President Guillermo Lasso has signed his second urgent economic decree-law after invoking of the cross death that dissolved the National Assembly. The “Attraction and Promotion of Investments for Productive Development” initiative, which provides for the creation of new duty-free trade zones, was sent on Tuesday to the Constitutional Court for its review and implementation.
According to the government, free trade zones will encourage more international trade and will generate more jobs.
The same legislation was submitted two years ago to the Assembly, where it was voted down.
“Today we are taking an important step in the path outlined by the president to create an environment conducive to investment, production, and employment generation in the country,” said Economy and Finance Minister Pablo Arosemena, who also underlined that the decree-law promotes the creation of Special Economic Development Zones (ZEDE), in order to strengthen Ecuador’s export and production capacities through a modern legal framework.
Duty-free trade zones are special geographic areas, used by many countries, in which businesses benefit from tax and customs incentives with a view to exports. Production, Foreign Trade, Investment, and Fishing Minister Julio José Prado said that through the decree-law “an exceptional regime is generated in customs, tax, and foreign trade matters.”
Among the benefits are a 10-year exemption in the payment of income tax and a zero rate in the Value Added Tax (VAT) for the acquisition of imported inputs, raw materials, and capital goods.
Under terms of the cross death, the Constitutional Court must review the legislation to make sure it does not violate the constitution or other laws. The court does not have the authority to pass judgement on the president’s intent.