That the casinos or game rooms return to the free zones is one of the several approaches presented in the report of the Investment Law project, approved by the Economic Development Commission this week and that will go to the first debate in the plenary session of the Assembly National.
It was the president of this Commission, Daniel Noboa Azín, who stated during the analysis of the project that casinos and gaming houses could operate in free zones for tourist services based on the principle of extraterritoriality inherent in free regimes, since the area that includes Free zones technically do not qualify as Ecuadorian territory and in the popular consultation of 2011 these activities were prohibited within the country.
Casinos combined with investment in resorts have proven to be powerful tools for attracting foreign investment and economic development, the report said. And Japan is set as a precedent, which in similar circumstances in 2020 established its Casino Administration Committee, which operate in specific areas, despite the fact that they are penalized in the rest of its territory.
The draft Organic Law for the Attraction of Investments, Strengthening of the Stock Market and Digital Transformation has an urgent nature in economic matters, so it must be resolved until March 24, 2022. There is still no date for the first debate to begin full on.
The Executive proposes to insert the figure of the free zones by modifying the Organic Code of Commerce and Investments and correcting the current model, since in more than ten years of the scheme of Special Development Zones (Zedes) there are only five, distributed in four provinces.
Similar is the case of the free zones, whose regulation is prior to that of the Zedes. There are also five, two in airports, another two are exporters (of tuna and flowers) and the last one corresponds to the Quito cable car.
The Minister of Production, Julio José Prado, detailed in his appearance the tax benefits applicable to those companies that operate within the free zones: ten years of exemption from income tax, from the eleventh year a reduction of up to 10 % income tax until year 20, exemption from the importation of capital goods and raw materials, exemption from the tax on foreign currency outflows and a 0% VAT rate for the acquisition of goods and services.
The new regime proposed by the Executive would be activated through private initiative, clear mechanisms are established for the constitution of a free zone, this may be operated in a single or multi-company manner, and may be dedicated to other sectors.
Commission approved report for the first debate of the Investment Law with changes in delegation, free zones and other aspects
The bill establishes that free zones may not be used for the relocation of companies or investments. However, in the debate within the Commission, the proposal was raised to allow Ecuadorian entrepreneurs to benefit from this system through new investments, even if they are issues related to the same line of business. An example could be the establishment of laboratories to improve agro-industrial production.
No appearances were received that consider the implementation of free zones to attract investment unwise, although there is some concern about possible confusion, for example, of maintaining two identical regimes such as free zones and special development zones at the same time, Because it could confuse investors, it has been recommended to completely eliminate the Zedes regime and leave a transitory provision that guarantees tax and legal stability to already qualified Zedes, but with the option that they can migrate to free zones.
In a general provision of the project it is established that the companies that are included in the regime of Special Economic Development Zones, as well as the free zones authorized prior to the entry into force of this reform, including those created prior to the enactment of the Organic Code of Production, Commerce and Investments, will continue to function under the scheme and with the benefits with which they were approved, without requiring new authorization.
The Special Economic Development Zones they are a customs destination, within a delimited space of the national territory, for new investments to be settled with incentives, which will be conditional on the fulfillment of specific objectives.
The free trade zone they are a customs destination, within a delimited space of the national territory, in which new investments made by legal entities, private, public or mixed, national or foreign, may be established after the validity of this law. The goods entered there and the services provided in them will be considered outside the national customs territory, with regard to customs duties, taxes and surcharges, where activities of goods and services will be developed with the purpose of promoting competitiveness and facilitating the foreign trade.
The Government will authorize them. They will be in charge of the Strategic Committee for the Promotion and Attraction of Investments and subject to customs control.
The companies that administer or operate the free zones created under the regime provided for in this Code must be new companies, with a single corporate purpose to settle within one or several free zones, dedicated exclusively to said activities.
In the case of Ecuadorian companies that make new investments in free zones, these may not be destined to the same economic activities that they exercise.
In these free zones, the following can be carried out:
- Industrial activities: These are the areas that seek to promote and develop the process of industrialization, value generation, the provision of services aimed primarily at foreign markets. In these zones, all kinds of active improvement activities can be carried out: transformation, manufacturing (including: assembly, assembly and adaptation to other merchandise) and repair of merchandise, of all kinds of goods for export, re-export or re-expedition, and internationalization. of products in global value chains, and in accordance with applicable supranational regulations.
- Service activities: These are the areas that will be used for the provision of all types of lawful services, including, but not limited to logistics, health, tourism, innovation and technology, among others, services that may only be provided to the foreign market, be exported to third countries, re-exported or forwarded in accordance with the applicable supranational regulations, or provided within the territory of the free zone.
- Logistics activities: It is the area of the free zone to carry out activities of trade of goods for export, re-export or internationalization based on competitiveness. All logistics services such as transportation, storage, packaging, labeling, classification, packaging, repackaging, distribution, handling, display, assembly, among others, shall be understood as commercial.
The regime of Special Economic Development Zones may not be combined with that of free zones, and vice versa, notwithstanding that those who provide services to companies located in one or the other may exercise their right to work.
The free zones may be single-company or multi-company, considering the number of operators that will settle in them.
In the sole proprietorships, the administrator is at the same time the only operator, and must meet the requirements established in the regulations of this Law regarding minimum investment amounts and parameters.
In multi-company companies there is more than one single operator, which may be different from the administrator. (I)
Source: Eluniverso
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