On September 13, 2018, the Labor Ministry signed the Ministerial Decree No. MDT-2018-0192, that establishes new regulations regarding special contracts for the sectors of manufacturing and software development.
The aim of the Decree is to regulate the labor relations within the normal objective of the business. Hence, the application of this Decree exempts employees who carry out administrative functions and activities that do not correspond specifically to these sectors.
In this respect, you need to know the following:
1. These sectors must subscribe a Full Time Labor Contract for the duration of the project.
2. Working week of this contract is 20-40 hours, which may be distributed up to 6 days, until per 8 hours each.
3. It is mandatory that the employers shall request for approval of schedules before Labor Ministry (LM), record of contracts in the Web Portal of LM within 10 days since them subscriptions, and, notify the Social Security Institute regarding to the employees.
4. In order to calculate the remuneration, the formula determined in the Decree must be observed.
5. The extraordinary and supplementary hours will be paid with a surcharge of 50% and 100%, respectively, in accordance with the labor Code.
6. Upon agreement between the parties, the proportional values of the labor benefits may be paid on a prorated basis, in accordance with the Decree.
7. Employers solely can apply this contract for new recruits.
Finally, this Decree must be published in the Official Register in order to come into force.
MINERGIA Magazine – LEGAL MINING, http://www.minergiaec.com/ There are no talks regarding the stoppage of mining exploitation experienced in the country in recent years. After the promulgation of Constitutional Mandate No. 6 – known as the Mining Mandate –
By Zumarraga César in Features , NATURAL RESOURCES, ENERGY AND INFRASTRUCTURE , news
Effective April 13, 2018, the Organic Code of Environment (OCE) will come into force. This Code regulates the administrative–environmental matters, and guarantees: i) the right of people to a healthy and balanced environment; and, ii) the rights of Nature.
Following is a summary of the OCE’s effects:
By Grefa Carla in NATURAL RESOURCES, ENERGY AND INFRASTRUCTURE , news
On June 21, 2018, the National Assembly of Ecuador approved the final draft of the Law for Production Development, Investment Attraction, Employment Generation and Fiscal Stability (hereinafter “Production Development Law” or the “Reform”). This law is geared towards the economic sector and modifies various other pieces of legislation. The most significant changes that have a direct impact on the mining industry are summarized hereunder:
The Production Development Law modifies the relevant part of the Organic Internal Tax Regime Law that establishes a 22% rate on earnings obtained from transferring share capital of a company or rights arising from concessions, for both residents and non-residents of Ecuador.
Currently, the Reform is confusing and contradictory. Nevertheless, we expect the President’s Office to correct this ambiguity. Based on our review, it is evident that the Reform divides the capital gains tax into two scenarios: i) when the gains arise for a company residing in Ecuador, a progressive table ranging from 0% to 10% will be applied to the earnings generated from said operation; or, ii) when said gains are obtained by a company that does not reside in Ecuador, the tax rate will always be 8%.
By all means, the Reform substantially mitigates the current capital gains tax, which was heavily criticized by the mining industry for being excessive.
The Reform includes one of the most widespread petitions throughout the industry, which is the elimination of the Windfall Profit Tax.
This tax levied a rate of 70% on the difference between the sale price of the metal extracted from the ground and the base price established in the Mining Exploitation Contracts. Although modifications were made to the regulatory standards in order for the calculation of this base price to have a reduced effect on investors, the tax in and of itself reflected the State’s intolerance for investors to earn a fair profit based on the risk that they take on in projects that require significant investments.
Without a doubt, this is the best news the mining sector has received in a long time.
In accordance with the Reform, mineral royalties will range from 3% to 8%, calculated as NSR (Net Smelted Return), as set forth in the applicable standard.
Currently, the royalty starts at 5% for largescale mining. Said percentage has been negotiated in the signed exploitation contracts. Therefore, it would not be surprising if investors establish reduced, more convenient royalties (3%) with the State in future exploitation contracts.
By Zumarraga César in NATURAL RESOURCES, ENERGY AND INFRASTRUCTURE , news
Through Ministerial Agreement No. 28, dated May 22, 2019, the Ministry of Energy and Non-Renewable Natural Resources issued the Update to the Mining Public Policy, which has been in effect since 2016. This proposal was drafted with contributions from the Inter-American Development Bank (IADB).
The prepared document has 6 strategic concepts, for which the respective public policy has been set out with certain guidelines and effective interventions by the State. A brief summary is presented hereunder:
CONCEPT 1 – ECONOMIC DEVELOPMENT: Looks to position mining as a relevant economic sector in the country, by increasing and diversifying the production, allowing for national and foreign long-term private investments. In order to reach this goal, the following effective interventions have been taken into consideration:
CONCEPT 2 – ENVIRONMENTAL AND SOCIAL SUSTAINABILITY: The goals of this concept are: i) promote the adoption of good environmental and safety practices; and, ii) coordinate the relations between mining stakeholders, by strengthening community relations and social responsibility of the concessionaires, and reinforce the governing levels through dialogue. In order to reach this goal, the following effective interventions have been taken into consideration:
CONCEPT 3 – RESEARCH AND DEVELOPMENT: Looks to foster research, innovation, transfer of technology and entrepreneurship in the mining sector, through lines of international cooperation and association between the public, productive and educational sectors. As a result, formation, training and education of skilled and certified workers in the country is expected to be strengthened. In order to reach this goal, the following effective interventions have been taken into consideration:
CONCEPT 4 – MANAGEMENT AND ADMINISTRATION: The goal of this concept is to articulate the functions and authorities of the public institutions involved in the mining sector, through intra- and inter-sectorial coordination, transparency, and access to public information. In order to reach this goal, the following effective interventions have been taken into consideration:
CONCEPT 5 – REGULATION, CONTROL AND COMBATING ILLEGAL MINING: : Looks to strengthen State regulation and control through audit, fiscalization and monitoring processes of mining activities. Additionally, it promotes the prevention, combat and sanctioning of illegal mining. In order to reach this goal, the following effective interventions have been taken into consideration:
CONCEPT 6 – STANDARD: The goal of this concept is to promote improvements to legal standards, allowing for juridical security, while fostering mining development according to the requirements of the sector. In order to reach this goal, the following effective interventions have been taken into consideration:
Finally, it is worth mentioning that, within 180 days of the publication of the aforementioned document, the update to the National Mining Development Plan is expected
By ZVS Tobar in NATURAL RESOURCES, ENERGY AND INFRASTRUCTURE , news