On 23 November, President Guillermo Lasso sent the bill for Audiovisual and Digital Transformation to the National Assembly (NA). This new legislation represents Ecuador’s latest effort to align all government policy with its National Development Plan (2021-2025) while emphasising digitalisation for all government agencies and processes.
Unlocking DX Opportunities
At its core, the bill seeks to promote the creation of opportunities through investment in the digital economy, establish a regulatory framework on digital public transformation, promote digital solutions for government procedures, and optimise resources to adopt digital technologies.
To achieve this, the bill introduces 41 articles aimed at reforming the country’s tax code and other laws on key issues, including:
- Telecommunications: Adds to Article 13 of the Telecommunication’s Law regarding the definition of telecommunication community networks, and proposes exempting fees for spectrum allocation and usage when radio spectrum frequencies are used for emergency and humanitarian purposes.
- E-commerce: Modifies the Commerce Code to reaffirm the concept of technological neutrality for untitled technology, while establishing that electronic titles have the same validity as those issued on paper. In addition, the bill outlines the two requirements for an electronic security title in the E-commerce Law: Exclusive personal control and personal identification.
- Digital Transformation: Requires government agencies to digitise their processes and create educational plans to inform citizens about the new digital tools. One notable example is that notary services will be available online, including validating electronic signatures and documents.
- Audiovisual: Declares the audiovisual sector of national interest. Moreover, it calls for establishing tax exemptions for domestic audiovisual and digital productions, payments abroad for audiovisual products and services, and digital services guaranteed by the Internal Revenue Service.
Capturing the potential benefit for tech companies
The proposed bill would significantly boost technology and digital companies operating in Ecuador. The newly proposed tax breaks would make Ecuador an attractive location for additional investment and production of digital services. Telecom and audiovisual companies could benefit from the proposed tax breaks while enhancing their investments in the Latin America region. The adoption of e-government initiatives to make government procedures more efficient also represents an opportunity for companies focused on e-commerce, digital identity, and cloud services to tap into these efforts and offer new digital solutions to local key stakeholders.
It is important to note that Ecuador recently increased its cyber resiliency with the launch of the National Cybersecurity Strategy, hence reducing concerns related to security infrastructure that would support these DX initiatives. In addition, the recently approved Communications Law’s stated autoregulation, freedom of expression, and lack of government intervention as a positive development for communication and telecommunication companies with operations in Ecuador, providing a more stable and business-friendly environment.
What are the next steps?
Moving forward, the Economic Development Commission opened the bill up for additional debate, with a preliminary report expected between December 9-11. Given the bill’s urgent marking, the National Assembly is expected to have the final vote before 23 December.
However, the bill’s prognosis remains unclear. Recently, Lasso’s approval ratings significantly dropped. In a November poll, only 12.6% of respondents rated his governance as good or very good. At the same time, frequent clashes with the opposition-controlled National Assembly, including on communications, security, and foreign policy issues, signal a stricter path for the bill’s passage.
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