Summary of new Ecuadorian standards related to COVID 19

Dear clients and friends,

Due to the situation that is being experienced worldwide in relation to the COVID-19 pandemic, countries around the world have implemented a series of policies that definitely affect the development of social interactions. In this context, Ecuador has also issued a series of regulations that influence several areas of citizens’ lives as of the State of Emergency for Sanitary Emergency issued by Executive Decree 1017 of March 17, 2020.

In Bermeo & Bermeo, maintaining the continuity and quality of our services, we have tried to make a compilation of the main regulatory changes that may affect the economic activities of our clients, and society in general.

The following is a list of the regulations mentioned with a brief explanation of the most relevant matters:

Civil & Commercial

Force majeure in contracts
Article 30 of the Civil Code defines force majeure as an “unforeseen event that cannot be resisted”; therefore, we consider that the emergency decreed due to COVID-19 is a temporary force majeure event since there is no specific term for its termination.

In view of this, it is important to consider that according to article 1574 of the Civil Code “Delay caused by force majeure or fortuitous event does not give rise to compensation for damages”; the following conditions must arise within the contracts in order for them to be affected or not:

It must be a fact not attributable to the parties.
It must be unforeseen, or foreseen but unavoidable.
The unavoidable event must cause and result in the non-performance of the obligation.
The affected party must not have assumed the risk of this event.



Ministry of Labor

In recent weeks, the Ministry of Labor has issued a series of resolutions to ensure the continuity of labor relations and avoid dismissals. The ministerial agreements containing the main changes have been published in the following link:

The main regulations to be considered are:


By means of Ministerial Agreement No. 2020-076, the figure of emerging telework was institutionalized, for the public and private sectors. Within the same Agreement, telework is defined as the provision of services of non-presential character, during ordinary or special days, without affecting the essential conditions of the labor relationship.

The agreement requires that teleworking be authorized and registered by the employer (in the SUT platform), clearly establishing the guidelines for the execution of the same; which will be automatically terminated at the end of the health emergency, or earlier by agreement of the parties.


Reduction, modification or suspension of working hours

Ministerial Agreements No. 2020-077 and 2020-080 issued the guidelines for the application of the reduction, modification or suspension of the working day during the health emergency. The purpose of these measures is to safeguard the continuity of the labor relationship and the stability that benefits both employers and employees.

These measures must be registered through the SUT platform, and will conclude by agreement of the parties or the termination of the sanitary emergency.

Regarding the reduction of working hours, this must be the product of an agreement between the parties for a maximum period of six months, extendable for the same term, for a single time.

This measure will be subject to the rules established in article 47.1 of the Labor Code, among them: a) over 30 hours per week; b) possibility of distributing dividends to its shareholders after canceling to the workers the hours that were reduced during the duration of the measure; c) severance payments and bonuses calculated on the last remuneration received before this adjustment; and d) social security contributions paid on eight hours of work per day.

With this option, the workday may be modified on an emergent basis to include work on Saturdays and Sundays, without exceeding the maximum workday of 40 hours per week. Such modification to the working day may only be applied in the event of an act of God or force majeure that requires the urgent attention of the worker, or when the company’s activities cannot be interrupted due to the nature of the needs they satisfy.

The suspension of the working day is contemplated for cases in which it is not possible to apply telework and/or the reduction or modification of the working day, without implying the termination of the employment relationship. Once the emergency concludes, the corresponding hours must be recovered, which may be up to 12 hours per week and 8 hours on Saturdays. Those workers who decide not to take advantage of the recovery schedule will not receive the corresponding remuneration, or will return to the employer what they would have received during the suspension of the working day.

The parties may reach agreements for the payment of the remuneration corresponding to the suspended workday; on the other hand, no surcharges for overtime or supplementary hours will be applicable.

It is important to bear in mind that the Agreement establishes that there will be no recovery when the employee has been required by the employer to work during the health emergency; notwithstanding the fact that he/she has not been able to perform the activities.

Additionally, the possibility is contemplated for the employer to set the start and end date of the employee’s use of accrued vacations or even, by agreement of the parties, for the employees to enjoy their vacations in advance.

The terms for all kinds of administrative procedures before the Ministry of Labor are officially suspended -by Resolution No. MDT-2020-009- during the validity of the sanitary emergency declaration; without prejudice to the services provided through the SUT system and the reception of complaints by digital means.

Payment of Profits

In accordance with the provisions of Ministerial Agreement No. 2020-079, it should be noted that under no precept can it be understood that employers are exempted from the payment of profits. The only thing that is extended, for ninety days, is the term to register the payment of the referred profits through the ministerial platform. The payment of profits must be made normally within the deadlines established for this purpose; there is confusion as to whether the 90-day extension provided for in the regulation corresponds to the possibility of payment, or only to the late registration, but of a payment made on time.

It should be noted that the Ministry of Labor is carrying out ex officio controls regarding compliance with the registration of the payment of profits through the SUT tool.

Compliance with private and public employers’ obligations

Ministerial Agreement No. Mdt-2020-081 provided for emergent measures regarding the payment of labor settlements and/or fines; and the processing of the termination of the individual employment contract in accordance with cause 6 of article 169 of the Labor Code.

Regarding the payment of settlements by consignment authorized by the Labor Inspector and/or fines, in the cases in which the employee has not withdrawn his payment, or does not want to sign the settlement act, they may be made through a bank transfer to the Ministry of Labor and must be notified to
On the other hand, the employer who alleges the termination of the labor relationship due to an act of God or force majeure must register in the SUT the grounds supporting the allegation within 24 hours of the termination and notify the employee by any means.

It is important to note that employers who fail to make this registration may be subject to penalties ranging from three to twenty basic unified salaries or wages.


Internal Revenue Service

In general, it should be considered that the deadlines and terms of all administrative processes of a tax nature, as well as the computation of time for the statute of limitations for the collection action of the Internal Revenue Service have been suspended during the validity of the sanitary emergency. -Resolutions NAC-DGERCGC20-00000022, 24, 26, 28 and 31; being suspended until May 15, 2020.

Extension of the deadline for filing tax attachments.

By Resolution No. SRI-SRI-2020-0002-R the deadline for filing the IBP, ICE, ROTEF, monthly APS and monthly AFIC tax attachments due in March and April 2020 was extended in accordance with the following tables.

Annexes due in March:


August 5 and 6 – August 5, 2020

7 and 8 – August 6, 2020

9 and 0 – August 7, 2020


Annexes to be filed in April:


August 1 and 2 – August 3, 2020

3 and 4 – August 4, 2020

5 and 6 – August 5, 2020

7 and 8 – August 6, 2020

9 and 0 – August 7, 2020


Also, through Resolution No. NAC-DGERCGC20-00000032 the deadlines for filing the ADI, CRS, Annex of Operations with Related Parties and the Integral Report on Transfer Pricing, ICT report, and the equity statement for the year 2020 were extended.

It is important to note that the Annex International Movement of Foreign Exchange (MID) whose filing deadline was initially extended until August according to Resolution No. SRI-SRI-2020-0002-R of March 20, 2020, must be filed until May 28, 2020.

Deferral of tax payment

Micro-enterprises (annual gross income up to USD $300,000 in the fiscal year 2019), companies domiciled in Galapagos, or those related to airline operations, tourism, lodging, food, agriculture, exporters of goods (that export constitutes from 50% of their income), may defer the payment of corporate income tax for the year 2019. Also, the VAT payable for the months of April, May and June 2020.

Both payments may be deferred for six months, of which in the first and second month 10% of the taxable monthly tax must be paid; and in the following months 20% of the same concept. In the case of income tax, the deferral will be from April to September 2020. In the case of VAT, the deferral will start in the month in which it should be paid in normal situations, depending on each taxpayer.

Tax on single-use plastic sleeves/bags

As of May 9, 2020, the tax on T-shirt type plastic sleeves (or bags) became effective; and therefore consumers will pay USD $0.04 per unit, as Special Consumption Tax (ICE); such value will increase until the year 2023.

Companies and individuals obliged to keep accounting records, who commercialize products at wholesale or retail, including the franchisor and its franchisees, must file a monthly return for the operations carried out within the immediately preceding calendar month and taxed with this tax, in accordance with the rules established by Resolution No. NAC-DGERCGC20-00000033.

Receipt of documents

Notwithstanding the suspension of deadlines and terms in tax matters, Resolution No. NAC-DGERCGC20-0000023 enabled the reception and processing of documents through electronic channels with respect to communications, consultations, petitions, requests and requirements of individuals or legal entities.

To this effect, documents with electronic signature may be sent through the QUIPUX system or by e-mail in PDF format, which must contain the signature of the petitioner, as well as a declaration of commitment to submit the documents in physical form through official channels when the state of emergency ends.

Corporate Scope

Superintendence of Companies

Like most of the entities of the public administration, the Superintendence of Companies, Securities and Insurance has also suspended the computation of all deadlines and terms of the administrative procedures under its jurisdiction, by means of Resolution No. SCVS-INPAI-2020-00002946.

The Superintendence of Companies, Securities and Insurance, by means of Resolution No. SCVS-INPAI-2020-00002930, extended the filing of the annual documents to which companies are obliged, until June 30, 2020. Finally, through Resolution No. SCVS-INAF-DNF-2020-0007 it was decided that for one time only, the companies subject to the surveillance and control of the Superintendence of Companies, Securities and Insurance that are obliged to pay the contribution for the fiscal year 2019 payable in 2020, may make the same in two installments: 50% of the value of the contribution will be paid until September 30, 2020; and the remaining 50% will be paid without surcharge until December 31, 2020.

CFN Loans

The National Financial Corporation announced that it will grant loans to SMEs from USD $25,000 to USD $100,000 with a rate ranging from 8.95% for a term of 18 months, so that they can catch up on payments to their workers, regularize their liabilities with the IESS and other institutions, as well as any other purpose directly associated with their business.

Bill on Concordat and Concurso Preventivo (reorganization and reorganization proceedings)

Debtors may enter into agreements with their creditors called Concordato Preventivo Excepcional to establish new conditions and terms, as well as the reduction or restructuring of outstanding obligations of any nature.

The concordat will have the force of a judgment and will be enforceable against third parties, except in those cases in which, by judgment, the existence of licit or illicit facts that vitiate the will of the creditors at the time of its subscription is declared.

The debtor must make an affidavit before a Notary Public indicating all its obligations due within a period of three years, as well as the complete identification of all its creditors. Once the affidavit has been made, the debtor will summon its creditors to reach an agreement and subscribe the concordat.

The concordat may be challenged in ordinary proceedings, and in the event of fraud to the detriment of one or more creditors.

If no agreement is reached, the debtor may file an exceptional petition for reorganization before the judge, provided that it declares under oath that its liabilities do not exceed 120% of its assets.

After verifying the requirements, the judge will order the temporary suspension of payments and will call a meeting of creditors to be held no earlier than five days and no later than 15 days from the date of the call. At such meeting, the debtor will present its report and if its assets are sufficient to pay at least 60% of the total credits, the judge will order a payment plan for the remainder and will immediately rehabilitate the debtor.

Criminal penalties contemplated as fraud are foreseen for various actions within these processes.


National Service of Intellectual Rights – SENADI

Notwithstanding the fact that the computation of terms and deadlines in the administrative proceedings before SENADI are suspended, taking advantage of the fact that the online services and the infrastructure of our law firm, which includes a robust technological platform, are still available, we have drawn up a contingency plan to continue with normality the substantiation of the proceedings. The plan can be reviewed in depth at the following link:

Constitutional Court of Ecuador

The Constitutional Court, by means of resolution No. 004-CCE-PLE-2020, made it mandatory for its employees to continue providing their services under the teleworking modality. Notwithstanding the foregoing, all proceedings are suspended and the attention is being given through electronic channels. The terms for the filing of constitutional actions are also suspended.

Judicial Function Ecuador

By Resolution No. 028-2020 the Plenary of the Judiciary Council ordered to restrict the entrance and attention to the public in the Judicial offices in the National Territory, due to the Sanitary Emergency related to COVID-19.

By means of Resolution No. 04-2020, the suspension of the periods or terms provided by law for judicial proceedings was ordered, except for flagrant infractions.

Through Resolution No. 044-2020, it was decided to reestablish the attention of the notary offices nationwide in accordance with the powers provided in the laws on the matter, through the modality of prior appointments while the sanitary emergency lasts.

Resolution No. 045-2020 partially reestablished the jurisdictional activities in the National Court of Justice and in the Provincial Courts of Justice for the dispatch of the judicial processes that are being processed in their offices.

Resolution No. 046-2020 reestablished the internal dispatch of pending cases in the Courts, Judicial Units, Criminal Courts, Contentious Administrative Courts and Contentious Tax Courts nationwide.

It is expected to soon regulate the holding of certain hearings and/or judicial proceedings virtually and with the use of electronic signatures.

Office of the Comptroller General of the State

All deadlines and terms in progress since March 17, and for the duration of the sanitary emergency, were suspended in accordance with Agreement No. A-007-CG-2020. All administrative procedures related to the execution of internal and external governmental audits, approval of reports, predetermination and determination of responsibilities, collection of coactivas, and information requirements are also suspended, without prejudice to the continuity of work by electronic means.

In this regard, the Comptroller’s Office has also enabled online channels for the reception and processing of citizen requests (Agreement No. A-008-CG-2020).

National Customs Service of Ecuador

Pursuant to Resolution No. SENAE-2020-0016, the terms and deadlines of all administrative procedures of a tax nature that are substantiated by the Customs Service of Ecuador are suspended during the sanitary emergency.

However, through Resolution No. 2020-0017, the attention of all customs districts nationwide has been guaranteed to ensure the continuity of international trade through electronic channels such as the ECUAPASS tool and e-mails enabled for this purpose.

Civil Registry of Ecuador

Pursuant to Resolution No. 029-DIGERCIC-CGAJ-DPyN-2020, the validity of the identity card, when it is invalid due to expiration of its validity time, was established.

This document is only informative, and does not constitute legal advice; as each case must be considered based on its particular circumstances; for which we are open to any consultation you may have.

Taking into account the different provisions, we remind all our clients and friends that BERMEO & BERMEO, taking the necessary precautions and taking advantage of all the technological tools at its disposal, continues to offer its legal services, ensuring that their needs in legal solutions are covered at all times.

This is a general summary for informational purposes. Each case must be carefully analyzed and this study is not and should not be construed as a legal opinion. BERMEO & BERMEO, taking the necessary precautions and taking advantage of all the technological tools at its disposal, continues to offer its services, guaranteeing that your needs in legal solutions are covered at all times.

Daniel Troya Sherdek

Daniel Troya Sherdek is an associate attorney at Bermeo & Bermeo, specializing in administrative law and general law.

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