SOPORTE PUBLITEK – Page 14

Rules for applying income tax paid abroad as tax credit

21 June, 202221 June, 2022

As of fiscal year 2022, any taxes paid abroad by individuals or corporations with tax residence in Ecuador over income obtained abroad may be used as a tax credit for the payment of income tax incurred in Ecuador. Previously this income was considered exempt. Through Regulation NAC-DGERCGC22-00000026 the Internal Revenue Service issued the rules and limits for the application of this amendment.

Requirements

Taxpayers with tax residence in Ecuador who receive income abroad, which is taxable in Ecuador, may use the tax paid abroad as tax credit for the payment of income tax in Ecuador, in accordance with the following:

The tax to be considered as tax credit will be the tax effectively paid or withheld abroad, provided that it may not be used as tax credit or reimbursed abroad.
The tax credit may only be used when the tax paid abroad is income tax or any equivalent direct taxes.
If the tax paid abroad has been paid in a currency other than US dollars, the value must be converted to US dollars according to the exchange rate reported by the Central Bank of Ecuador.
The recognition and quantification of the income obtained abroad will correspond to the gross value, i.e., the value of the income before subtracting the tax paid abroad.
If the foreign income is not taxed in Ecuador or is considered exempted, the tax paid abroad cannot be used as tax credit.
The necessary evidence must be available to prove the payment of the tax abroad, for example, a certificate issued by the competent tax authority, duly legalized and translated into Spanish.

The part of the tax paid abroad that exceeds the limit to be used as tax credit is not subject to refund, compensation or any other form of recovery and cannot be used in another tax period.

Limits

The value to be used as tax credit for the payment of income tax shall be limited to the lower between:

The tax effectively paid abroad; and,
The value obtained by multiplying the effective income tax rate applicable to the taxpayer for that period, by the difference of the income obtained abroad minus the total expenses attributable to such income.

The effective rate is equal to the percentage obtained by dividing the total income tax incurred by the total taxable income.

Double tax treaties

If the rules of a double tax treaty apply, the following must be taken into consideration:

If the mechanism to avoid double taxation in the treaty is not the ordinary imputation method, the provisions of the regulation do not apply.
If the mechanism to avoid double taxation in the treaty is the ordinary imputation method, the provisions of the regulation apply.
If the mechanism for avoiding double taxation in the treaty is the ordinary imputation method with specific rules, the specific rules shall be applied first and then the rules of the regulation, insofar as it does not contradict the treaty.

Specialist in Tax
Andrea Moya, partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144

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CORRALROSALES

The Organic Law of Personal Data Protection – Teleamazonas

15 June, 202219 May, 2023

DETAILS

DATE: 15-06-2022

PROFESSIONALS IN THE NEWS:

-Rafael Serrano

MEDIA:

– Teleamazonas

Ecuador celebrates the first year of the entry into force of the Organic Law on Personal Data Protection. For this reason, the media Teleamazonas has asked our senior associate Rafael Serrano about its regulations.

According to Serrano, also vice-president of the Ecuadorian Data Protection Association (AEPD), “the Data Protection Law was published on May 26, 2021, and came into force at that time, only leaving two years for the sanctioning regime to come into force. Two years of latency, we could say. During this period, the aim was for both the private and public sectors to develop their capacities to adapt to the Law, since this implies a process of cultural changes”.

Our associate also adds that “the Law is created and a new entity is created, which is the Superintendence of Data Protection. The Council of Citizen Participation has approved the regulations of the contest for the appointment of the Superintendent of Personal Data. Additionally, the overseers for the above mentioned contest have already been appointed. The executive must send the corresponding list of three candidates to appoint the authority”.

The news item explains the lack of adaptation by the public and private sectors to the Data Protection Law. This will be a problem since the application of the sanctioning regime will begin in one year and both the public and private sectors will require several actions to be in compliance.

“This is a regulation to both the private sector and the public sector, which will also have to adapt and begin to prepare for the provisions of the Law. The lack of an authority means that there is a lot of uncertainty about what is going to happen,” confirms Serrano.

If you want to see the full video, click here.

Extension for the submission of financial statements

31 May, 202231 May, 2022

By Resolution No. SCVS-INPAI-2022-00004075 dated May 27, 2022, the Superintendent of Companies, Securities, and Insurance resolved to extend the deadline for filing financial statements and reports for fiscal year 2021 of companies subject to its control and established a schedule for filing thereof based on the ninth digit of the company’s taxpayer number (RUC), as follows:

Those companies whose ninth digit of the taxpayer number is 1, 2 and 3, must submit the information between June 1 and June 10, 2022
Those companies whose ninth digit of the taxpayer number is 4, 5, 6 and 7, must submit the information between June 11 and June 20, 2022
Those companies whose ninth digit of the taxpayer number is 8, 9 and 0, must submit the information between June 21 and June 30, 2022

Specialist in Corporate
Milton Carrera, senior associate at CorralRosales
mcarrera@corralrosales.com
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not liable for any loss or damage incurred as a result of acting or failing to act on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

VAT refund to exporters´ suppliers

25 May, 202225 May, 2022

Regulation NAC-DGERCGC22-00000020 issued on May 11, 2022, by the Internal Revenue Service establishes the procedure for VAT refunds for: (i) direct suppliers of exporters of goods (Direct Suppliers), and (ii) direct suppliers of companies that are owned by exporters and part of the same productive chain up to the export of goods (Indirect Suppliers).

Right to refund: Direct and Indirect Suppliers may request a refund of VAT paid on the importation or local acquisition of goods, raw materials, services, and fixed assets, used in the manufacture and commercialization of goods taxed with 0% VAT rate, that are transferred to the exporter for export.

Periodicity: VAT refund applications shall be filed on a monthly basis. When the production processes are cyclical (greater than one month), the applications shall be submitted when the transfer to the exporter and the export is made.

Mechanisms: The return mechanisms are as follows:

For VAT paid by Direct Suppliers, two mechanisms apply:
Automatic provisional refund; and,
Exceptional refund.
For VAT paid by Indirect Suppliers, only the exceptional refund mechanism is provided for.

Automatic provisional refund: This mechanism allows Direct Suppliers to obtain an automatic provisional VAT refund before the resolution of the refund request is issued.

The request begins with the filing of the application through the Internal Revenue Service (SRI) system and, if accepted, the taxpayer must submit the requirements detailed below physically as an annex to the process. Once the annex is submitted, the SRI will issue a credit note for the provisional refund percentage.

The provisional refund percentage may vary from 50% to 100% of the amount requested and validated through the IRS system, depending on the tax risk indicators of each taxpayer.

If the amounts provisionally refunded are higher than those recognized in the final resolution, the tax administration will require the reimbursement of the amount refunded in excess. If these amounts are not refunded within the term, the tax administration will initiate a coercive process.

Exceptional return: This mechanism allows the definitive reimbursement of VAT without the issuance of a provisional liquidation.

Requirements: Before filing the VAT refund application, by either of the two mechanisms, the Direct or Indirect Supplier must comply with the following requirements:

To be registered in the Taxpayers Registry (RUC) with active status.
The right to the VAT reimbursements for the requested period must not be expired,
Have completed the “pre-validation” process in the SRI system.
Be registered in the VAT refund system for the automatic provisional refund mechanism.
To have declared the VAT corresponding to the periods for which the refund will be requested.
To have filed the simplified transactional annex, in the applicable cases.
In the case of the automatic provisional refund, the “Agreement on provisional settlement of automatic refund” must have been signed online.

Once the return process has been initiated, the following requirements must be met:

List of the sales receipts and/or import customs declarations that support the production costs and marketing expenses that support the tax credit for the VAT paid.
Sales receipts of local acquisitions of fixed assets.
Sales receipts rejected by the pre-validation system.
List of sales receipts of goods transferred to the exporter.
In the case of Direct Suppliers, a list detailing the customs export forms.
In the case of Indirect Suppliers, a certification issued and signed by the exporter detailing that the export has been executed.
If the taxpayer maintains accounting systems that allow the tax credit to be unequivocally differentiated, the accounting ledger of the tax credit account generated by the acquisitions made exclusively for the transfer of goods to the exporter, as well as the accounting ledgers of the accounts in which the sales are registered.
Certificate issued by the exporter establishing the ownership of the company to which the Indirect Supplier makes its sales.

Specialist in Tax
Andrea Moya, partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not liable for any loss or damage incurred as a result of acting or failing to act on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

New deadlines for filing tax returns regarding assets

18 May, 202218 May, 2022

By Regulation NAC-DGERCGC22-00000019 issued on May 6, 2022, the Internal Revenue Service extended the deadlines for filing: (i) the equity tax return applicable to individuals, and (ii) the assets and liabilities annex applicable to entities, for the year 2022 according to the following schedule:

Ninth digit of the tax number (RUC) or ID Deadline for submission 1 December 10 2 December 12 3 December 14 4 December 16 5 December 18 6 December 20 7 December 22 8 December 24 9 December 26 0 December 28

For individuals who have a passport and do not have an ID, the deadline for filing will be the one applicable to individuals whose ninth digit of their ID is 0.

The taxpayers who are subject to the Temporary Tax Regime for Regularization of Asset Located Abroad, can file the equity tax return or the assets and liabilities annex regarding 2022 and any substitute returns to which they are obliged due to the application of the regime until December 31, 2022.

Specialist in Tax
Andrea Moya, partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not liable for any loss or damage incurred as a result of acting or failing to act on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

New deadlines for withdrawing medicines from the market and applying new ceiling prices

9 May, 202218 May, 2022

Through Resolution No. STFP-04-714-2022, published on May 3, 2022, the Board of Medicines Prices Regulatory Authority provided:

Until November 17, 2022, the medicines whose secondary packaging are marked with selling prices according to Appendix B of Resolution No. 10-2015 issued on August 19, 2015 (hereinafter, “Appendix B”), which was repealed by Resolution No. STFP-07-706-2021 published on November 22, 2021, shall be withdrawn from the market.
By November 18, 2022, the medicines affected by the repeal of Appendix B must be sold at the new ceiling prices.

Specialist in Corporate Law
Mario Fernández, senior associate at CorralRosales
mfernandez@corralrosales.com
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a consequence of acting or not acting on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

Extension for the submission of financial statements

28 April, 20229 May, 2022

By Decision No. SCVS-INPAI-2022-00003228 dated on April 22, 2022, the Superintendent of Companies, Securities and Insurance resolved to extend the deadline for the submission of financial statements and corresponding reports for fiscal year 2021 to May 31, 2022.

Specialist in Corporate Law
Milton Carrera, senior associate at CorralRosales
mcarrera@corralrosales.com
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a consequence of acting or not acting on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

Job security for alternate union leaders

28 April, 202228 April, 2022

In Resolution 02-2022 -published in Official Gazette 40 on April 11, 2022- the National Court of Justice invoked the principles of equality, freedom of association/trade union freedom, and progressive development of rights, issuing a mandatory jurisprudential precedent:

“The alternate leaders of workers’ associations have the same guarantees as the [workers’ associations’] official leaders, in accordance with Article 187 of the Labor Code” (emphasis added).

This means that alternate union leaders enjoy job security that prevents them from being fired by their employers. In the event that they were to be fired, such matter would be considered ineffective dismissal, with the consequences that this entails. Specifically, the employer in question would be obliged to reinstate the individual to their job and pay them any unpaid wages plus a 10% surcharge; or alternatively, pay additional compensation equivalent to 12 months of remuneration to effectively terminate the employment relationship.

Specialist in Labor Law
Edmundo Ramos, partner at CorralRosales
eramos@corralrosales.com
+593 2 2544144

Specialist in Labor Law
Marta Villagómez, associate at CorralRosales
mvillagomez@corralrosales.com
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a consequence of acting or not acting on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

Payment facilities for the tourism sector due to COVID-19

28 April, 202228 April, 2022

Trough Resolution C.D. 645 -published in the Official Gazette of April 13, 2022- the Board of Directors of the Ecuadorian Social Security Institute (hereinafter, “IESS” or “Social Authority”) issued the “Regulation of Payment Facilities for the Tourism Sector, in application of the Organic Law for Economic Development and Fiscal Sustainability after the COVID-19 Pandemic” (hereinafter, the “Regulation“).

Scope of application

Employers registered in the National Tourism Registry shall be eligible for the benefits contemplated in the Regulation.

Payment facilities

Employers that comply with the requirements and have not paid the obligations hold with the Social Authority during the period between January 2020 and December 2021, may submit to the Social Authority a request to pay the outstanding obligations within a term of up to 48 months.

IESS will eliminated interest, fines and surcharges that were generated during the aforementioned period, provided that the employer complies on time with the payment of the installments. In case of non-compliance, interest, fines and surcharges will be paid in accordance with applicable regulations.

The debtor may request early payment of the debt to the Portfolio Management Units of the Social Authority.

Payment default

Breach on the payment agreement will be reflected on the certificate of compliance of the Social Authority.

Documents that must be attached to the request

Inscription in the National Registry of Tourism.
The updated Single Annual License of Operation, granted by the Municipality in which the tourist establishment operates.
Titles of credit of the periods from January 2020 to December 2021 are unpaid.

Specialist in Labor Law
Edmundo Ramos, partner at CorralRosales
eramos@corralrosales.com
+593 2 2544144

Specialist in Labor Law
Marta Villagómez, associate at CorralRosales
mvillagomez@corralrosales.com
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a consequence of acting or not acting on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

Neuro-Rights

26 April, 20223 May, 2022

Pablo Dent y Rafael Serrano, asociados de CorralRosales, de Ecuador, y un edificio de cristal

With the development of Neuroscience in recent years, human beings can influence their own nervous system, especially the brain.[1] Neuroscience, the branch of science dedicated to the study of the nervous system, has developed a range of technology known as neurotechnology. Neurotechnology consists of all tools and processes used to understand the functioning of the brain, as well as control or repair its functions.[2] The development of this disruptive technology has opened doors to a subject that has been rather overlooked within legal spheres related to the possible effects that this technology could have on the rights of individuals.

The development of neurotechnology could pose major risks to the rights of individuals, namely privacy, free will, health, and personal data. Within this context, countries like Chile have determined the need to debate possible regulations that would limit the impact of neurotechnology, establishing ethical principles for its use and creating new rights. This constitutes the first steps toward the creation of neuro-rights, which are based on traditionally recognized rights, coupled with their impact on the neurological field.

This article aims to describe the bases and guidelines to, in the future, develop legal regulations on the subject. We begin with a theoretical explanation of the concept of neuroscience and then go on to discuss the rights involved and how they may be impacted. Reference will then be made to the new neuro-rights discussed in the literature, presenting the regulatory proposal in Chile alongside its respective criticisms. Finally, we conclude that it is necessary to regulate and create opportunities for analysis and debate on developing regulations on neurotechnology.

Neuroscience and Neurotechnology

Neuroscience studies different aspects of brain functioning and the nervous system. There are various branches of science that study neuroscience from different fields. Examples include genetics, cellular biology, anatomy, and physiology. Neurotechnology analyzes the application of various tools to study brain functioning. Such tools seek to solve physical and psychological problems that could come to affect normal brain functioning or the normal functioning of other bodily organs.

An example of neurotechnology’s application is the use of “BCI,” or Brain Computer Interface, which may help people who suffer from various types of paralysis. BCIs record brain waves, which are interpreted by a system and then a command is sent to a machine that performs the corresponding operation.[3] BCIs improve the lives of people who suffer certain types of disabilities. The use of this technology can improve memory functions or even improve the mobility of individuals with physical disabilities.[4]

Alongside the benefits, these tools also present great risks to certain individual rights. Their misuse may affect individual rights such as freedom, privacy, data protection, and proper societal development. According to Spanish neurobiologist Rafael Yuste,[5] within 10 years we will be using neurotechnology to read and record brain activity. As a result, using neurotechnology to change brain activity necessarily requires an ethical development of this technology.

Neurotechnology and Rights

As already mentioned, the development of neurotechnology could bring major benefits to human beings. However, if used incorrectly, neurotechnology could affect their rights. The rights to privacy, freedom of thought, no discrimination, and the right to protect personal data could be affected by the incorrect use of neurotechnology.

The creation of devices and tools arising from neurotechnology could lead to the creation of new rights. Ieca and Adorno have presented four new rights applicable to neuroscience: mental privacy, cognitive liberty, mental integrity, and the right to psychological continuity.[6]

Mental privacy is defined[7] as the right to protect what we think and feel. Humans’ most private and intimate possessions are those that reside in theire brains. Science, applying technological tools, will soon come to know what people think and feel, and eventually, be able to analyze and modify these thoughts and feelings.

Cognitive liberty goes hand in hand with mental self-determination. This right is comprised of two elements, (i) an individual’s right to freely use new technologies and (ii) the protection of individuals against the mandatory use of said technologies. This right is based in the freedom of individuals to choose whether to use these technologies.

The right to mental integrity has a broader meaning that goes beyond the traditional guarantee of mental and physical integrity as an expression of adequate health. Within the framework of neuro-rights, this right, refers to those devices and tools not causing any damage to the brain or brain activity, where no unauthorized modification occurs.

Finally, the right to psychological continuity means that through neurotechnology, no type of abuse, threat, or alteration to the mental activity of a person occurs that may affect the personality or personal identity of an individual.

Chile and Neuro-Rights

Chile is a pioneer in the regulation of neurotechnology, promoting two bills on the matter, called “Neuro-Rights Bills.” The first is a constitutional reform establishing that scientific and technological development must be in the service of the people. This reform was introduced through Law No. 21.383[8] which modifies article 19.1 of the Political Constitution of the Republic of Chile with the following text:

“Scientific and technological research shall be at the service of the people and shall maintain respect for life and physical and psychological integrity. The law shall regulate the requirements, conditions, and restrictions for scientific and technological use in people, and shall especially safeguard brain activity, as well as the information derived from it.”

In the amendment, the protection and safeguarding of brain activity during technological development is expressly included, creating the need for a regulatory framework in the event that technology affects normal functioning.

Additionally, a draft bill on the protection of neuro-rights and mental integrity[9] (the “Bill”), as well as the development and investigation of neurotechnology was presented. The Bill is intended to protect physical and psychological integrity of the people in the face of development and advancement of neurotechnology.

It is important to note that the Bill recognizes the freedom of people to use any system or type of neurotechnology. To this effect, a persons consent must be free, prior, and informed, as well as provided explicitly in writing. It may be revoked at any time.

The proposed amendments have not been free of controversy. Authors such as Zuñiga, Villanvicencio, and Salas[10] have openly criticized the creation of neuro-rights, noting that the risks of neurotechnology are already regulated by existing rights (privacy, freedom, data protection). For these authors, new threats can easily be regulated by allowing for an evolution of said rights, and as such, the constitutional amendment would have no legal grounds.

Conclusions

The ongoing development of neuroscience, and especially neurotechnology, will benefit human beings. Some tools, instruments, and procedures for the development of neurotechnology could cause risks to constitutionally recognized rights and international treaties. For the time being, it cannot be irrefutably determined that these risks or impacts require specific regulation for the creation or recognition of new rights. In any case, an academic debate on the impact of this technology and the need for regulation is key. Prior to developing new rights, an ethical and legal framework for the future of neurotechnology needs to be created; this is essential to ensure respect and protection of the rights and freedoms currently recognized.

[1] Yuste, R.; Genser, J.; Hermann, S., It´s Time for Neuro-Rights (2021), Horizons. https://www.perseus-strategies.com/wp-content/uploads/2021/03/Neuro-Rights-Horizons-Winter-2021.pdf

[2] N.A., (2019). Iberdrola. Neurotecnología. Recuperadoi de: https://www.iberdrola.com/innovacion/neurotecnologia

[3] N.A., (2021). NeuroTech Edu. Intro to BCI. Retrieved from: http://learn.neurotechedu.com/introtobci/

[4] Jamil, N.; Palmer, J. (2020). Frontiers in Neuroscience. Neural Tech. Retrieved from: https://www.frontiersin.org/articles/10.3389/fnins.2020.00692/full

[5] Arancibia, F., (2022). Rafael Yuste, neurobiólogo precursor del proyecto BRAIN: “Hay una línea roja que no se debe cruzar: el cerebro no se toca, es la esencia del ser humano” Retrieved from: https://interferencia.cl/articulos/rafael-yuste-neurobiologo-precursor-del-proyecto-brain-hay-una-linea-roja-que-no-se-debe

[6] Ienca, M. Y Andorno, R. (2021) Hacia nuevos derechos humanos en la era de la neurociencia y la neurotecnología. Retrieved from: https://www.redalyc.org/journal/3400/340067606006/html/#redalyc_340067606006_ref12

[7] Maldonado, P., (2019), Neuroderechos: la discusión por la privacidad mental y el control del cerebro ya está aquí. Universidad de Chile. Retrieved from: https://www.uchile.cl/noticias/156392/neuroderechos-la-discusion-por-la-privacidad-mental

[8] Law 21.383

[9] Senado República de Chile. Boletín 13828-19. Retrieved from: https://www.senado.cl/appsenado/templates/tramitacion/index.php?boletin_ini=13828-19

[10] Zuñiga, A; Villavicencio, L; Salas, R. (2020). ¿Neuroderechos? Razón para no legislar. Ciper. Retrieved from: https://www.ciperchile.cl/2020/12/11/neuroderechos-razones-para-no-legislar/

Pablo Dent y Rafael Serrano
Associates at CorralRosales
pdent@corralrosales.com – rserrano@corralrosales.com

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International standars, local vanguard

Author Archives: SOPORTE PUBLITEK

Rules for applying income tax paid abroad as tax credit

The Organic Law of Personal Data Protection – Teleamazonas

DETAILS

Extension for the submission of financial statements

VAT refund to exporters´ suppliers

New deadlines for filing tax returns regarding assets

New deadlines for withdrawing medicines from the market and applying new ceiling prices

Extension for the submission of financial statements

Job security for alternate union leaders

Payment facilities for the tourism sector due to COVID-19

Neuro-Rights

Neuroscience and Neurotechnology

Neurotechnology and Rights

Chile and Neuro-Rights

Conclusions