General Regulation to the Communication Law

On August 23, 2023, President Guillermo Lasso issued Executive Decree No. 850, which contains the General Regulations of the Organic Law on Communication. In the main, the new Regulation:

  • Incorporates the rules for the self-regulation of the media.
  • Determines the rules for the operation of the Information and Communication Development and Promotion Council.
  • Creates the Mechanism for the prevention and protection of journalistic work, as a state technical instance in charge of adopting measures for this purpose. The mechanism is made up of the Ministries of Defense, the Interior, Foreign Affairs and Human Mobility, Women and Human Rights, the Risk Management Secretariat, the State Attorney General’s Office, a representative of the media workers private, public and community communication and a representative of civil society.
  • Modulates the prohibition of dissemination of imported advertising established in article 98 of the Organic Law of Communication, by determining that advertising produced in member countries of the integration treaties and agreements to which Ecuador is a party, will have the quality of national. This implies that the  dissemination of advertising produced in the member countries of the Andean Community of Nations, CAN, (Colombia, Peru and Bolivia) is allowed; and MERCOSUR (Argentina, Brazil, Paraguay, Uruguay, Chile, Colombia, Guyana, Peru and Suriname) is allowed.
  • Prohibits the dissemination of advertising of any type of betting or sports prediction systems.

 

The General Regulations to the Organic Law of Communication will enter into force from its publication in the Official Gazette, which has not happened until the moment of publication of this bulletin.

 

Ana-Samudio-abogados-ecuador

Ana Samudio, Senior associate at CorralRosales
asamudio@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.

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Foreign exchange tax paid regarded as income tax credit – Update of the list of subheadings

The Regulation CPT-RES-2023-00-1 issued on July 31, 2023, by the Tax Policy Committee (hereafter the “CPT“) amended the list of raw materials and capital goods which importation is subject to Foreign Exchange Tax (ISD) but may be used as a tax credit for the payment of Income Tax.

The following link shows the subheadings that are included and those that are excluded from the list:

CPT-RES-2023-001

The inclusion of subheadings is effective as of January 1st, 2023, and the exclusion of subheadings is effective as of August 1st, 2023.

 

Andrea Moya - CorralRosales - Lawyer Ecuador

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

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Deducibility of remunerations and fees paid to legal representatives of entities

On July 20, 2023, the Department of Regulations and Consultations of the General Directorate of the Internal Revenue Service in response to Consultation No. 1170120230744808 issued Official Letter No. 91701202023OCON001932, in which it determines:

  • That according to the Labor Code and Circular No. NAC-DGECCGC22-00000004, issued by the Tax Administration, entities may maintain a labor or civil relationship with their Legal Representative.
  • In the case of Legal Representatives who maintain an employment relationship with the entity, the amounts for wages, salaries and other remunerations will be deductible if the payment of employer contributions to the Ecuadorian Institute of Social Security, is justified.
  • In the case of Legal Representatives who maintain a civil relationship with the entity, the respective fees will be deductible expenses when they are supported by invoices, issued in accordance with tax regulations, therefore, it is not necessary to pay employer contributions to the Ecuadorian Institute of Social Security.

 

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New regulations for the importation of household goods and work equipment of returning migrants and foreigners

Resolution SENAE-SENAE-2023-0043-RE issued on July 19, 2023, and published in Official Gazette Supplement 362 of July 27, 2023, the National Customs Service of Ecuador established new regulations for the importation of goods under the exception regime for household goods and work equipment.

The most important reforms include:

  1. Alcoholic beverages are admissible if it does not exceed 50 liters in total and 2 liters for each commercial brand.
  2. Collectible goods that are not restricted according to the following list are admissible: https://www.aduana.gob.ec/gaceta-resolucion/SENAE-SENAE-2021-0131-RE/
  3. If the imported goods are not properly identified or do not match with the data registered in the list of goods subject to the exception regime, the returning migrant or foreigner will be subject to the payment of a fine. However, this will not prevent the importation process from continuing under the exception regime.
  4. The returning migrant or foreigner may reimport the household goods and work equipment that was definitively exported under the reimportation regime in the same condition. This regime is exempt from the payment of foreign trade taxes. The re-importation must be carried out within a period of 2 years from the date of shipment of the goods.
  5. The percentage of goods subject to prior inspection is reduced from 30% to 15%. The customs operating technician is able to review only 15% of the total amount of goods imported by the returning migrant.
  6.  For the import of used or new vehicles of the returning migrant, the following supporting documents may be attached to the customs declaration: i) the exports customs declaration made in the country of departure where the value of the vehicle is stated; or, ii) the certificate issued by the dealer or commercial house detailing the value of the vehicle.
  7. When the declared price for vehicles and motorcycles of the returning migrant is lower than the minimum values established by the Customs Authority, the Authority shall initiate a reasonable doubt procedure for the returned migrant to justify the price.
  8. Only foreign migrants may maintain the benefit of the exception regime when the interruption of their residence does not exceed 180 days as long as it is due to labor reasons.

The new regulations are effective from the date of publication in the Official Gazette, that is, from July 27, 2023. However, the new regulations will not be applicable to imports shipped prior to their publication in the Official Gazette, unless it benefits the migrant.

In the following link you can review the complete text of the Resolution:

https://www.aduana.gob.ec/gaceta-resolucion/SENAE-SENAE-2023-0043-RE/

Andrea-Moya-ConvertImage-1-300x300

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

f163f1c8-9d63-6efb-1078-c8dc91448b91

Customs Law Specialist
Fernanda Inga, Senior Associate CorralRosales
finga@corralrosales.com
+593 2 2544144

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Thresholds for the imports of textiles and its manufactured goods

The Ministerial Agreement MPCEIP-MPCEIP-2023-0030-A (the Regulation) issued on July 3, 2023, and published in the Official Gazette 355 of July 18 of the same year, the Ministry of Production, Foreign Trade, Investment and Fisheries established the parameters (thresholds) to strengthen the risk profile and customs control system against possible circumstances of customs fraud, money laundering and other illicit operations.

These thresholds will be applied to imports under a definitive importation regime (Regime 10) of textiles and its manufactured goods classified in chapters 52, 53, 54, 55, 55, 58, 60, 61, 62 and 63 of the National Tariff.

Annex 1 of the Regulation details the 527 tariff subheadings that will be subject to the special reasonable doubt procedure of the National Customs Service of Ecuador (SENAE), when the Authority verifies that the FOB value per kilo declared is less than or equal to the thresholds established for each subheading, which range between US$4.00 and US$20.00 per kilo.

Once the reasonable doubt procedure has been initiated, the importer is able to justify that the declared value is equal to the price actually paid or payable for the imported goods within 5 working days. This procedure is regulated in the “Specific Manual for Applying the Reasonable Doubt Procedure” which may be reviewed in the following link: https://www.aduana.gob.ec/gaceta-resolucion/SENAE-SENAE-2021-0050-RE/

The provisions of the Regulation must be implemented by SENAE within 60 days from its promulgation in the Official Gazette.

This measure is not applicable for imports made by Authorized Economic Operators (AEO), imports exempted from payment of foreign trade taxes, and imports shipped prior to the enactment of the Regulation.

The complete text of the Regulation may be review in the following link:

ACUERDO Nro. MPCEIP-MPCEIP-2023-0030-A

 

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Regulation for public-private partnerships – Executive Decree 788

By Executive Decree number 788 issued on June 26, 2023 and published in Official Gazette Supplement 341 of June 28, 2023, the President of the Republic issued the Regulations for Public-Private Partnerships (“Regulation“), on which we highlight the following.

  1. Overview:

Scope: The Regulation applies to Public Private Partnership (“PPP“) projects carried out by the Central Government or by the Decentralized Autonomous Governments (“GAD“). This will allow GAD to implement delegation projects under this modality, which had occurred only by exception.

Definitions: The Regulation incorporates the definition of several elements necessary for all stages of the process of a PPP contract. Some of the most relevant definitions, due to their practical usefulness, are those related to the promotion, structuring, execution, financing and evaluation of PPP projects.

The measurement of progress or degree of compliance of the Private Manager of a PPP project must be related to performance indicators or KPIs (Key Performance Indicators). These indicators may be financial or non-financial.

Institutional framework: The Interinstitutional PPP Committee (“CIAPP“) is maintained as the entity in charge of the steering and regulation of PPPs. This entity is formed by the head of the Secretariat of Public-Private Investments (“SIPP“) -who will preside it and will have the casting vote- and the heads or delegates of the following institutions: the entity in charge of production and investments, who will be the vice-president; the Ministry of Economy and Finance (“MEF“); and the entity in charge of national planning. Its main functions are to issue policies and regulations regarding the promotion of investment through PPPs as well as to coordinate actions at the central administration level.

The SIPP is also maintained as an entity attached to the Presidency of the Republic to promote, facilitate, materialize and maintain investments derived from PPPs. The Regulations establish a list of functions of the SIPP, the requirements to be appointed and the functions of the Secretary of Public-Private Investments.

The Regulation determines the functions of the Delegating Entities, among which the following stand out: preparation of the Initial and Final Business Case, execution of the PPP contracts and everything related to the management of the PPP project phases. The Delegating Entities may transfer their functions to another public administration related to the object of the PPP project. This scheme will be financed from: the budget of the Delegating Entity or from the fiduciary business set up by the SIPP.  In both cases, a scheme for the recovery of costs and expenses by the successful bidder may be included; and, at the risk of the structurers, when the procedure concludes with a successful bidder and a mechanism has been established in the bidding conditions. In any case, the Delegating Entities must include in their budgets the necessary resources to comply with their obligations.

In the case of the GAD, they will exercise their institutional autonomy to assign competencies and budgets. They will require a preliminary report and opinion from the MEF when the PPP project requires any contribution from the General State Budget or when it requires the assumption of any contingent liability of the central public administration.

It also determines the functions to be performed by the MEF and the Private Manager, which must necessarily be a special purpose vehicle.

Principles: The Regulation establishes the following principles and guidelines applicable for all actors of a PPP project: integrity and probity, publicity; citizen participation, quality and efficiency, concurrence and environmental sustainability, among others. It also establishes criteria for coverage and social inclusion related to social groups, communities and nationalities, the hiring of human talent residing in the area of influence and the use of a national component in the development of PPP projects.

  1. About PPP Contracts

Definition: a PPP association is defined as a long-term delegated management contractual modality in which the experience, knowledge, equipment, technologies and technical and financial capacities of the private sector are incorporated, in order to fulfill one or several of the following activities: design, finance, build, improve, operate and maintain a new or existing public asset and/or provide the maintenance, administration and supplies of a public service. Under this scheme the risks are distributed between the parties, with the Private Manager assuming significant risks. The Private Manager’s consideration will be linked to its performance.

Classification: projects are classified as self-financed by the Private Manager and co-financed between the Private Manager and the Delegating Entity.

Duration and value: PPP contracts must have a term of between 5 and 30 years. Exceptionally, this term may be extended for 10 years. The minimum Total Value of a PPP project shall be US$ 20 million. In the case of the GAD it will be US$ 10 million.

Public Trust Funds: the Regulation creates the possibility for the State to have public trust funds for (i) financing preparation studies; (ii) fiscal risk coverage; (iii) liquidity to meet firm commitment obligations; and, (iv) others that the CIAPP resolves to promote the bankability of PPP projects. The assets may originate from the General State Budget, the private sector and/or reimbursable and non-reimbursable financing.

Stability and Incentives: legal stability will apply to sectoral and specific regulatory aspects declared as essential in a PPP contract. Tax incentives may be established in the investment contracts. Exemption from foreign trade taxes and foreign currency outflow taxes must be requested and justified by the Delegating Entity. Other tax incentives may be granted by the CIAPP.

  1. Economic-financial regime and risk allocation

Project revenues and compensation: the Private Manager will be paid through public resources, payments made by the users, payments derived from the commercial exploitation of the project or a combination of the above. In projects related to new or existing public infrastructure, payment by the Private Manager in favor of the Delegating Entity may be determined. Revenues and expenses will be administered through a commercial trust according to the type of project and the conditions established in the bidding documents, contracts and other regulations. The tariff scheme will be determined by the Delegating Entity.

Risk distribution: the risk analysis shall be performed by the Delegating Entity in order to identify, prioritize and quantify the risks associated with the PPP project and their distribution between the Private Manager and the Delegating Entity.

Financing: the Private Manager may establish the necessary guarantees to ensure the financing of the project. The Regulation establishes the general scheme of rights of the financiers in PPP projects.

  1. PPP Project Cycle

The Regulation determines the following phases of a PPP project:

  • Planning and eligibility phase: includes the elaboration of the project profile, verification of alignment with general planning, incorporation of the project in the National PPP Registry and determination of eligibility criteria.
  • Structuring phase: includes the (i) pre-feasibility studies, which must materialize in a Preliminary Technical Report issued by the Delegating Entity with which the MEF will issue a Preliminary Sustainability and Fiscal Risks Report; (ii) feasibility and transactional stage, in which the pre-feasibility studies are concluded and adjusted, the bidding documents are formulated, the draft PPP contract, among others, with which the Delegating Entity will issue the Final Business Case; (iii) public bidding, for which the Delegating Entity will determine an award variable, these variables are related to the contributions of state resources, the remuneration to the State, the tariff level, among others; and, (iv) award of the PPP contract, from which the successful bidder will have 90 days to confirm compliance with all the necessary conditions such as the incorporation of a sole purpose company and the presentation of insurance and guarantees for the execution of the PPP contract.
  • Execution and management phase of the PPP contract: includes the provision of infrastructure and/or services object of the PPP contract, the supervision of the execution by the Delegating Entity and the articulation of coordination actions between the parties. The creation of one or more commercial trusts for the administration of all the income and expenses of the project is determined. The Private Manager must report periodically on its performance and the Delegating Entity will publish its performance reports annually in the National PPP Registry.
  • The Regulation also establishes the rules for the suspension, termination and liquidation of PPP contracts. At the end of the Contract, the assets will revert to the Delegating Entity.

Private initiative: private initiatives must be submitted within the timeframe determined by the CIAPP and always aimed at satisfying a need in accordance with the plans or policies established by the respective level of government. The proponent will assume the totality of the costs of the development of its proposal. The Delegating Entity may declare a private initiative to be of public interest or reject it for cause. If a declaration of public interest is issued, pre-feasibility studies may begin. In 2023 private initiatives may be submitted between July and September, in 2024 between January and March and between July and September.

Prequalification: The Delegating Entity may use a prequalification system when it considers that its amount or complexity could limit the number of bidders.

Dispute Resolution: the PPP contract shall provide for a tiered dispute resolution mechanism. The parties may agree that disputes of a technical nature shall be heard by a Combined Dispute Board whose decisions shall have binding effect.

Reformatory and Derogatory Provisions: the Regulation includes reformatory provisions to the General Regulation of the Organic Code of Planning and Public Finances, mostly related to the determination and management of fiscal risks. The rule that any modification to a PPP contract under execution will require the opinion of sustainability and fiscal risks issued by the MEF is maintained. The 3 Executive Decrees that regulated this matter are expressly derogated.

 

Jimmy-Rodriguez-abogados-ecuador

Specialist in Infrastructure
Jimmy Rodríguez, associate at CorralRosales
jirodriguez@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.

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Occupational health promotion regulation

From the 14th of May 2023, companies must implement an Occupational Health Promotion Plan, accordingly to the following considerations:
Scope:
All public or private work centers with 25 or more employees are obligated to implement the Occupational Health Promotion Plan; hereby the “Plan”.Stages:Planification: this stage requires an occupational health, security and practices evaluation as well as identifying problems and necessities. It also requires establishing activities that motivate personnel into a healthy lifestyle and work condition.

Implementation: in this stage the company must design an educational program for employees and notify the National Health Authority about the Plan implementation in the workspace for its evaluation.

Work centers must appoint a health professional as “Focal Point” to lead and form the work team that will oversee the Plan implementation.

Approval on the “Actívate y Vive” certificate: the Health Authority will issue a compliance report of the Plan and as a result the “Actívate y Vive” certificate.

Renewal: companies must request a renewal of the certificate in the dependencies appointed by the Health Authority for this purpose.

The Quality Assurance in Health Services and Prepaid Medicine Agency (ACCES) or whoever acts in its place will verify the existence of the “Actívate y Vive” certificate from December of 2023.

The “Actívate y Vive” certificate will be valid for two years and obligated companies must request its renewal four months before the expiration date.

 

Edmundo-Ramos-abogados-ecuador

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

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Decree Law for strengthening the family economy

On May 17, 2023, the President issued the draft of the Decree-Law for Strengthening the Family Economy. This Decree-Law will enter into force once the Constitutional Court issues a favorable opinion. A public hearing is scheduled for June 6, to analyze this matter. The following is a summary of the most relevant issues:

1. Individuals Income Tax

Increases the amount that individuals may apply as a rebate for personal expenses with respect to the income tax incurred, according to the following detail:

a. Individuals without family dependents: the amount of the rebate will be equal to 18% of the lower value resulting from the personal expenses declared in the respective fiscal year and the value of the basic family basket (US$764.71 for 2023) multiplied by 7.

b. Individuals with family dependents: the amount of the rebate will be equal to 18% of the lesser value resulting from the personal expenses declared in the respective fiscal year and the value of the basic family basket multiplied by the applicable number, according to the following table:

Family dependents are parents, spouse or common-law partner and children up to 21 years of age or disabled of any age; if they do not receive taxable income and are dependent on the taxpayer.

c. Individuals who have dependents with catastrophic, rare and/or orphan diseases: the amount of the rebate will be equal to 18% of the lower value resulting between the personal expenses declared in the respective fiscal year, and the value of the basic family basket multiplied by 20.

If the value of the rebate exceeds the amount of the tax incurred, there will be no refund of the excess.

The income tax table is replaced by the following, which reduces the tax burden for individuals:

The provisions related to the rebate for personal expenses and the table for calculating income tax for individuals will be applicable as from the current fiscal year 2023.

2. Sole Income Tax on Sports Betting Operators

The “Single Income Tax on Sports Betting Operators” is created. The taxable event is receiving Ecuadorian source income derived from sports betting activities carried out live, through internet or any other means.

The taxpayers are:

a. Individuals or entities with tax residence or permanent establishment in Ecuador that carry out sports betting activities.
b. As substitute taxpayers, users of sports betting platforms when the operator does not have tax residence or permanent establishment in Ecuador.

The tax rate is 15% of the taxable base. The taxable base will be calculated according to the following:

a. Operators with tax residence in Ecuador: The taxable base will be equal to the total income (including commissions) minus the total prizes paid in the same period. Prizes will be deducted from the taxable base if 15% of the value of the prize has been withheld.

b. Non-resident operators: The taxable base will be equal to the total amount paid by the user in each transaction, i.e., the total value of the bets. If the bet is made through an intermediary, the intermediary must collect the tax from the user and pay it to the Internal Revenue Service.

The beneficiaries of the prizes will pay a 15% tax on the value of each prize received, in cash or in kind.

The Single Income Tax for Sports Betting Operators will become effective as of January 1, 2024.

3. Simplified Regime for Entrepreneurs and Popular Businesses (RIMPE)

The following are excluded from the RIMPE Regime:

a. Those taxpayers engaged in the production, importation and/or first stage of commercialization of goods or rendering of services taxed with Special Consumption Tax (ICE).
b. Taxpayers who carry out economic activities excluded from the RIMPE regime, even when they simultaneously carry out non-excluded activities.
c. Taxpayers qualified as artisans.

Taxpayers subject to the RIMPE regime will pay the tax according to the following progressive tables:

If, at the end of the fiscal year, the taxpayer had gross income over USD$300,000.00, it must file and pay income tax under the general regime. Prior to this reform, the taxpayer had to apply the general regime in the following year.

The period for the liquidation and payment of income tax corresponding to the RIMPE regime is extended from March to June of each fiscal year.

With respect to Value Added Tax (VAT), the transfer of ownership of tangible property, rights and the rendering of services carried out by popular businesses will be taxed at a 0% VAT rate.

Payments made to taxpayers categorized as popular businesses will not be subject to income tax withholding. In the case of payments made to entrepreneurs, the Internal Revenue Service will determine the income tax withholding percentages.

 

Andrea Moya - CorralRosales - Lawyer Ecuador

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

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Beginning of the sanctioning regime of the Organic Law on Personal Data Protection

On May 26, 2021, the Organic Law for the Protection of Personal Data (the “LOPDP“) entered into force with its publication in Official Gazette Supplement 459. However, the sanctioning regime began to apply as of May 26, 2023, as established in the First Transitory Provision: “(the…) provisions related to the corrective measures and the sanctioning regime will enter into force two years after the publication of this Law in the Official Gazette”.

In the course of this time, whoever oversees the processing of personal data had to adapt its activities to the precepts established in the LOPDP, whose purpose is to protect the fundamental rights and freedoms of data owners and their right to the protection of personal data.

The process of adapting to the new information processing depends on the type of company (public entity, multinational, SME, self-employed, among others) and, above all, on the types of data processed (health data, credit data, data of children or adolescents).

The main obligations of companies are summarized below:

1.    Scope of application of the LOPDP:

•    The law is applicable to any processing of personal data, whether in physical or digital format, including its automation and any additional use.

•    Both legal and natural persons, public or private, must comply with the obligations imposed by the LOPDP.

2.    Individuals involved in data protection:

•    The controller is the person, natural or legal, who decides on the purpose and treatment of the personal data collected.

•    The processor is the person who provides a service to the controller that involves the processing of personal data in the name and on behalf of the Controller.

•    The data subject is the natural person whose data is subject to processing, such as name, surname, ID card number, health data, religion, credit data, gender, ethnicity, fingerprint, among others.

3.    New obligations:

The LOPDP obliges to include new warnings, for example: the legal basis for data processing or data retention periods. In addition to the following:
•    Consent: this must be a free, specific, informed, and unequivocal manifestation. This implies that the data controller must be able to prove that it had the consent of the data subject.

•    Relationship between data controllers and data processors: describes the type of contract between the data controller and the data processor. It specifies the obligations of both parties for the provision of the agreed service.

•    Risk analysis: those who process data must carry out a risk analysis on the processing of data, before implementing its use, to minimize the impact, it may have on data subjects.

•    Rights: provides data subjects with a series of rights to ensure data protection, such as: access, rectification, erasure, opposition, portability, not be subject to a decision based solely or in part on automated assessments, among others.

•    Data Protection Officer (“DPO”): those who process personal data, depending on the volume, category, and treatment of data, must appoint a DPO who will be the one to carry out a permanent and systematized control of personal data.

4.    Data Protection Authority (“DPA”):

The LOPDP provides for the creation of the Superintendence of Personal Data Protection, which will oversee the correct application of the law.

5.    Corrective actions:

The DPA shall take corrective measures to prevent further infringement. These measures could be:

•    Cessation of processing.
•    Erase of the data.
•    Imposition of technical, legal, organizational, or administrative measures.

6.    Sanctioning measures:

Establishes an administrative regime whereby there are minor and major offenses. The fines are based on the volume of business:
•    Minor offenses: are sanctioned with fines that go from 0,1% to 0,7%.
•    Major offenses: are sanctioned with fines that go from 0,7% to 1%.

So far, the regulation to the LOPDP has not been issued, nor has the DPA been appointed. However, as the sanctioning regime is already in force, those who use personal data must implement data processing policies and data protection measures to avoid fines.

CorralRosales has formed a team specialized in data protection to provide legal advice and consulting. LOPDP compliance audits are performed, as well as documents related to personal data protection.

Rafael Serrano, asociado de CorralRosales, con traje y corbata. En el fondo, una parte de Guayaquil (Ecuador)

Specialist in Data Protection Law
Rafael Serrano, associate at CorralRosales
rserrano@corralrosales.com
+593 2 2544144

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CORRALROSALES

Dissolution of Congress

In application of the powers conferred by Article 148 of the Constitution, the President of the Republic issued Decree No. 741 (the “Decree”) whereby the President dissolves Congress and ordered the National Electoral Council to call for legislative and presidential elections to complete the current respective terms.

The aforementioned powers allow the President to dissolve Congress when, in his opinion, there is a “serious political crisis and internal commotion”. It does not require the prior determination of the Constitutional Court and may be exercised only once during the first three years of office.

The National Electoral Council, within a maximum term of 7 days after the publication of the Decree, will call for legislative and presidential elections for the remainder of the current term, which ends in May 2025.

To sum up,  i) the President has made use of a constitutional power expressly contemplated in Article 148 of the Constitution; and, ii) in approximately 6 months a new President and Vice President of the Republic and members of Congress will take office, for a term to end in May 2025. In the meantime, the President remains in office and may issue economic decree laws, with the approval of the Constitutional Court.

Xavier-Rosales-abogados-ecuador

Leader of the Competition, Corporate and M&A areas
Xavier Rosales, partner at CorralRosales
xrosales@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.

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