Economic Urgency Organic Law Approved by National Assembly

January 4th, 2024

On December 20, 2023, the Economic Urgency Organic Law (“Law”) was published in the Official Gazette, which included several modifications and reforms, mainly, to the tax laws and regime. Among others, the Law reformed: (i) additional tax deductions for young employment (18-29 years), ex- convicts and their spouses; (ii) additional tax deductions for support and sponsorship to athletes, sports events, scholarships, education institutes, donations of equipment to the National Police; (iii) up to 10% auto withholding income tax for major tax contributors.

Reforms to the Mining Law

As per article 40 of the Mining Law (Mining Services Agreement), the mining concessionaires that execute Mining Services Agreement are exempted to pay royalties, but the national Government will pay a 3% royalty to the provincial, cantonal and parish GADs for specific social development and infrastructure.

In article 67 of the Mining Law, the Law eliminates the obligation of the GADs to finance the local projects through the State Bank and establishes that the funds will be transferred by the Ministry of Economy and Finance to the GADs.

Article 93 of the Mining Law was reformed to clarify that the funds corresponding the 60% of the mining royalties will be transferred by the Ministry of Economy and Finance to the GADs in the same fiscal year that the royalties were received and without any consideration or additional requirement for the GADs. The distribution will be as follows: 45% for the provincial GADs, 35% for the cantonal GADs and 20% for the parish GADs, belonging to the areas of influence. The funds will be used for specific social development and

infrastructure detailed in the Law.

Unfortunately, the reform did not clarify if the transfers will be made to the Amazonian Circumscription Territory Fund and kept the original language contained in the Mining Law.

For more information, please do not hesitate to contact us.

This bulletin contains a summary of legal developments of interest, and therefore cannot be considered as advice provided. If you have any concerns, please contact the team at AVL Abogados.



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