On December 9, 2024, the Organic Law for Financial Relief and Economic Strengthening of Generations in Ecuador was published in the Fifth Supplement of Official Register No. 699. This law provides financial relief measures due to issues arising from energy rationing in the country, within the following areas:

Taxation Area
Employers, whether natural persons or companies, except for banks classified as "large," may access a tax credit on income tax for the year 2024, calculated on the employer's contribution to social security for the last quarter of the year, provided that they have not terminated their workers and that they maintain them under equal or better conditions. The tax credit will be equivalent to between 5% and 45% of the paid employer contribution, depending on the type of institution.

At the taxpayer's request, a 12-month payment plan may be applied for overdue taxes received and withheld as of October 31, 2024.

Extinction of firm debts for tax obligations with the Central Tax Administration that do not exceed a unified basic salary (USD 460), including tax, interest, and fines, that have been overdue for more than one year, demonstrating that collection or coercive actions have been undertaken. The sectional and exceptional tax administrations may voluntarily apply this measure.

Condonation of income tax for RIMPE – POPULAR BUSINESS taxpayers for the years 2022 and 2023.

The exemption for income generated by the occasional sale of real estate for natural and legal persons is reestablished, provided that it does not exceed two (2) sales in the year.

Remission of interest, fines, and surcharges for obligations with GADs and their public companies, as well as with the ANT, the General Comptroller's Office, and those generated by educational loans granted by any public institution.

Social Security Area
Immediate access to unemployment insurance for individuals who have been terminated from their jobs between November 2024 and February 2025, under the following conditions:

• Register a notice of departure during the reference period.
• Have 24 non-simultaneous accumulated contributions, of which 6 must be continuous.
• Be unemployed for at least 10 days, according to the notice of departure, to apply for payment.
• Not be retired.

The guarantees for granting payment facilities for mortgage loans with BIESS will apply to the outstanding value of the original obligation.

Refinancing of mortgage loans with BIESS valid as of September 30, 2024, for one additional occasion, with a grace period of 90 days.

Employers will not incur liability for the failure to comply with contribution obligations for November and December 2024, as long as they are paid within 90 days.

Compensation of reserve funds of natural persons, not committed to unsecured loans, with obligations to IESS.

Financial Area
The executive may order Financial Institutions to forgive interest on credit operations in arrears that are undergoing refinancing processes, except for BIESS.

Implementation of extraordinary and temporary deferment programs for financial obligations, which will not incur additional costs, by public, private, and popular and solidarity financial sectors.

Condonation of 100% of debts for educational loans for individuals with disabilities and/or catastrophic, orphan, or rare diseases.

Condonation of debts with closed banks with an initial capital value of USD 10,000, and for interest and other debts between USD 10,000 and USD 50,000 of initial capital.

Remission of interest, judicial expenses, fines, and surcharges for debtors of the public financial system for productive loans, which can be requested until February 28, 2025.

Other Measures
Remedial measures for users and payment facilities on bills, while the electrical emergency lasts, to be applied by service providers of internet access and mobile service.

The law includes an administrative procedure to file complaints related to excessive billing for electricity service consumption, providing guarantees to the final customer.

Suspension of the application of automatic increase clauses in the renewal of lease contracts, both between private parties and between private parties and the State.

Important Note
These measures are complemented by those provided by Resolution No. JPRF-F-2024-0123 of November 5, 2024, from the Board of Financial Policy and Regulation, which states:

New period for refinancing and restructuring loans:
For financial entities in both the public and private financial sectors, as well as entities in the popular and solidarity financial sector, the period within which credit operations with overdue balances that can be refinanced or restructured has been modified. In both cases, the period will be from August 10, 2023, to October 31, 2024.

New credit operation:
In the case of new resources granted by the financial entity, a new credit operation will be generated solely for the additional resources, with a payment periodicity aligned with the debtor's business cycle.

Definitions:
Temporary and extraordinary deferment of credit operations is the process by which entities in the public and private financial sectors (or popular and solidarity) postpone the payment of upcoming installments of operations in effect as of September 30, 2024, or at the time of implementing the mechanism, for up to ninety (90) days. The deferred installments may be moved to the end of the corresponding amortization schedule, and the financial entities may determine whether to charge interest on the deferred installments, which condition must be expressly notified to the client/member. This deferment mechanism may be applied until March 31, 2025.

Initiative request:
This deferment mechanism may be requested by the client/member at the initiative of the creditor financial entities, applying relevant notification and implementation procedures.

Express acceptance:
The deferment will apply when the client indicates their acceptance explicitly, by any means.

Deferment as a new operation:
The temporary and extraordinary deferment of credit operations does not constitute a new operation and, therefore, no legal costs or fees will be charged, and the deferred installments will not generate late interest.

New information structures to be established by SB and SEPS:
The Superintendencies of Banks and Popular and Solidarity Economy will have 2 months (from November 5, 2024) to establish the relevant information structures so that the new resources granted under the extraordinary refinancing and restructuring mechanism are reported with an A1 rating at the time of their implementation.

Additionally, they must establish the information structures that allow identifying credit operations whose installments are deferred. This information will be provided to credit information bureaus (in the case of the Superintendency of Banks) or to the Superintendency of Banks (in the case of the Superintendency of Popular and Solidarity Economy, for final delivery to the bureaus).

This is a summary of the cited law, containing only information we have deemed relevant and does not necessarily reflect the opinion of Robalino®; therefore, it cannot be considered as provided advice.

If you would like to know more information about the content, do not hesitate to contact us at unidadtributaria@robalinolaw.com, criofrio@robalinolaw.com, and rserrano@robalinolaw.com.