Energy & Petroleum

A Presidential Decree approved the partial reform that modifies, among other things, the corporate purpose of the mixed company Petroquiriquire, S.A. Likewise, the National Executive approved the transfer to the aforementioned company of the rights for the development of the primary activities of exploration, gathering and transfer of oil in
the geographic areas denominated "Campo la Ceiba-Occidente, Campo Tomoporo-Bloque VII-CEUTA” of the State of Zulia for a period of twenty five (25) years as from the date of publication of the Decree in the Official Gazette. (Official Gazette No. 6.801 Extraordinary of 17/04/2024. Entry into force: On the date of publication in the Official Gazette).

A Presidential Decree approved the creation of the mixed company Petrolera Roraima, S.A. Likewise, the National Executive approved the transfer to the aforementioned company of the rights for the development of the primary activities of exploration, gathering and transfer of oil in the geographic areas designated by the Ministry of the
Popular Power for Petroleum, for a period of twenty five (25) years as from the date of publication of the Decree in the Official Gazette. (Official Gazette No. 6.801 Extraordinary of 17/04/2024. Entry into force: On the date of publication in the Official Gazette).

Banking and Finance

The Venezuelan Central Bank (VCB) established the interest rates applicable to obligations derived from employment
relationships (58.98% and 47.49% - April 2024) and to transactions with credit cards (60.00% annual maximum rate and 17.00% annual minimum rate - May 2024). (Official Gazette of 05/21/2024. Official Notice. Entry into force: Upon publication in the Official Gazette).

Tax

The new Customs Tariff was approved, which incorporates the VII Recommendation of Amendment of the Harmonized System based on the Mercosur Common Nomenclature (Nomenclatura Común del Mercosur - NCM), thus abrogating the Decree No. 2,647 dated 12/30/2016, published in Official Gazette No. 6,281 Extraordinary, dated 12/30/2016. (Official Gazette No. 6804 Extraordinary of 04/25/2024. Administrative Rulings Nos. SNAT/2024/00005and SNAT/2024/00006. Entry into force: 30 days upon publication in the Official Gazette).

The National Integrated Service of Customs and Tax Administration (Servicio Nacional Integrado de Administración Aduanera y Tributaria - SENIAT) established the rate applicable to the calculation of late payment interest accrued during September and October, 2023. It was established that the weighted average interest rates for loans of the
six (6) principal commercial and universal banks of the country with the highest volume of deposits, excluding portfolios with prime rates, set by the VCB for September 2023 is 57.84%, and for October 2023 is 56,14%, which rates are to be increased 1.2 times for the calculation of late payment interest accrued during said months. (Official Gazette
of 05/21/2024. Official Notice. Entry into force: Upon publication in the Official Gazette).

Labor

The National Assembly issued the Law of Partial Reform of the Decree with Rank, Value and Force of Law of the Housing and Habitat Benefit System, establishing, among others, the contribution of 0.5% for individuals or legal entities of the total estimated amount of the works projects whose cost exceeds 500,000 times the Exchange Rate of the Highest Value Currency published by the VCB. (Official Gazette No. 6.805 Extraordinary of 05/01/2024. Entry into force: 30 days upon publication in the Official Gazette).

The National Assembly issued the Law for Protection of Social Security Pensions in the face of the Imperialist Blockade (The Law), which creates a special contribution which amount will be up to 15% of the total payments made by taxpayers to the workers on account of salary and non-salary bonuses, amount to be fixed annually by the National
Executive. The calculation basis of the special contribution may not be lower than the indexed minimum integral income defined by the National Executive. (Official Gazette No. 6.806 Extraordinary of 05/08/2024. Entry into force: Upon publication in the Official Gazette). Likewise, a Presidential Decree established that the amount of the special
contribution provided for in the Law was set at nine percent (9%) of the total payments made by taxpayers to workers. (Official Gazette of 05/16/2024. Entry into force: Upon publication in the Official Gazette). Finally, the SENIAT issued an Administrative Ruling establishing the rules of declaration and payment of the special contribution for the Law, as well as the corresponding declaration and payment schedule. (Official Gazette of 05/17/2024. Entry into force: Upon publication in the Official Gazette).

Civil Aeronautics

The National Assembly issued the Law Approving the Agreement between the Government of Venezuela and the
Government of China on Air Services, which has the purpose of granting overflight rights over the territory of the other party of the Agreement, making technical stopovers for non-commercial purposes, with the proviso that neither of the parties shall have the privilege of embarking passengers, cargo and mail in the territory of the other Party for lucrative purposes and with destination to another destination without prior authorization. (Official Gazette No. 6.807 Extraordinary of 05/13/2024. Entry into force: Upon the date of receipt of the last notification, by means of diplomatic notes, from any of the Contracting Parties to the other Contracting Party).

Misclellaneous

The Ministry of the Popular Power for Ecosocialism issued the Rules for the Integral Management of Waste of Electrical and Electronic Equipment, which will be aimed at the management of recoverable hazardous materials and hazardous waste in order to reduce their generation and guarantee the mechanisms of use and final disposal of such waste. (Official Gazette of 05/03/2024. Entry into force: After 90 days upon the date of publication in the Official Gazette).

The National Assembly issued the Law Approving the Agreement between the Government of Venezuela and the
Government of Turkey, concerning the reciprocal promotion and protection of investments, which purpose is to stimulate and create favorable conditions for investors to make investments in each of the territories of the contracting parties. (Official Gazette No. 6.808 Extraordinary of 05/13/2024. Entry into force: Upon the date of receipt of the last
notification, by means of diplomatic notes, from any of the Contracting Parties to the other Contracting Party).

New Rules for Exemption from Capital Gains Tax on the Sale of Property

The government recently announced a change to the capital gains tax exemption rules, providing significant tax relief for property owners.

Previously, in order to benefit from the IRS exemption on capital gains tax resulting from the sale of a property, the property had to have been kept as a permanent home/tax residence for at least 24 months prior to the sale and the sale proceeds had to be applied or invested in the acquisition of another property that would be the new permanent home/tax residence.

With the new rule, this period has been reduced to 12 months, offering greater flexibility, and encouraging mobility in the real estate market.

This measure comes in the context of a government strategy to boost the real estate sector, facilitating access to housing and promoting the renovation of the housing stock. The reduction in the exemption period is especially advantageous for those looking to sell their home quickly to reinvest in another property, without the concern of incurring in heavy taxation on capital gains.

TAX

The Organic Law to Address the Internal Armed Conflict, Social and Economic Crisis, published on March 12, 2024, in the Official Gazette, introduces significant reforms in tax matters:

Value Added Tax (VAT):

• The VAT rate is increased from 12% to 15%.
• The VAT rate on local transfers of construction materials is set at 5%. The VAT increase takes effect on April 1.

Temporary Security Contribution:

• A contribution of 3.25% on profits subject to income tax for the fiscal year 2022 is established for companies that generated profits during that period. This contribution must be paid in the fiscal years 2024 and 2025, with deadlines established by the IRS, and penalties for non-compliance.

Temporary Contribution to the Banking Sector:

• A contribution is established on profits generated in the fiscal year 2023 by banks and savings and credit cooperatives, with rates ranging from 5% to 25% depending on the taxable profit.

Currency Exit Tax:

• The ISD rate is raised to 5%, with the possibility of modification by the President following a favorable opinion from the public finance governing body. The regulation for the application of this law must be published by the President within a maximum of 30 days from its entry into force.

TOURISM

The Organic Law for the Strengthening of Tourism Activities and Promotion of Employment introduces significant changes to Ecuadorian tax legislation. Among the most notable reforms are:

• Payments abroad for the organization, production, and presentation of artistic and cultural events in Ecuador, made by taxpayers registered as tourism service providers, will be subject to a 15% income tax withholding. If the recipient resides in tax havens, the withholding will be applied according to the general rate.
• Additionally, the VAT can be reduced to 8% for tourism services on specific days.
• Uncompensated VAT on the acquisition of goods for the production of construction materials can be considered a deductible expense.
• It is established that payments abroad made by national and foreign airlines operating within, from, and to Ecuador, and having an operating permit, will be exempt from the Currency Exit Tax. The Internal Revenue Service will determine the procedures for its application.

• Furthermore, the Organic Code of Territorial Organization, Autonomy, and Decentralization  is reformed, allowing Decentralized Autonomous Governments to qualify tourism investment or reinvestment projects to access a total exemption from municipal taxes, fees, and contributions for a period of seven years.

• Individuals engaged in commercial transport using tricycles will be entitled to a tax credit for the VAT paid on the purchase of these vehicles. The commercialization of mineral substances is subject to a 10% income tax withholding, although it does not apply to Large Taxpayers.

ECONOMICS

Pitahaya Sets Export Record with Over USD 172 Million in 2023

In 2023, Ecuador's agricultural industry marked a significant milestone with record-breaking fresh pitahaya exports reaching $171.7 million, a 72% increase from 2022, according to the Central Bank of Ecuador. This achievement positions pitahaya as a leading non-traditional export product.

Since opening the U.S. market in 2017, followed by Peru in late 2022 and China in April 2023, pitahaya exports have soared. The U.S. remains the primary market, receiving 80% of Ecuador's production, valued at $137.1 million. Other key markets include Hong Kong (6.55%), Spain (3.53%), Peru (2.35%), and Canada (1.85%).

With a Free Trade Agreement with China underway, exports to China are expected to surge, as the current 20% tariff will be immediately reduced to 0% upon the agreement's implementation.

Pitahaya farming supports around 15,000 families in Ecuador, primarily producing two varieties: yellow and red,

Renowned for its unique tropical flavor and aroma, Ecuadorian pitahaya benefits from exceptional soil and farming conditions. It holds the "Pitahaya Amazónica de Palora" designation of origin, Good Agricultural Practices certification, and international Global GAP certification.

EXTERNAL INVESTMENT

Ecuador Secures Over USD 4.8 Billion in Sustainable Mining Investments

At the World Mining and Exploration Convention in Toronto, Canada, Ecuador's President and his official delegation participated in "Ecuador Day." Organized by the Ecuadorian Chamber of Mining, the event aimed to highlight the country's mining potential, attract foreign investment, and promote sustainable mining practices.

During the official agenda, the head of the Ministry of Production, Foreign Trade, Investments, and Fisheries, signed six investment agreements. These agreements formalized the mutual interest between the Ecuadorian state and investors to develop mining projects, laying the groundwork for future negotiations and collaboration focused on sustainable, responsible, and long-term business practices.

The MTEPS regulates the salary increase applied to workers for the 2024 fiscal year.

 On May 1, 2024, the Bolivian government promulgated Supreme Decree No. 5154, which aims to establish a 3% increase in the basic salary and a 5.85% increase in the National Minimum Wage, resulting in a new amount of Bs.2,500. It applies to all private sector workers. It will be retroactive from January 2024, must be paid by May 31, 2024, and reported to MTEPS by June 30, 2024. In the public sector, it applies to the following sectors: Health, Fiscal Teaching, Departmental Service of Social Management, Armed Forces, and Bolivian Police.

Tax incentives for the importation of flex-fuel technology vehicles and hybrid vehicles.

Supreme Decree No. 5142 of April 10, 2024. Supreme Decree 5142 implements customs and financial tax policies to incentivize the importation and manufacturing of flex-fuel technology vehicles, as well as tax incentives for importing hybrid vehicles. The objective is to "encourage the use of plant-based additives through the importation of flex-fuel technology vehicles, diversifying the energy matrix, and modifying the tax treatment for the importation of hybrid vehicles." The rates for the Customs Duty (GA) and the Specific Consumption Tax (ICE) for the importation of flex-fuel technology motor vehicles will be zero percent for three years, while the rates for the Customs Duty and the ICE for the importation of self-recharging hybrid vehicles will be 10%.

New Regulation for the Registration of Foreign Investment in the Plurinational State of Bolivia. Board Resolution No. 043/2024 of March 26, 2024.

The president of the Central Bank of Bolivia (BCB), Edwin Rojas, presented the "Online RIOF System" (RIOF) developed by the Issuing Entity to facilitate the timely submission of this statistical information, allowing the creation of various specialized documents that it publishes, such as the "Balance of Payments and International Investment Position Report," the "Foreign Private Capital in Bolivia Report," and the "Private External Debt Report."

Corporate/M&A

Disclosing duties

Bolivia has regulations to transparently disclose information and identify the holders of bearer shares. Official Gazette, April 5th, 2023. - With the purpose of disclosing information transparently and identifying the holders of bearer shares, this Supreme Decree aims at requiring commercial companies with bearer shares to submit information to the Authority for Business Supervision - AEMP. The companies must report current and future shareholders through an affidavit by the company’s legal representative. Non-compliance may result in fines and other legal actions.
Commercial Registry Before April 1st, 2022, the commercial service registry was carried out in Bolivia by the Foundation
for Business Development. The latter has been replaced by the Plurinational Service of Commercial Registry or Seprec. However, registration for merger operations were enabled in the Seprec only after January 16th, 2023, while the registration for spin-offs is still suspended until further notice.

Tax

Gold Law

Law No. 1503 of May 5th, 2023, authorized the Bolivian Central Bank to purchase gold in the domestic market to strengthen the international reserves. The law provides tax exemptions, including Value Added Tax (VAT), for gold transactions.

Banking and Finance

The Venezuelan Central Bank (VCB) established the interest rates applicable to obligations derived from employment relationships (58.98% and 47.49% - March 2024) and to transactions with credit cards (60.00% annual maximum rate and 17.00% annual minimum rate - April 2024). (Official Gazette of 04/24/2024. Official Notice. Entry into force: Upon publication in the Official Gazette).

Tax

The National Integrated Service of Customs and Tax Administration (Servicio Nacional Integrado de Administración Aduanera y Tributaria - SENIAT) legalized the issue and circulation of liquor warranty seals. (Official Gazette of 04/05/2024. Administrative Ruling No. SNAT/2024/000017. Entry into force: Upon publication in the Official Gazette). The SENIAT established the rate applicable to the calculation of late payment interest accrued during January 2024. It was established that the weighted average interest rates for loans of the six (6) principal commercial and universal banks of the country with the highest volume of deposits, excluding portfolios with prime rates, set by the VCB for January 2024 is 57.84%, which rate is to be increased 1.2 times for the calculation of late payment interest accrued during said month. (Official Gazette of 04/05/2024. Administrative Ruling No. SNAT/2024/000022). A Presidential Decree exempted from payment of income tax the income obtained by the holders, natural and legal persons, residing or domiciled in the Bolivarian Republic of Venezuela, derived from investments made in securities or other instruments of similar nature, issued and guaranteed by the Venezuelan Central Bank. The exemption benefit will have a duration of one (1) year as from the date of its entry into force. The exemption will be applied to the fiscal year that is ongoing, as from the date of entry into force of the Decree. (Official Gazette of 04/30/2024. Decree No. 4.949. Entry into force: As from 05/08/2024).

Labor

The National Assembly issued the Law for Protection of Social Security Pensions in the face of the Imperialist Blockade. The purpose of said Law is to establish mechanisms for protecting social security pensions. The Law creates a special contribution applicable to legal persons, partnerships, including those not formed pursuant to formal legal requirements and de facto associations, of private character, domiciled or not domiciled in the Bolivarian Republic of Venezuela, which perform economic activities in the national territory. The amount of said contribution will be of up to 15% of the total payments made by the taxpayer to the workers on account of salary and non-salary bonuses. The calculation base of the special contribution may not be lower than the indexed minimum integral income defined by the National Executive. (Official Gazette No. 6.806 Extraordinary of 05/08/2024. Entry into force: Upon publication in the Official Gazette).

Miscellaneous

The National Assembly issued the Organic Law for the Defense of the Guayana Esequiba. (Official Gazette No. 6.798 Extraordinary of 04/03/2024. Entry into force: Upon publication in the Official Gazette). The Ministries of the Popular Power for Productive Agriculture and Lands, for Defense, for Petroleum, for Internal Affairs, Justice, and Peace, and for Transportation, established, through a Joint Resolution, the mechanisms for control of carriers and end users of mineral or chemical fertilizers in the national territory. The requirements and formalities of control registry requested by the Sole National Registry of Operators of Controlled Chemical Substances (Registro Nacional Único de Operadores de Sustancias Químicas Controladas (RESQUIMC) and those of the General Directorate of Arms and Explosives (Dirección General de Armas y Explosivos - DAEX) for the companies that carry out activities and formalities for production, importation, and exportation of the mineral or chemical fertilizers mentioned in the Resolution and covered by legal regime 7 and 11 of the schedule of customs duties continue to be in force. (Official Gazette of 04/12/2024. Joint Resolution DM/No. 002/2024, DM/No. 054903/2024, DM/No. 0012/2024, DM/No. 032/2024, andDM/No. 015/2024. Effectiveness: From 04/01/2024 up to and including 03/31/2025).