Contribution for financing the comprehensive treatment of cancer

cancer-financing-comprehensive-treatment-tax

Regulation NAC-DGERCGC20-000000019 issued by the Internal Revenue Service and published on April 3, 2020 in Official Registry 479, established the rules for applying the contribution for financing the comprehensive treatment of cancer.

General provision fourteen of section I of the Monetary and Financial Code establishes that individuals or entities that receive credits from the private financial sector will pay a contribution equal to 0.5% of the amount of the credit.

The contribution tariff may be reduced to 0.01% by executive decree in cases duly justified by economic or social reasons.

The regulation establishes the following parameters for the applying the contribution:

1. Withholding agents

The withholding agents of the contribution are:

  • Credit cooperatives under the control of the Superintendency of Popular and Solidarity Economy; and,
  • Entities of the private financial sector under the control of the Superintendency of Banks.

These entities shall withhold the total amount of the contribution from individuals and entities who have been granted credits, portfolio purchase, discounts on bills of exchange, repo operations, renewal of loans, including deferred payments on credit cards and overdrafts.

2. Declaration and payment

Withholding agents must file the contribution return on a daily basis, using the “Form for Declaring the Contribution for Financing the Comprehensive Treatment of Cancer”. This return may be filed up to 48 hours after the date on which the withholding is made.

In the case of overdrafts, the contribution shall be calculated and paid by the withholding agent, once the operation is settled.

In the event that the declaration and/or payment of the contribution is not made within the 48 hours, the withholding will be subject to pay fines and interest.

In the case of credits granted from January 1 until April 3, 2020 by credit cooperatives controlled by the Superintendency of Popular and Solidarity Economy, they may declare and pay the value of the withholding through the form described above within 45 working days since April 3, 2020.

 

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CORRALROSALES

Extension of deadlines for tax matters

deadlines-extension-tax-matters

In accordance with the state of emergency declared by the President, the following tax authorities, in the exercise of their powers, have suspended the following deadlines and terms:

  1. Regulation NAC-DGERCGC20-00000022 issued by the Internal Revenue Service establishes that terms and deadlines in all administrative processes and the statute of limitations for collecting debts are suspended from March 16 to March 31, 2020. The suspension was extended until April 30, 2020 by regulation NAC-DGERCGC20-00000028.
  2. Regulation SENAE-SENAE-2020-0016-RE issued by the Customs Authority establishes that terms and deadlines in all administrative processes and the statute of limitations for collecting debts are suspended from March 17 to March 31, 2020. The suspension was extended until April 30, 2020 by regulation SENAE-SENAE-2020-0022-RE.
  3. Regulation GADDMQ-DMT-2020-001-R issued by Quito Municipal Authority establishes that terms and deadlines in all administrative processes and the statute of limitations for collecting debts are suspended from March 16 to March 20, 2020. The suspension was extended until March 31, 2020 by regulation GADDMQ-DMT-2020-002-R. As soon as the municipality extends the suspension period, we will inform you through this bulletin.

 

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State of emergency – tax measures (April 1st)

state-of-emergency-tax-measures

Regulation NAC-DGERCGC20-000000025 issued by the Internal Revenue Service on April 1, 2020 regulates the application of Executive Decree 1021 by which regulated certain tax issues with regard to the state of emergency.

1. New deadline for filing the income tax return

Taxpayers, except non-profit and government entities, may file the corporate income tax return for the fiscal year 2019, without generating fines or interest, until the dates described in the following chart:

Tax ID 9th digit

Due date

1 and 2 April 15, 2020 3 and 4 April 17, 2020 5 and 6 April 21, 2020 7 April 23, 2020 8 and 9 April 29, 2020 0 April 30, 2020

Non-profit and government entities may file the corporate income tax return for the fiscal year 2019, without generating fines or interest, until the dates described in the following chart:

Tax ID 9th digit

Due date

1 and 2 May 4, 2020 3 and 4 May 5, 2020 5 and 6 May 6, 2020 7 and 8 May 7, 2020 9 and 0 May 8, 2020

2. Taxpayers that are able to defer the payment of taxes:

The following taxpayers are able to defer the payment of corporate income tax of the fiscal year 2019 and, value added tax (VAT) to be declared in April, May and June 2020:

  • Micro-enterprises understood as those that obtained gross revenues of up to US$300,000.00 during fiscal year 2019.
  • Taxpayers that, before March 27, 2020, have registered the province of Galapagos in their Tax ID (RUC).
  • Taxpayers that are regular exporters of goods, or that 50% of their income derives from the export of goods; or,
  • Taxpayers that, before March 27, 2020, have registered one of the following as their main economic activity in their Tax ID:
    • The operation of airlines,
    • The provision of accommodation and/or food services; or,
    • Activities of the agricultural sector.

 

3. Deadlines for paying the corporate income tax:

Taxpayers described in paragraph 2 are able to pay the corporate income tax of the fiscal year 2019 in a single installment, according to the general rules of the Income Tax Regime Law and its regulations, or in six installments, in accordance with the following percentages:

Month for filing
the tax return 
Payment
installments 

Payment
percentage

April, 2020 April, 2020 10% April, 2020 May, 2020 10% April, 2020 June, 2020 20% April, 2020 July, 2020 20% April, 2020 August, 2020 20% April, 2020 September, 2020 20%

The first installment shall be paid on the date the return is due in accordance with the schedule set forth in paragraph 1. The remaining 5 installments shall be made through the Multiple Payment Form in accordance with the following schedule:

Tax ID 9th digit:

Due date:

1 10th of each month 2 12th of each month 3 14th of each month 4 16th of each month 5 18th of each month 6 20th of each month 7 22th of each month 8 24th of each month 9 26th of each month 0 28th of each month

If the taxpayer doesn’t pay the tax within the deadlines described before, it would be subject to pay the applicable interests and fines.

 

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Measures to mitigate the effects of COVID-19 on labor issues

measures-effects-covid-19-labor-issues-marta-villagomez

The arrival of COVID-19, cataloged as a global pandemic, and the measures that Governments have adopted to mitigate its effects, have brought a deep economic crisis that affects directly both employers and workers.

According to ILO’s (International Labor Organization) official data, it is estimated that COVID-19 could cause the loss of 25 million jobs worldwide.

In Ecuador, the President of the Republic declared a state of emergency and suspended on-site labor activities from March 17th to April 12th. This period may be extended according to the development of the pandemic.

Those entities that perform activities within health, safety, airports, financial, food, pharmacies and exporting sectors and its supply chain are authorized by the Government to operate.

Entities belonging to other sectors are able to operate if services they provide and the activities carried out by their workers can be performed from home through “emergency telework”, as the authority has called it.

Some emergency measures have been established with the purpose of protecting employment and guaranteeing the health of workers, but also with the objective of preserving the financial stability of the employer. These measures are described below:

1. Suspension of work maintaining payment rights

For those entities that are required to suspend all or part of their activities as a consequence of the Government’s measures, the following should be considered:

  • Employer must pay its workers during the period on which activities are suspended.
  • Employer and its workers may agree on a payment schedule of the salaries accrued during the period on which activities are suspended.
  • Employer has the right to recover the period on which activities were suspended, increasing the working schedule up to 12 hours a week and 8 hours on Saturdays.
  • If worker does not fulfill with recovery time, employer may deduct from any future salary payments what employee had received during the suspension period.

In order to introduce suspension of work, employer must fulfill the online process implemented by the Ministry of Labor.

2. Reduction of working hours (work schedule)

Employers may reduce the working hours temporarily or permanently and reduce proportionally worker´s remuneration – including teleworkers – under the following scenarios:

  • With worker’s consent

According to article 82 of the Labor Code, it is possible to agree with worker to permanently or temporarily reduce their working hours and their remuneration proportionally. For its implementation, it will be necessary to enter into an addendum to the employment agreement and file such addendum with the Ministry of Labor and the Ecuadorian Institute of Social Security (“IESS”).

  • Without worker’s consent

According to article 47.1. of the Labor Code and Accord MDT-2020-077 issued by the Ministry of Labor, the latter may authorize the reduction of working hours. Such reduction will be mandatory for workers, under the following conditions:

  1. Working hours may not be reduced to less than 30 hours per week.
  2. The measure can be applied for up to 6 months, renewable for an additional 6 months.
  3. Employer contribution to IESS must be paid based on the full remuneration corresponding to 8 hours of work per day.
  4. In the event that during the reduction of the working hours the labor relationship is terminated without cause, severance shall be calculated based on the last monthly remuneration received by worker before the working hours reduction.
  5. If the company generates profits in the fiscal year in which the measure was applied, it will not be entitled to distributing dividends without first paying workers the balance they stopped receiving as a result of the reduction in working hours.

In order to introduce suspension of work, employer must fulfill the online process implemented by the Ministry of Labor.

3. Emergency vacation planning

During the health emergency, employer may require its workers to take any pending paid vacation time. Employer may also agree with its workers for them to take advance vacation time.

4. Work leave with or without payment

Additionally, employers may resort to the following alternatives in order to maintain employment and at the same time preserve the financial status of the company: 

  • Leave without payment

With worker’s consent, a “leave without payment” may be agreed. In order to apply such leave, an agreement must be entered between the parties. Under this alternative, the employment relationship does not end, worker holds his/her seniority in the company.

An exit notice for “leave without payment” must be registered in IESS online system. Therefore,  worker will not be covered by Social Security during the leave period.

  •  Leave with partial payment

With worker’s consent, a “leave with partial payment” may be agreed. In order to apply such leave, an agreement must be entered between the parties. Under this alternative, employer recognizes the worker a percentage of his/her remuneration during the leave period.

Contribution to the IESS will be made on the amount actually paid to the worker, but it may not be less than 50% of the statutory minimum wage (currently US$400.00).

5. Modification of working conditions

Employer and workers may agree on work alternatives established in the existing regulations, due to conditions arising from the COVID-19 pandemic, such as mobility restrictions, preventing infection risks and employer’s financial situation. All these must not imply a waiver to workers’ rights. For example, parties could modify the type of agreement or take health and safety measures such as workers’ remaining in suitable places inside the employer’s facilities, among many others.

6. Termination of the employment relationship

If it is not possible for employer to maintain its workers or part of them, company will be able to unilaterally terminate the employment contracts by paying the corresponding severance determined by law. Government has not established the intangibility of employment contracts due to the pandemic, except for those specific cases already provided by law.

Some lawyers have expressed their opinion that labor contracts may be unilaterally terminated without severance payments under these circumstances due to force majeure (restrictions imposed by the government). We do not agree with these criteria, due to the social nature of labor law, pro operario principle, and consequently, the possible risks employer would assume now and in the future.

Finally, it shall also be considered that workers who lose their jobs due to causes beyond their control and who meet the conditions established by  IESS – 24 accumulated monthly contributions and at least 6 continuous contributions immediately prior to termination – will be able to access “unemployment insurance” for a maximum period of 5 months, once 60 days have elapsed without employment.

 

Marta Villagómez
Senior Associate at CorralRosales
mvillagomez@corralrosales.co

Reforms to Ministry of Labor guidelines on the application of reduction, modification or emergency suspension of work activities

work-activities-reduction-modification-suspension-Covid-19-labor

On March 28, the Ministry of Labor amended the Ministerial Agreement MDT-2020-077, regarding guidelines on the application of reduction, modification or emergency suspension of work activities during the sanitary emergency.

Working-day schedule modification

Employer that modifies working schedule due to the sanitary emergency, must allow their workers to rest for 2 consecutive days.

Suspension of work activities 

  • Employer is entitled to recover the period on which activities were suspended, increasing the working schedule up to 12 hours during the week and 8 hours on Saturdays.
  • Employer and workers may agree on a wage payment schedule during the period on which activities are suspended.

Emergency vacation planning

During the health emergency, employer may require its workers to take any vacations days they have available. Employer may also agree with their workers to take early vacations, to do so, the corresponding vacation request must be submitted.

Working conditions modifications 

Employer and workers may agree on work alternatives established in the existing regulations, due to conditions arising from the Covid-19 pandemic, such as the mobilization impossibility, prevention infection risks and employer´s financial status. All these must not imply a waiver to workers’ rights.

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CORRALROSALES

State of emergency – tax measures

state-of-emergency-tax-measures

By Executive Decree 1021 issued on March 27, 2020, the President of Ecuador, adopted the following tax measures within the state of emergency:

1. Income tax withholding:

The following entities will be required to withhold and pay on a monthly basis income tax over their total taxable income obtained in each month:

Entity activity 

Monthly income tax withholding rate (%)

Financial institutions under the supervision of the Superintendency of Banks and entities that provide mobile telephone services. 1,75% Entities that have entered into contracts with the Goverment for the exploration and exploitation of hydrocarbons under any modality or, contracts for specific works and services under the Hydrocarbons Law or, complementary petroleum services as well as transportation of crude oil. 1,5%

The withholding tax receipt must be issued in the name of the withholding agent and the value withheld will be consider as tax credit for paying the withholding agent’s income tax.

2. Tax payment deadlines:

For this time only, the taxpayers who at this date are considered as:

  • Micro-enterprises;
  • Those domiciled in Galapagos Islands;
  • Those who are regular exporters of goods, or that 50% of their income derived from the export of goods; or,
  • Those whose economic activity is:
    1. The operation of airlines,
    2. The tourism sector, exclusively those that provide accommodation and/or food services; or,
    3. The agricultural sector.

Will be able to pay the corporate income tax for the fiscal year 2019 and the value added tax (VAT) to be paid in April, May and June 2020 as follows:

  1. Payments will be made in 6 installments during the year 2020 in the following percentages: in each of the first two months, the taxpayers are required to pay 10% of the total value; and, in each of the remaining four months, taxpayers are required to pay 20% of the total value.
  2. These payments will be made according to the ninth digit of Tax ID as follows:
Ninth Digit of Tax ID 

Payment Date

1 10th of each month 2 12th of each month 3 14th of each month 4 16th of each month 5 18th of each month 6 20th of each month 7 22nd of each month 8 24th of each month 9 26th of each month 0 28th of each month

Taxpayers domiciled in the province of Galapagos are able to make the payment until the 28th of each month..

If a payment deadline overlaps with a mandatory rest day or holiday, the deadline shall be the next working day unless that day falls on the following month, in which case the payment deadline shall be anticipated to the last working day of the month.

If the taxpayer makes the payment after the deadlines have expired, he must pay the respective interest and fines in addition to the tax

  1. The payment of 2019 corporate income tax for the entities described above, will be made from April to September 2020 in the percentages and terms indicated in numbers 1 and 2 of this document.
  2. The payment of VAT for the months of April, May and June 2020 will be made in the percentages and terms described above, in the following months:
VAT to be paid in the month of

Months of Payment:

April 2020 From April to September, 2020 May 2020 From May to October, 2020 June 2020 From June to November, 2020
  1. Taxpayers subject to the Micro-enterprise Taxation Regime shall file their VAT return on a semi-annual basis. These taxpayers will not be subject to the exception regime detailed above.

 

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National Assembly requires the Executive Branch to establish mandatory licenses and access to testing data and technology to fight COVID-19

licenses-testing-data-intellectual-property

Through Resolution dated March 20, 2019, the Education, Science and Technology Commission of the National Assembly (Legislative Branch) in charge of Intellectual Property matters, requested that the Executive Branch include in the emergency declaration the adoption of administrative and technical mechanisms for the establishment of “compulsory patent licenses, access to testing data and access to other technologies for the availability of vaccines, drugs, diagnoses, devices, supplies, and other useful means for surveillance, prevention, detection, diagnosis and treatment of people infected by Coronavirus (COVID-19).”

For the local IP office to have a compulsory emergency license, it will first be necessary to issue the corresponding executive decree (Presidency) or ministerial agreement (Ministry of Health) detailing the reasons for the emergency. The validity of the compulsory license will be maintained only while the grounds for the emergency declaration last.

The exploitation of the patent may be carried out directly by the state or a state contractor and it will not be the duty of the IP office to notify the holder of the patent with the compulsory license immediately upon its adoption, since the law establishes that the same will be done “when reasonably possible”.

The owner of the patent on which the compulsory license was ordered will receive financial compensation and may continue to exploit it directly.

The Executive Branch has not ruled on this request so far.

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Income tax withholding rates

Regulation NAC-DGERCGC20-00000020 issued by the Internal Revenue Service and published on March 20, 2020 in the Official Registry Special Edition 459 established new rules to the income tax withholding regime:

  1. The following income tax withholding rate was modified:
Concept 

Previous
rate

New
rate Acquisition of all types of movable property of a tangible nature 1%  1,75% Payments that do not have a specific withholding rate 2% 2,75%
  1. It was clarified that the acquisition of goods of agricultural, poultry, livestock, beekeeping, bio aquatic, forest and meat origin, which are maintained in their natural condition, will be subject to 1% withholding regardless of whether an invoice or settlement for the purchase of goods or provision of services is issued.
  2. Additionally, it is clarified that this withholding rate (1%) applies to income from local production and marketing of agricultural activities, even if the taxpayer generating the income is subject to a special income tax regimen.

The new withholding rates are applicable beginning April 1st.

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ASIPI – Interview with María Cecilia Romoleroux

ASIPI-Maria-Cecilia-Romoleroux-Intellectual-Property

DETAILS

DATE: 14-03-2020

CORRALROSALES IN THE NEWS: 

-María Cecilia Romoleroux

María Cecilia Rpmoleroux, Co-chair Host Committee, Quito

  1. The XXII ASIPI Workshops and Board of Directors will be held in November 2020. Its organization is always an interesting job for the Organizing Committee that you Co-Chair. Tell us how the work has been divided.

Paul and I have made a very good team, and the truth is that we have not divided the work; instead we are cooperating in all fields. The support of ASIPI’s young associates has been very valuable.

  1. What has been the most difficult in the organization of the Conference?

Agreeing with so many people is always complicated, but we have already achieved an agreement on everything. Quito is an easy city to show, since there is so much to see. The “Law Offices” event may always be the one that needs the most agreements, but the collaboration of Johana Aguirre and her team in this event has been invaluable.

  1. What does Quito have that differentiates it from other host cities?

Quito is a Cultural Heritage of Humanity with the best-preserved historical center in the region, making it a city that already offers a lot by itself. Now if you add to this the enthusiasm we have to show Quito during ASIPI, just try to picture the difference.

  1. Why should ASIPI members attend?

ASIPI is the most important Intellectual Property conference in the region, and if you add to this the fact of being able to know Quito, the first cultural heritage of America! And also to go to the Galapagos Islands, the result is an event that you cannot miss.

  1. We know that you are the first Ecuadorian to sit on the INTA board of directors, as well as the first Ecuadorian to be part of the Programming Committee of the International Association for the Protection of Intellectual Property (AIPPI). How did you achieve that honor? If a young associate asks you for advice on pursuing a similar career, what would you say?

I have indeed had the pleasure of having several positions of relevance, being one of my favorites Co-Chairing the “Quito 2020” Host Committee. My advice would be that these positions are only achieved by showing work and dedication to your own ideals and to each association. There are many “bumps” along the way but the key to success is to keep on going ignoring them, since they are only “bumps”.

If you want to read the full interview in Spanish (on page 14), click here

Ecuador: New measures against Covid-19

covid-19-labor.jpg

Since March 17, new limitations apply to mobility and the development of economic activities.

I. Measures enforced throughout the country

The President of Ecuador, through Executive Decree 1017, declared a state of emergency throughout Ecuador, further declaring the Covid-19 (coronavirus) as a pandemic and issued additional control measures.

  1. Freedom of movement and mobility of people in the country have been limited and in-person work activities on public and private sector were suspended from March 17 to 24.
  2. Exceptionally, the mobility of people will be allowed in the following cases:
    • Workers and employees of entities that provide basic services relating to health, security, fire, airports, terminals (maritime, river), banking, food supply; the export sector and its logistics chain, strategic sector, those related to animal care and breeding, consular services accredited in the country.
    • Members of the National Police and Armed Forces.
    • Medical, health or relief personnel
    • Public and private transportation of entities authorized to operate.
    • People who must commute for emergency reasons.
    • People who need to stock up on food, medicine or fuel.
  3. Curfew has been established prohibiting any circulation of vehicles and people from 9:00p.m. to 5:00 a.m. each day, except for the cases listed in a. to f. of Paragraph 2.
  4. From midnight on Tuesday 17 to April 5, domestic air operations are suspended. Exclusive air cargo operations, domestic and international, are permitted and operational.
  5. Since Wednesday, March 18 vehicle circulation is restricted for people who commute to stock up on food, medicine or fuel. Circulation is limited to:
Day

License plate ending on:

Monday, Wednesday, Friday, and Sunday 1 – 3 – 5 – 7 – 9 Tuesday, Thursday and Saturday 0 – 2 – 4 – 6 – 8

II. Measures enforced in the Metropolitan District of Quito

The Mayor of M.D. of Quito announced additional control measures applicable exclusively in M.D. of Quito from 5:00 am of March 17 until March 31:

  1. Suspension of the use of public spaces including sidewalks, streets, parks, pedestrian bridges, passages, among others. Only the mobility of the persons listed in Section I.2 above is allowed with certain additions.
  2. Suspension of business activity licenses. Licenses for food and medicine sales activities are exempted.
  3. Full restriction for private vehicles´ circulation and buses (motorcycles, bicycles, trolleybus, Ecovía, Metrovía systems). Motorcycles that transport food and medicines with a maximum of one passenger are allowed to circulate.
  4. Taxis can circulate to transport authorized persons, with limitation established by the Mayor.
  5. Closure of land terminals and airports, except for cargo operations.
  6. Circulation of children, senior citizens or people with disabilities is not allowed.

III. Public sector operation and the judicial function

  1. The suspension of in-person work activities includes the public sector, which will limit its activity to what can be carried out by teleworking. This means that the majority of processes are suspended.
  2. Several public entities such as the Internal Revenue Service, the National Customs Service of Ecuador, the Superintendence of Companies, the Superintendence of Control of Market Power, Ministry of Labor have expressly suspended the terms within pending administrative proceedings.
  3. The Judicial Branch suspended activities while the state of emergency established by the President of the Republic lasts. Likewise, judicial processes dates and terms are suspended.

 

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