A decree-law to create new free zones in depressed and border areas in Ecuador, a mechanism by which President Guillermo Lasso can govern in the absence of Congress, was rejected on Friday by the Constitutional Court (CC), the agency reported.
The Court indicated in a statement that it “issued an unfavorable opinion” for the decree-law for the Attraction and Promotion of Investments for Productive Development presented three weeks ago by Lasso, considering that it disrespects the Magna Carta.
This initiative contemplated reforms to several laws for the creation of new free zones that will offer tax exemptions in productive, industrial, service and logistics activities, according to the Executive.
The reforms point to the exemption of income tax for up to 15 years for border regions, as well as other taxes such as VAT (12%).
In Ecuador there are small free zones, which operate in Quito and the port of Guayaquil (southwest).
The CC, on the other hand, gave its approval on Friday to a decree-law on tax reforms to expand the deductibles for calculating the income tax for workers, which will benefit some 340,000 middle-class taxpayers.
These changes include setting a 15% tax for sports betting houses.
The decree-law regarding taxes was issued by Lasso a month ago, once he dissolved the unicameral Parliament in the midst of an institutional crisis.
The president, who took office in May 2021, applied the Constitution to dissolve the opposition National Assembly, which led to the call for early general elections for August 20 to complete the current four-year term.
Until there is a new Congress, Lasso, who declined to run, can govern by issuing decree-laws of economic urgency, but with a favorable opinion from the CC.
Despite the insecurity linked to drug trafficking and the institutional crisis, Ecuador lives in calm after the dissolution of the Legislature, which traditionally registers high citizen distrust.