that, as in this case, have obtained protection three days before their expiration due to the absolute irresponsibility of the State. State that has also charged annuities for a non-existent right and the highest fees in Latin America for examination.

I consider this ruling a professional achievement. Reversing patent decisions in courts is not easy, but it is a failure of our country’s patent system. If we do not take these types of facts seriously and seek a correction that solves these problems at the root, we will continue, at best, obtaining unfair justice.

 

Eduardo Ríos
Partner at CorralRosales
eduardo@corralrosales.com

Amendments to the Public Procurement Law Regulations

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Through Executive Decree 333 of July 12, 2024, published in the Third Supplement of the Official Registry 600 on July 15, 2024, the Public Procurement Law Regulations (the “Regulations“) were amended.

The key amendments are summarized below:

  1. The contracting of Ecuador’s tourism promotion is included as a special regime. Under this regime, the following may be contracted: (i) supply and demand studies; (ii) advertising; (iii) organization, logistics, and assistance for events and fairs; (iv) creation of tourism promotion campaigns; and (v) promotion and positioning of the country brand (Marca País).
  2. A legal entity with its main office in the canton, province, or region where the contract will be executed is considered a local supplier.
  3. If the contractor is an obligated subject before the Financial and Economic Analysis Unit (UAFE), it must hold a Certificate of Compliance from the UAFE during the contractual execution phase.
  4. The study of technological disaggregation in works applies only when the reference budget is equal to or exceeds the amount resulting from multiplying the coefficient 0.00003 by the State’s initial budget for the corresponding fiscal year. For 2024, such amount is US$998,904.59.
  5. Public entities may acquire domestic and international airline tickets under any of the following mechanisms:
  6. Direct purchase from airlines.
  7. Direct purchase from airlines using business or corporate plans.
  8. Direct purchase through online ticket platforms.

Through travel agencies, if deemed appropriate for technical and operational reasons.

 

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

© CORRALROSALES 2024
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

Circular Economy

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The circular economy system seeks to keep materials in supply chains for as long as possible, in order to minimize product waste, promote sustainable use of natural resources, revalue waste and regenerate nature.

The circular economy emerges to replace the linear economy (take-make-waste), which is a production model that extracts virgin raw materials to manufacture products that eventually end up as waste.

Since 2021, Ecuador has enacted the Inclusive Circular Economy Law. This legislation establishes mechanisms for transitioning from a linear economy to an inclusive circular economy. It recognizes waste as a potential economic resource and aims to economically integrate waste pickers.

The transition to a circular economy is led by the Secretariats of Production and Environment through the National Inclusive Circular Economy System.

Extended producer responsibility

Extended Producer Responsibility (EPR) is a policy requiring producers or importers to manage a product throughout its entire life cycle, including the post-consumer stage. The Inclusive Circular Economy Law mandates the implementation of EPR schemes for designated priority products.

The collection, classification and recycling processes of EPR contribute significantly to material circularity, making it a pivotal tool that serves as a cornerstone of the circular economy.

In Ecuador, this policy has been implemented for over 10 years for specific products such as tires, batteries, electronic waste, medication waste, among others. The National Inclusive Circular Economy System must determine the priority products for the extended producer responsibility scheme.

 

Verónica Manrique, Junior Associate Lawyer at CorralRosales
veronica@corralrosales.com
+593 2 2544144

Felipe-Samaniego-abogados-ecuador

Felipe Samaniego, Partner at CorralRosales
felipe@corralrosales.com
+593 2 2544144

© CORRALROSALES 2024
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

Income Tax for Sports Betting Operators

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The Executive Decree 313 issued June 27, 2024, by the President of the Republic of Ecuador regulates the Unique Income Tax for Sports Betting Operators. Below are the key points summarized:

  1. Assessment and payment of the tax: Taxpayers parties must declare and pay the tax monthly. Sports operators with tax residence in Ecuador must file an annual tax form consolidating the amounts declared monthly.
  2. Taxable Base: It is equal to the total income generated, including commissions, minus total paid prizes, provided that 15% tax was withheld from these prizes at the time of payment.
  3. Tax Rate: A flat rate of 15% applies to the taxable base.
  4. Withholding: Prizes paid by resident and non-resident operators are subject to a 15% withholding. The prize is the amount the player is entitled to when their prediction is correct, excluding the accrued forecast, i.e., the amount wagered by the player.
  5. Receipts: Resident or non-resident operators must issue sales receipts. One sales receipt per player per sporting event may be issued. Regarding withholding, one withholding receipt may be issued for all prizes awarded to the same player during the month.
  6. Implementation Period: Operators have 6 months to adjust their systems and implement the necessary mechanisms to comply with the applicable formal obligations.
  7. Non-resident Operators: Non-resident operators must obtain their Unique Taxpayer Registry (RUC). Obtaining a tax ID in Ecuador does not imply that operators have a permanent establishment in the country. However, the Ecuadorian representative must retain supporting information for 7 years.

 

Andrea-Moya-abogados-ecuador

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

© CORRALROSALES 2024
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