Tag Archives: Ecuador

The new Regulations to the Public Procurement Law (hereinafter, the “Regulations”) were published in the Official Gazette No. 153 of October 28, 2025.

Below is a summary of the main provisions of the Regulations:

 

1. Value for money. “Value for money” is defined as the outcome of considering efficiency, effectiveness, economy, competition, and sustainability throughout all stages of the procurement process, in order to obtain the desired results, optimize public resources, and achieve the best cost–benefit ratio.

 

1. Financing of SERCOP. For contracts equal to or exceeding one million U.S. dollars (USD 1,000,000), contracting entities shall withhold 0.4% of each invoice or work statement and transfer it to the National Public Procurement Service (hereinafter, “SERCOP”) for its financing.

 

1. Open data. A public policy of open contracting and access to open data is established, led by SERCOP, aimed at reducing corruption and increasing competition. Information related to national security or classified as confidential by law is exempt from disclosure.

 

1. Exceptions to the RUP. Contractors will not be required to be registered in the Single Registry of Suppliers to participate in: (i) contracts financed with loans and international cooperation; (ii) contracts abroad; (iii) acquisition or lease of real estate; (iv) fuels; (v) airline tickets; (vi) minor purchases (“ínfima cuantía”); and (vii) social communication services.

 

1. Electronic signature. Documents related to public procurement procedures must be signed electronically using a signature issued by a locally accredited entity and through the official application of the telecommunication’s regulatory authority. Procurements carried out abroad are exempt from this requirement.

 

1. Technical commission. For contracts with a reference budget equal to or greater than USD$ 100,000, entities must form a Technical Commission responsible for evaluating and qualifying bids. If the amount is lower, this function may be performed by a public officer designated by the highest authority of the contracting entity.

 

1. In bids submitted by entities, the contracting entity shall ensure that majority shareholders are not subject to any of the disqualifications established by law. A majority shareholder is any individual or entity holding fifty-one percent (51%) or more of the shares in the entity.

 

1. The awarded bidder shall sign the contract within fifteen (15) business days following the date on which the award becomes final and binding, with the possibility of requesting an extension in cases of force majeure.
2. Technical warranty. As part of the technical warranty, it may be required that if the contractor breaches the agreement, the manufacturer or authorized distributor will take on the corresponding obligations. For contracts valued at five million USD or more, the contractor must provide a financial guarantee equal to the value of the goods supplied.

 

1. Advance payments. To execute the contracts, an advance payment of between twenty percent (20%) and thirty-five percent (35%) of the total contract amount may be granted to the contractor. Advance payment is mandatory for works contracts.

 

1. Bank transactions. The contract administrator may verify that the contractor’s banking transactions are related to the use of the advance payment or the execution of the contract. Upon request of the administrator, the contractor shall provide the bank statements issued by the corresponding financial institution for verification purposes.

 

1. In case of delay in the execution of the contract, the contracting entity may impose a daily penalty equivalent to one per thousand (1×1000) of the value of the unfulfilled obligation. If such obligation cannot be quantified, the calculation shall be based on the total contract amount, provided that the penalty does not exceed five hundred U.S. dollars per day.

 

1. Substitution of goods. In the event of force majeure, the contractor may propose to the entity the delivery of goods of a different brand than that offered, provided that they are of equal or superior quality and condition, without generating any additional cost. Acceptance of such proposal shall be at the sole discretion of the contracting entity.

Procurement procedures initiated up to October 27, 2025, will continue to be governed by the prior regulations.

Hugo García Larriva, Partner at CorralRosales
hgarcia@corralrosales.com
+593 2 2544144

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

On November 7, 2025, through Resolution No. SPDP-SPD-2025-0041-R, the Data Protection Authority (hereinafter, “DPA”) issued Regulations for the Application of Legitimate Interest as a Lawful Basis for the Processing of Personal Data (hereinafter, the “Regulation”).

 

The Regulation is mandatory whenever a legitimate interest is relied upon as a legal basis for processing personal data.

 

Below we highlight the most relevant aspects of the Regulation:

 

1. Characteristic of legitimate interest

 

The Regulation establishes that legitimate interest must be:

 

i. Lawful: the processing activity must not pursue a purpose that is prohibited by law.

ii. Certain and specific: it cannot be substantiated upon hypothetical circumstances and must be clearly identified responding to concrete and verifiable needs.

iii. Proportionate: the processing must be adequate, necessary, timely, and not excessive.

iv. Within the data subject’s reasonable expectations: before carrying out the processing, the controller must provide the data subject with relevant information on the entire processing activity and must also include such information in the applicable privacy notice/policy.

 

2. Balancing Assessment

 

Any controller intending to rely on legitimate interest as a lawful basis must first carry out a balancing assessment with respect to the processing activity. This assessment, along with its outcome, must be available for review by the DPA and data subjects.

 

The balancing assessment will have to determine whether the interest relied upon by the controller prevails over the rights and freedoms of the data subjects. Failure to carry out such an assessment constitutes a serious infringement under the Data Protection Law.

 

The balancing assessment must include the criteria set out in Annex 1 of the Regulation, which, among other aspects, requires:

 

i. Identification and justification of the legitimate interest.

ii. Justification of the necessity, demonstrating that the processing is indispensable to achieve the intended purpose and that there are no less intrusive means available.

iii. A balance between the purpose pursued and the potential impact on the data subject’s rights.

iv. Implementation of technical, organizational, and mitigation measures, as well as documentation of the outcome of the assessment.

 

Controllers must maintain an up-to-date record of the balancing assessments they have performed. This record must be reviewed at least once every year, or whenever the purpose, the type of data, or the level of risk associated with the processing changes.

 

3. Permissible Scenarios

 

The DPA has limited the use of legitimate interest to the following purposes:

 

i. Direct marketing provided that no special categories of data or children’s data is used, and that a free and immediate mechanism to object to such processing activity is in place.

ii. Prevention, detection, reporting of fraud, money laundering, terrorism financing, and related crimes.

iii. Internal data sharing within a corporate group, limited to legitimate purposes and subject to transparency towards data subjects.

iv. Security of networks and IT systems, through the implementation of appropriate technical and organizational measures.

v. Video surveillance for the security of individuals, property, or facilities. The capture or recording of audio is not permitted in systems relying on legitimate interest.

 

In all cases, each processing activity must successfully pass the balancing assessment required under the Regulation. Data subjects may exercise their rights under the Data Protection Law at any time, in particular their rights to object and to access.

 

4. Prohibitions

 

Legitimate interest may not be relied upon in the following cases:

 

i. Processing of special categories of personal data, unless the processing is strictly indispensable, and reinforced security measures are in place.

ii. Processing involving automated profiling that produces legal effects concerning the data subject or significantly affects them similarly, except in cases expressly provided for the financial or insurance sectors with additional safeguards.

iii. Processing of personal data of children or adolescents, unless it can be justified based on the best interests of the child.

iv. Large-scale processing or further use of personal data for purposes that are different from, or incompatible with, the original purpose.

 

Rafael Serrano, Partner at CorralRosales
rserrano@corralrosales.com
+593 2 2544144

On October 27, 2025, the President of the Republic of Ecuador issued the Law on Social Transparency Regulations. Below, we summarize the provisions regarding the Advance Payment on Undistributed Profits:

 

1. General Regime

 

a. Calculation Formula

 

The advance payment will be calculated as follows:

 

1. Profit (+) or loss (–) from the immediately preceding fiscal year: accounting profit or loss, minus employee profit-sharing, minus income tax expense, minus legal reserve.
2. To this amount, the accumulated profits (+) or losses (–) from prior fiscal years (other than those mentioned above) shall be added or subtracted.

• (–) The value of dividends distributed between January 1 and July 31 of the fiscal year in which the advance payment is determined shall be subtracted.

1. (–) The capitalization of profits made between January 1 and July 31 of the fiscal year in which the advance payment is determined shall also be subtracted.
2. Adjustments for income valuation under the equity method for the previous period (+/–) shall be added or subtracted.
3. The progressive rate established in Article 39.2.1 of the Internal Tax Regime Law shall then be applied to this base to determine the amount payable.

 

b. Payment Methods and Dates

 

Taxpayers must declare and pay the applicable value in the month of August according to the ninth digit of the tax ID:

 

 

• Special taxpayers must make the payment by the 11th day of the due month.

 

• Payment may be deferred up to three equal installments to be paid in August, September, and October of each year.

 

• Entities that do not exceed the exempt threshold of USD 100,000.00 are not required to file the declaration.

 

c. Offset and/or Refund for Dividend Distribution or Capitalization

 

The amount paid in advance may be offset if dividends are distributed or profits are capitalized, following this order of priority:

 

1. Dividend Distribution:

 

• Offset first against the withholding tax payable on dividends derived from accumulated profits.
• If not fully offset, it may be credited against the income tax of the fiscal year in which dividends are distributed, or against income tax of other periods, within 3 years from when the credit became enforceable.
• If not offset, the taxpayer may request a refund of the remaining balance within 3 years from the date of payment.

 

2. Capitalization:

 

• Offset first against income tax of any fiscal year.
• If not fully offset, a refund may be requested within three years from the date of payment.

 

Holding companies and entities subject to a single income tax regime may request the refund from the first day of the month following the capitalization or dividend distribution, for the portion of the credit not offset, within 3 years.

 

The offset or refund shall be made in the same proportion as the amount distributed and/or capitalized.

 

d. Capitalization of Profits

 

For the purpose of offsetting or refunding the advance payment due to capitalization of profits, the capitalized value must be used for any of the following activities:

 

• Acquisition of new productive assets purchased as of August 28, 2025, such as property, plant and equipment, intangible assets, and biological assets, intended for the taxpayer’s productive or commercial process. The change of ownership of operating assets or those located abroad shall not be considered.
• Acquisition of new inventories as of August 28, 2025, such as raw materials, supplies, intermediate goods, and finished goods forming part of the business operating cycle.
• A net increase in employment of at least 5% compared to the fiscal year preceding the investment year. The net employment growth will be calculated as:

 

Net employment growth = (total jobs – previous jobs) / previous jobs

 

e. Non-Deductible Expense

 

Taxpayers that neither distribute nor capitalize their accumulated profits within the two fiscal years following the year in which the advance payment was made shall not be entitled to offset or request a refund. Consequently, the paid amount will become a non-deductible expense in the fiscal year when that term expires.

 

1. Special Regime for the Advance Payment on Undistributed Profits for Fiscal Year 2025

 

f. Calculation Formula

 

To calculate the taxable base for fiscal year 2025, taxpayers will use the information included in the 2024 income tax return filed by July 31, 2025, disregarding any amended returns filed after that date:

g. Payment Methods and Dates

 

Only for the 2025 fiscal year, taxpayers must file and pay the obligation in two equal, interest-free installments during November and December, according to the following schedule:

 

First Installment:

Second Installment:

Holding companies are not subject to this payment for fiscal year 2025.

 

h. Offset and/or Refund for Dividend Distribution or Capitalization

 

For the purposes of offset or refund for fiscal years 2025 and 2026 related to profit capitalization, the acquisition of new productive assets, property, plant and equipment, biological assets, and/or inventories made during the two fiscal years immediately preceding the publication date of the Law shall be considered, provided that they are incorporated into the productive process.

 

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

Mateo Bravo, Associate at CorralRosales
mbravo@corralrosales.com
+593 2 2544144

The Law Reforming the Law on Public Procurement (“LOSNCP”) was published in the Official Gazette No. 140 on October 7, 2025.

Below is a summary of the main amendments.

1. The concept of “best value for money” is incorporated as one of the guiding principles of public procurement.

 

1. The LOSNCP does not apply to Public-Private Partnership (“PPP”) projects, unless expressly referred to in the relevant PPP regulations, bidding documents, or contracts.

 

1. The National Public Procurement Service (“SERCOP”) may issue models and methodologies, but is no longer authorized to issue secondary regulations governing the National Public Procurement System.

 

1. Inter-administrative contracts. Public contracting entities may not associate with private companies or subcontract them for more than 30% of the total contract value. Any subcontracting requires prior authorization from SERCOP.

 

1. Electronic Catalog. Contracting entities should preferably procure goods and services listed in SERCOP’s electronic catalog (the “Electronic Catalog”).

 

1. Electronic Reverse Auction and Bidding. The Electronic Reverse Auction shall be used when the required good or service is not listed in the Electronic Catalog and the award is based solely on the lowest price. When evaluation criteria other than price are considered, the Bidding procedure shall apply.

 

1. Consulting services are excluded from the Electronic Catalog and must be procured through a Public Tender when the reference budget exceeds US$10,000. Contracts at or below this threshold may be awarded under the Minimal Amount (“Ínfima Cuantía”) procedure.

 

1. Response to contractors. During contract execution, public entities must respond to contractor requests within a maximum of 10 business days from notification.

 

1. Any penalty imposed on the contractor shall be calculated based on the value of the unfulfilled obligation.

 

1. Payments to contractors must be made within a maximum of 2 months after fulfillment of the contractual conditions precedent.

 

1. Termination by mutual agreement. When a contract is terminated by mutual agreement, the contracting entity may directly procure the pending obligations within 2 months from the termination date, provided that such obligations are not contracted with the same contractor.

 

1. Administrative appeals in public procurement matters shall be governed by the provisions of the Administrative Code (“Código Orgánico Administrativo”).

 

1. During the pre-contractual phase, a bidder may file a complaint before SERCOP if the contracting entity fails to comply with applicable regulations. SERCOP or the complainant may request suspension of the procurement process, subject to the requirements established in the forthcoming regulations to the LOSNCP.

 

1. Audit Fines (“glosas”). Before making the final payment, contracting entities must consult the Office of the Comptroller General of the State to determine whether the contractor has any enforceable and unappealed fines (glosas). If such fines exist, the corresponding amounts shall be withheld and offset against the final payment.

 

Public procurement procedures initiated before October 7, 2025, will continue to be governed by the prior regulations.

 

The President of the Republic must issue the new regulations on the LOSNCP by November 21, 2025.

Hugo García Larriva, Partner at CorralRosales
hgarcia@corralrosales.com
+593 2 2544144

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

On October 2, 2025, through Executive Decree No. 172, the president of the Republic, Daniel Noboa, ordered the suspension of the workday corresponding to Thursday, October 9, 2025, for both the public and private sectors. Consequently, the national holiday for Guayaquil Independence Day will extend from October 9 to October 12, 2025.

The workday will not be recoverable.

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

María Victoria Beltrán, Associate at CorralRosales
mbeltran@corralrosales.com
+593 2 2544144

Within the current regulatory framework, specific provisions have been incorporated that directly affect the rights and benefits applicable to people with disabilities, their substitutes, and caregivers, as well as those facing rare, orphan, catastrophic, or complex diseases. These reforms cover key aspects related to access to services, labor, education, and health benefits. We highlight the following:

1. Person with Disability: An individual presenting structural or functional, bodily, mental, intellectual, sensory, or psychosocial impairments and limitations in exercising essential daily life activities autonomously.

 

The Law introduces a new category of disability not regulated in the previous statute, namely psychosocial impairments.

 

Previously, applicable regulations determined that the rights of people with disabilities depended on their disability percentage. However, the current law eliminated this classification system, proposing instead that disability be categorized as mild, moderate, severe, very severe, and complete.

 

1. Direct Substitute: A person responsible for the maintenance or care of individuals with severe, very severe, or complete disabilities, related up to the fourth degree of consanguinity and the second degree of affinity.

 

Parents and legal representatives of minors with any type and percentage of disability are also considered direct substitutes.

 

Certification of Direct Substitutes:

 

• People seeking recognition as substitutes for adults with severe, very severe, or complete disabilities must submit a certificate of non-affiliation to the social security under a dependency regime.
• Where certification of substitute status is required by an employer to comply with inclusion quotas, a copy of the employment contract must be submitted.
• People with disabilities may, if deemed necessary, request the withdrawal of substitute status.
• Employers are required to register within 30 days, in the system established by the Ministry of Labor, those employees who have notified them of their substitute status.
• Failure to register may result in a fine of USD 200 per unregistered employee, up to a maximum of 20 Unified Basic Salaries (currently USD 9,400.00).
• Employees are likewise obligated to notify their employer of their substitute status.
• The Ministry of Labor, through the SUT platform, has implemented a complementary system to verify the authenticity of substitute certificates.

 

1. Caregiver: The new law introduces the category of caregiver, defined as the mother, father, legal representative, or guardian authorized to care for a person with a severe, very severe, or complete disability.

 

Caregivers assume responsibility for assisting people with disabilities who, to varying degrees, require support in carrying out daily life activities.

 

This role confers rights distinct from those of substitutes, and caregivers are not included within the inclusion quota.

 

1. Remote Work Authorization: people with disabilities pursuing postgraduate or continued education systems can request to work remotely.

 

1. Labor Inclusion: employers with 25 or more employees must include at least 4% of people with disabilities. Substitute personnel may be included within the quota, provided they do not exceed 25% of the total inclusion required.

 

To fully comply with the quota, employers must apply principles of gender equity and disability diversity, and where operations exist in multiple provinces, distribute included personnel equitably.

 

Noncompliance may result in monetary sanctions of 11 to 15 unified basic salaries or the suspension of activities for up to thirty days.

 

1. Labor Inclusion for Private Security Companies: for the purpose of calculating the inclusion quota, private security and surveillance companies may consider substitutes in operational roles, even exceeding the maximum percentage allowed in other sectors.

 

1. Employment Conditions: people with disabilities must be hired on full-time schedules (8 hours), under contractual modalities deemed stable or permanent by law.

 

Part-time employment is permitted only with medical certification confirming the impossibility of full-time work.

 

1. Job Stability: people with disabilities, as well as those responsible for their maintenance and/or care, enjoy reinforced job stability. Unjustified dismissal entitles them to either reinstatement or additional severance equal to 18 months of the highest salary received from the employer.

 

1. Extended Maternity Leave: in cases of childbirth involving minors with disabilities or severe congenital conditions, maternity leave is extended by three months.

 

1. Leave for Substitutes and Caregivers: individuals responsible for people with severe, very severe, or complete disabilities are entitled to two hours of daily leave for caregiving purposes.

 

1. People with Rare, Orphan, Catastrophic, or Highly Complex Diseases Employment Rights: employees who demonstrate such conditions are entitled to workplace accommodations, including modified schedules, where necessary.

 

1. Rights of Substitutes and Caregivers:

13. Income Tax Deduction: employers may deduct an additional 150% of all remunerations and benefits contributed to social security (IESS) with respect to disabled employees and substitutes exceeding the mandatory inclusion quota.

 

14. Tax Exempt from Vehicle Imports: In the case of used vehicles, the model must correspond to the last three years prior to importation, (between the model year and the year of shipment).

 

The beneficiary may access a new tax-exempt importation five years after the Customs Import Declaration has been cleared.

 

15. Local Purchase of Exempt Vehicles: local purchase must be authorized by the Internal Revenue Service within a maximum period of 30 days from the submission of the application. Only new vehicles will be exempt from local taxes. The beneficiary may access a new exemption five years after the local purchase.

 

If it is determined that the conditions for benefiting from the exemption on local vehicle purchases were not met, the Internal Revenue Service will recalculate the tax for the total amount of the exempted values plus the respective interest.

 

16. Exceptional Transfer Clause: if the person with a disability benefiting from the tax exemption is unable to fulfill their financial obligation to the seller of the vehicle due to an emerging personal economic crisis, they may request the transfer of the vehicle within one year from the date of importation or acquisition.

 

To this end, the person with a disability or the person interested in acquiring the vehicle, duly authorized by the beneficiary of the exemption, may request the transfer of ownership of the vehicle from the customs or tax authority, as appropriate, and pay the proportional part of the taxes remaining to complete the five-year period, calculated from the date of submission of the transfer request.

 

To this end, the person with a disability must, by means of a sworn statement before a notary public, justify the reasons for their emerging financial hardship; they will be prevented from benefiting from this exemption again until five years have elapsed from the date of release of the import or acquisition, as applicable.

 

17. Use of Exempt Vehicles: vehicles imported or purchased locally with tax exemption must be driven by the person with a disability who is the beneficiary of the exemption. Extraordinarily, and depending on the condition of the person with a disability, the vehicle may be driven by:

 

• Members of the family unit of the person with a disability, including up to the second degree of consanguinity and first degree of affinity.
• A person outside the immediate family, if they can prove that the person with a disability is under their protection, care, or dependency (e.g., driver) and that the person with a disability is in the vehicle.
• In emergency situations, when the person with a disability is unable to drive the vehicle due to exceptional circumstances, duly justified and verifiable if applicable.

**Legal References:

1. Organic Law for Persons with Disabilities. Published July 3, 2025, Fourth Supplement of the Official Gazette No. 73.
2. Ministerial Agreement MDT-2025-105 “Regulation for the Certification of Direct Substitutes of Persons with Disabilities.” Published August 26, 2025, Third Supplement of the Official Gazette No. 110.
3. Organic Reform Law to Various Legal Bodies to Guarantee the Labor Rights of Persons with Disabilities, Rare, Orphan, Catastrophic, and Highly Complex Diseases, and Their Substitutes. Published June 20, 2025, Fifth Supplement of the Official Gazette No. 64.

 

 

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

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

María Victoria Beltrán, Associate at CorralRosales
mbeltran@corralrosales.com
+593 2 2544144

Through Interministerial Agreement No. 2025-013, issued by the Ministry of Production, Foreign Trade, Investments and Fisheries together with the Ministry of Tourism, it has been ordered:

 

• The suspension of deadlines and terms for the declaration and payment of the “Eco Delta” and “Potencia Turística” fees, effective September 15, 2025, for a period of two months.
• No interest or penalties will accrue on obligations that fall within the suspension period.
• The obligation to declare and pay remains in force; therefore, airlines must comply with these obligations once the suspension period ends or earlier, if lifted through a new ministerial agreement.

 

Reason for the suspension:

 

This measure is adopted as part of the merger by absorption of the Ministry of Tourism into the Ministry of Production, Foreign Trade, Investments and Fisheries, in order to ensure a proper administrative transition and guarantee due process in tax and collection procedures.

 

Summary of the fees:

 

• Eco Delta: Fee applied to international airline tickets issued in Ecuador, aimed at fostering air connectivity and promoting tourism.

 

• Potencia Turística: Contribution created to finance national tourism development and promotion projects.

Chester Salazar, Senior Associate at  CorralRosales
csalazar@corralrosales.com
+593 2 2544144

Veronica Olivo, Associate at  CorralRosales
volivo@corralrosales.com
+593 2 2544144

Update of asset thresholds for entities subject to the supervision of the Superintendence of Companies, Securities and Insurance, requiring their annual financial statements to be submitted to mandatory external audit.

Supplement No. 118 of the Official Register, dated September 5, 2025, published Resolution No. SCVS-INC-DNCDN-2025-0005 of August 27, 2025, issued by the Superintendence of Companies, Securities and Insurance, which, for the purposes of external audit, the amounts that were previously expressed in United States dollars have been replaced with values equivalent to a specific number of minimum wages. In this manner, the thresholds applicable to the assets of domestic entities, as well as branches of foreign corporations or other foreign companies organized as legal entities, shall be adjusted automatically on an annual basis.

Under these amendments, the following entities are required to submit their annual financial statements to external audit review:

1. a) Domestic mixed-economy companies, corporations, and simplified joint-stock corporations with the participation of public entities or private legal entities with a social or public purpose, whose assets exceed two hundred seventy-three (273) minimum wages.
2. b) Branches of foreign corporations or enterprises organized as legal entities and established in Ecuador, provided that their assets exceed two hundred seventy-three (273) minimum wages.
3. c) Domestic corporations, limited liability companies, partnerships limited by shares, and simplified joint-stock corporations whose assets exceed one thousand three hundred sixty-six (1,366) minimum wages.
4. d) Entities subject to the control and oversight of the Superintendence of Companies, Securities and Insurance, which are required to file consolidated financial statements.

For purposes of the Regulation on External Audit, “assets” shall mean the total assets recorded in the statement of financial position submitted by the respective company to the Superintendence of Companies, Securities and Insurance in the prior fiscal year.

These amendments shall apply from the statement of financial position corresponding to the fiscal year 2025.

Milton Carrera, Partner at CorralRosales
mcarrera@corralrosales.com
+593 2 2544144

In the Third Supplement to the Official Registry No. 112 of August 28, 2025, the Organic Law on Social Transparency was published.

The Fifth Amending Provision modifies the Mining Law (the “Law”) as follows:

Exploration Stage of the Mining Concession

Before the expiration of the initial exploration period, if the concessionaire wishes to continue mining exploration activities, it must request approval from the Sectoral Ministry to transition to the advanced exploration period for a term of four years. This request must include: an express waiver of part of the concession area; and evidence of compliance with the minimum activities and investments required during the initial exploration period.

For concessions obtained through auction or tender, the concessionaire must also demonstrate compliance with:

1. The minimum investment amounts established by law; and
2. The committed investment declared in its financial bid for each concession granted.

If the Sectoral Ministry fails to issue the corresponding resolution within sixty (60) days from the approval of the request, advanced exploration shall be deemed authorized.

Caducity of Mining Rights

In the administrative process for the caducity of a mining concession due to any of the causes established in the Law, the timeframe for the concessionaire to prove compliance with its obligations, submit defenses, and provide supporting evidence is reduced from forty-five (45) to fifteen (15) days.

If an administrative resolution determines that obligations remain outstanding, the concessionaire will have fifteen (15) days (previously forty-five) to remedy the non-compliance. Failure to do so within this period will result in the Sectoral Ministry declaring the forfeiture of mining rights through a reasoned resolution.

Caducity of mining rights shall also be declared automatically, without the need for further administrative proceedings, if the environmental authority has determined and notified the existence of environmental damage.

New Cause of Caducity for Non-Payment

Within the grounds of caducity due to non-payment of fees, royalties, and other rights or taxes established under this Law and its Regulations, administrative fees are now expressly included, broadly and without specific limitation

New Cause of Caducity for Breach of Economic Commitments

A new unnumbered article following Article 177 establishes that mining concessions obtained through auction or tender shall be terminated if the concessionaire fails to comply with either the minimum investment amounts or the committed investment set forth in its financial bid.

Verification Process of Minimum Investment and Committed Investment

The Ninth Transitory Provision instructs the Mining Regulation and Control Agency, within ninety (90) days, to verify whether mining concessions obtained through auction or tender have complied with the minimum investment amounts and the committed investment proposed in the financial bid. The results must be reported to the Sectoral Ministry to initiate, if applicable, forfeiture proceedings.

 

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