CorralRosales among the five most popular firms in Ecuador employed by International Legal Management Offices

CorralRosales among the five most popular firms in Ecuador employed by International Legal Management Offices

DETAILS

DATE: 07-04-2021

MEDIA: Latin Lawyer

The prestigious Latin Lawyer media has published its latest report entitled: “Who Represents Latin America’s Biggest Companies?”. CorralRosales stands out among the five most popular firms in Ecuador employed by legal management offices in the last year.

In recent months, and because of the COVID-19 pandemic, law firms have had to adapt to a new and complex situation. They have seen their customer relationships and expectations change. During 2020, external lawyers have been an important help for the companies’ legal services. CorralRosales has undoubtedly adapted to the “new normal” and Latin Lawyer acknowledges this in its recent yearly report.

Our firm, CorralRosales, appears among the most popular Ecuadorian firms along with other large law offices. For this report, an investigation is carried out by LACCA (Latin America Corporate Counsel Association), based on the 100 firms with the highest income in the region. The initial sorting order considers income for the last full year, headquarters and their subsidiaries as a whole, news and articles on agreements and cases related to these firms.

CorralRosales is proud to appear in this renowned Latin Lawyer report. We thank all those who have made it possible for our firm to continue growing. We will keep working hard to provide our customers with the best service.

Thanks again. Congratulations team!

If you want to see the article (under registration), click here.

Living wage 2020

living-wage-2020-labor-bulletin-corralrosales-lawyer-ecuador
On March 18th, the Labor Ministry -by Ministerial Agreement MDT-2021-087- set the living wage for 2020 on US$447,41 monthly and stablished the payment procedure.

On those cases, that living wage compensation is applicable, employer shall pay it to employees no later than March 31st, 2021.

For living wage payment, “profit” shall be understood as the value declared by the employer as accounting profit deducting: (i) employees profit  sharing, (ii) tax  or advance payment fixed for the fiscal year declared, and (iii) statutory reserve.

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DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

CORRALROSALES

Amendments to the rules for applying advance pricing agreements for operations carried out between related parties

amendments-to-the-rules-for-applying-advance-pricing-agreements-for-operations-carried-out-between-related-parties-lawyer-ecuador-corralrosales
Regulation NAC-DGERCGC21-00000013 issued on March 11, 2021 by the General Director of the Internal Revenue Service and published in the Fourth Supplement to the Official Registry 409 of March 12, 2021, amended the following regulations:
  • NAC-DGERCGC14-00001048, which establishes the content, procedure and other matters related to the filing and resolution of the advance pricing agreements for increasing the limit of deductibility (20%) of royalties, technical, administrative, and consulting services paid to related parties, and.
  • NAC-DGERCGC15-00000571, which establishes the rules for the applying the advance pricing agreements.

The following is a summary of the changes introduced in each Regulation:

Regulation NAC-DGERCGC14-00001048

Information to be included of the parties and the transactions subject to consultation:

a. Names and surnames, company name, tax identification number, country of tax residence and income tax rate of the taxpayer and the parties with whom the operations covered by the consultation are carried out,

b. Detailed description of the operations, including among other elements, their nature, characteristics, amount in US dollars of the last three fiscal years, and the effect on the taxpayer’s income,

c. If the transaction is a service, documentation must be submitted to identify its invoicing, periodicity, and form of payment. In the case of royalties, in addition to the above, the intangible asset, its owner, administrator (if applicable), the method of valuation of the intangible asset and its calculation must be fully identified,

d. Comparability analysis according to the terms described in the tax legislation, including the following elements: i) characteristics of the operations; ii) analysis of the functions or activities performed, including the assets used and risks assumed; iii) contractual terms; iv) economic or market circumstances, and v) business strategies, both of the taxpayer and its related parties involved in the operations subject to consultation,

e. Details of the search performed in the respective databases to obtain the comparable to be used. The date on which the search was performed attaching the screenshots of the filters applied in the databases, the selection and discarding matrix of the comparable. The reasons for the selecting the proposed method, in the terms contemplated for the Integral Transfer Pricing Report,

f. Copies of existing contracts, agreements or arrangements entered into by the taxpayer with related or unrelated parties, which affect, directly or indirectly, the operations covered by the valuation consultation. If applicable, copies of the cost sharing agreements, including the cost sharing criteria,

g. Audited balance sheet and income statement of the taxpayer for the last tax year as of the date of filing the consultation, including the notes to the financial statements. If the taxpayer is not required to have audited financial statements, the balance sheet, income statement and accounting books at the highest level of detail,

h. Audited balance sheet and income statement of the taxpayer’s related parties subject to the analysis, including the notes to the financial statements. If the taxpayer’s related parties are not required to have audited financial statements, the balance sheet, income statement and accounting books at the highest level of detail,

i. Balance sheet and income statement of the companies proposed as comparable for the last fiscal year. This requirement is not applicable if the taxpayer proposes the Comparable Uncontrolled Price (CUP) Method, and

j. Any other relevant information, data, or documentation that the applicant considers necessary to support the methodological proposal for valuation of related party transactions.

Application report:

In the application report the taxpayer must include the following information:

a. The working papers in Excel including: the indicator (or price) of the taxpayer, the indicators (or prices) of the comparable, comparability adjustments, interquartile range, among others, depending on the methodology.

b. Description and reasoning of any particular fact or circumstance of the fiscal year analyzed that affected the valuation of the prices or financial margins of the analyzed party.

c. The taxpayer may not file a new report when the tax authority has initiated an assessment procedure.

Regulation NAC-DGERCGC15-00000571

Deadline for submitting the request:

The request may be filed until the last working day of February of the tax period in which the application of a higher limit of deductibility is intended. For fiscal year 2021, the request may be filed until the last business day of March.

Report of transfer pricing adjustments:

In the event that, upon application of the methodology approved, there is a transfer pricing adjustment, the taxpayer must report such on the income tax form.

Substitute tax returns:

If the increase of the deductibility limit is approved, the taxpayer is able to file substitute tax returns regarding the years which income tax returns was filed prior to the notification of the response to the request. The substitute tax return must be filed within 60 days after the notification of the response.

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DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

CORRALROSALES

Reform to General Guidelines for Internships

reform-to-general-guidelines-for-interships-lawyers-ecuador-corralrosales

Labor Ministry through Ministerial Agreement MDT-2021-042, reformed the “General Guidelines for Internships”.

The Agreement establishes that students under a dual training modality may be considered for the mandatory percentage of interns.

Students under dual training are those whose professional training process occurs in educational environments and production or real services environments.

According to the Internship Law, for every 100 regular employees, employers are ordered to hire interns in a number equal to 4% of their employees who hold a professional degree. Consequently, the obligation to hire interns is subject to 2 conditions: (i) company has 100 or more employees; and (ii) at least 4% of such employees hold a professional degree.

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DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

CORRALROSALES

SENADI ignored the existence of renowned marks through an appeal resolution

el-senadi-desconocio-la-existencia-de-las-marcas-renombradas-mediante-resolucion-de-apelacion-abogados-ecuador-corralrosales

The Court of Justice of the Andean Community, a supranational body with competence to ensure compliance with Andean regulations, their uniform application and interpretation in the member countries, in the exercise of its power to interpret Decision 486 of the Andean Community, has repeatedly defined the figure of a renowned trademark or also known as highly renowned. Thus, it has expressly said that: “The notorious trademark regulated in Decision 486, which we can call an Andean notorious trademark, is that which is notorious in any member country of the Andean Community (…). The renowned trademark, for its part, is not regulated in Decision 486, but due to its nature, it receives special protection in all four member countries. “[1] Departing from the interpretation of the Andean Court, the National Service of Intellectual Rights (SENADI), in an appeal resolution, expressly ignored the existence of this figure, arguing that it is not specifically provided for in the Andean regulations.

The renowned trademark, whose special protection has been repeatedly recognized by the Court of Justice of the Andean Community, presupposes its knowledge by not only the specific consumers of the product or service in question, but that this level of knowledge is extended to the general public, even to those who do not consume the products or services protected by the trademark. The special protection on this type of trademarks seeks to prevent third parties’ illicit use of the prestige they possess.

An example of the special protection that the Andean regime grants to highly renowned trademarks is shown in the evidentiary field. Thus, it has been expressly established through numerous preliminary rulings that the renowned trademark does not need to be proven, since it is comparable to what is commonly known as a well-known fact.

Although this special protection is not expressly regulated in Decision 486 of the Andean Community or in the Organic Code of the Social Economy of Knowledge, Creativity and Innovation, as it has been expressly recognized by the Court of Justice of the Andean Community, through preliminary rulings, it forms an integral part of the Andean community law, to which Ecuador is subject to.

In the case at hand, a person applied for the registration of the trademark PIZZAS DEL VALLE[2], to protect the services of bars, cafes, restaurants, catering (international class 43 services). Against this request, a third party, owner of the DEL VALLE trademark, filed an opposition based on the similarities between the signs and the renowned nature of its trademark. In first instance, SENADI just focused on comparing products and services, and concluded that the trademark applied for was registrable. There was no pronouncement on the highly renowned name argued by the opponent.

The opponent filed an appeal in which, among other arguments, he insisted on the absence of a pronouncement on the argument of the highly renowned trademark. On this issue, SENADI pointed out: “As for the appellant’s allegation regarding the highly renowned DEL VALLE trademarks, Community legislation does not recognize the existence of this figure, but only that of notoriety (…)”[3] Within the same decision, it also pointed out that: “this Court denotes the fact that once the file has been reviewed, it has not been verified that the holder has provided sufficient material to verify the veracity of his statements in accordance with the factors stipulated in the regulations, having only limited itself to pointing out that said trademarks are easily recognized by the general consumer.

The aforementioned Resolution is contrary to the Andean regulations and specifically to the binding preliminary rulings of the Court of Justice of the Andean Community regarding the protection of trademarks in the member countries.

This type of decision confirms the need for the intellectual property offices of the member countries to implement permanent updating programs on the development of Andean community law. This would not only avoid damage to users due to an erroneous interpretation of the regulations and lack of application of binding rulings, but it would also raise the level of the decisions issued, so that, in addition to solving a conflict, they become a source of reference, for lawyers and users on intellectual property issues.

[1] Preliminary ruling 07-IP-2020 of May 8, 2020.

[2] Procedure SENADI-2018-61769 of August 29, 2018.

[3] Resolution No. OCDI-2020-1042 of December 23, 2020.

Katherine González H.
Associate at CorralRosales
katherine@corralrosales.com

New deadlines for filing the personal expenses annex

nuevas-fechas-para-la-presentacion-del-anexo-de-gastos-personales-corralrosales-abogados-ecuador

Regulation NAC-DGERCGC21-00000009 issued on February 4, 2021 and published in the third supplement to the Official Registry 386 of February 5, 2021, the General Director of the Internal Revenue Service established that the personal expenses annex of the fiscal year 2020 may be filed, for this time, until the following dates:

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CORRALROSALES

Special labor regime for private higher education institutions academic staff

regimen-especial-de-trabajo-personal-academico-instituciones-educacion-superior-particulares-abogados-ecuador-corralrosales

The Labor Ministry by Ministerial Agreement MDT-2020-286 regulated the special labor agreement for private Higher Education Institutions academic staff:

– Scope: Mandatory implementation to hire academic staff on private Higher Education Institutions.

– Term for Regular Staff:  Up to 1 year (continuous or discontinuously) renewable up to 2 years. A 90-day trial period may be agreed.

– Term for Non-Regular Staff: Up to 1 year (continuous or discontinuously). The agreement may be renewed as many times as necessary. A 90-day trial period may be agreed.

– Weekly working day: Up to 40 hours per week, that may be distributed in no more than 6 days a week. A noninterrupted rest of 24 hours per week is guaranteed.

– Special leave regime: The Higher Education Institutions may grant, at the employee´s request, a special leave with or without payment.

If the leave is without payment, the employee is not entitled to labor and social benefits. The employment relationship is suspended; therefore, no seniority will be generated during it.

– Termination of the agreement: The employment relationship ends once the term has concluded, without any other formality.

– Termination for cause: Under Labor Code provisions to terminate an employment relationship with cause, prior Labor Ministry authorization (“Visto Bueno”), the following definitions shall be included:

  • Indiscipline: Breach of terms to return in cases of licenses or mobility.
  • Ineptitude: If employee obtains results below the minimum for 2 consecutive times or 3 times throughout his/her career. The term for request the Labor Ministry authorization will run from the date on the employer’s decision to separate the employee.

– SUT´s registration: Within a period of 15 days upon its execution.

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CORRALROSALES

Amendments to the tax regime for small businesses

boletin-tributario-reformas-al-regimen-de-microempresas-abogados-ecuador

Executive Decree 1240 issued on February 3, 2021 by the President of the Republic amended the Internal Tax Regime Regulations regarding the Tax Regime for Small Businesses.

It establishes that, in order to calculate the income tax, taxpayers subject to such regime must apply a 2% rate over the net sales derived from the business activity subject to this regime and subtract: (i) the income tax withholdings made in the same period with respect to the activities subject to the regime; and, (ii) the income tax credit.

It is also stated that taxpayers subject to the regime, that in the fiscal year 2020 did not obtain any profit (calculated before paying the income tax) from the economic activities subject to the regime, may:

1. Pay the applicable income tax for the fiscal year 2020 until November 2021; and,
2. Pay the applicable income tax for the fiscal year 2021 until March 2022.

Those taxpayers who have paid the tax with interest and penalties will not be entitled to request a reimbursement.

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CORRALROSALES

Case highlight: CorralRosales´s Brand Protection Team has made history once again in the fight against counterfeiting

caso-de-exito-brand-protection-de-corralrosales-combate-a-las-falsificaciones-abogados-ecuador

Great news for Ecuador

The National Service of Intellectual Property Rights (SENADI) confirmed the adoption of border measures on the import of a container with more than 600,000 counterfeit goods of different marks, especially cell phone accessories and packaging, which would have been ready to be assembled and distributed across our country.

Customs in Manzanillo, Mexico, warned about the existence of a container in transit, with Guayaquil as its final destination, which contained suspicious goods corresponding to counterfeit goods of the best-known cell phone marks. CorralRosales followed the container’s route, which included previous transit through Cartagena de Indias-Colombia and the Port of Callao-Peru, constantly making sure that the cargo was not released at these ports or that it returned to its origin, which would have prevented the border measure.

Prior to the arrival of the container at the Port Terminal of Guayaquil, CorralRosales requested the National Customs Service of Ecuador to allow them to carry out an inspection in order to determine its origin and, especially, whether or not it contained counterfeit goods. Once the verification was completed, the local IP office (SENADI) was asked to adopt a border measure to prevent the nationalization of the container, as it contained counterfeit products, which was accepted by the IP authority. The process continues through an ongoing Administrative Action. Infringers may face a fine of up to US$ 56,800 once the Administrative Action is concluded, as well as the definitive seizure of the goods.

The historic decision made by IP authorities and the actions of CorralRosales guaranteed the intellectual property rights of the owners of the affected marks, as well as the rights of potential consumers of the counterfeit goods, as possible damage to electronic equipment was prevented and even catastrophes were avoided, such as fires and more*.

This action was possible thanks to the international cooperation of our partners and the coordination between the public and private sectors, which allowed the most important border measure in the history of Ecuador.

CORRALROSALES

Foreign shareholders information

foreign-shareholders-information-corral-rosales-lawyers-ecuador
Regulation NAC-DGERCGC21-00000005 issued on January 21, 2021 by the General Director of the Internal Revenue Service establishes the transitory regime applicable in 2021 for filing information of foreign shareholders.

Prior to the enactment of the Law of Modernization of the Companies Law, on December 10, 2020, limited liability companies and corporations were required to submit to the Superintendence of Companies, in the month of January of each year, the list of foreign shareholders.

The aforementioned Modernization Law established that this information had to be filed before the Internal Revenue Service, in accordance with the terms and conditions established for such purpose.

However, Regulation NAC-DGERCGC21-00000005 issued by the Internal Revenue Service establishes that, for this one time only, companies must file this information through the web portal of the Superintendence of Companies (www.supercias.gob.ec) until January 31, 2021.

Compliance with this obligation does not exempt taxpayers from filing the Shareholders’ Annex (APS).

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CORRALROSALES

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