This article surveys significant legal developments in Latin America and the Caribbean in 2022.
As of April 2022, the Servicio Plurinacional de Registro de Comercio (SEPREC) is the new institution in charge of the Registry of Commerce in Bolivia. Previously, a private foundation was in charge of this role, unlike the new state entity.
The start of operations of this new entity has brought with it the following amendments to the Commercial Registry:
(1) The implementation of digital citizenship as a requisite for initiating all registration procedures, a tool that is being gradually implemented throughout the structure of the Bolivian state;
(2) The possibility of carrying out procedures digitally, as well as correcting the observations in the same way;
(3) The possibility of signing documents and forms with a digital signature, even for notaries; and
(4) A change in the identification number of the business registration, which is merged with the tax identification number.
Likewise, the following elements are highlighted in relation to the Electronic Gazette of the Registry of Commerce:
(1) The procedure for making publications in the Gazette is modified, and company representatives must have a user profile related to the corporate type of their company.
(2) The types of publications that can be made in the Gazette are diverse, and include annual reports; capital increases and reductions; address changes; summons to corporate meetings; transformations, mergers, and acquisitions; and others.
The regulation of pre-sales real estate agreements has been included in the Bolivian legal system, for the prevention of abusive provisions in this type of contract. The mechanism established by the norm for the regulation of pre-sales real estate agreements is the issuance of a certificate for the contracts issued by the Ministry of Justice, which certifies that it does not contain abusive clauses. To obtain this certificate, a procedure must be carried out before the Defense of User and Consumer Rights Division of the Ministry of Justice, and several requirements must be met, such as:
(1) Identification of the parties and intermediaries;
(2) Proof that the seller is the owner or has the power to sell the property;
(3) Demonstration of the existence of the project and its approval before the competent authorities, or that this approval is in process; and
(4) Other specific provisions that must be included in the contract: a clause that states the obligation to deliver without delay; the prohibition of unilateral amendments to the contract; and a precise description of the payments to be made.
The procedure for obtaining this certification is carried out digitally, for which, those interested must have digital citizenship. In case of non-compliance with this regulation, sanctions may be imposed in accordance with current regulations for the protection of user and consumer rights.
Through a national law and a regulation, the main tax regulations in Bolivia have been modified with the purpose of granting benefits to taxpayers in relation to the reduction of sanctions, effective repentance, payment facilities, and other modifications on the Value Added Tax. These modifications are summarized in the following aspects:
(1) The term to opt for the benefit of “Reduction of Sanctions” by 80% of the applicable fine has been extended from ten to twenty days.
(2) The term to opt for the “Effective Repentance” benefit has been extended from ten to twenty days.
(3) The penalty for “omission of payment” in tax matters has been reduced from one hundred percent to sixty percent to be calculated on the omitted tax.
(4) For independent professionals, the application of the “Earnings Tax—IUE” has been replaced by the “Value Added Complementary Regime—RC IVA,” which implies a possibility of reduction in the amount of tax payment for independent professionals.
(5) A tax exemption has been established for “the income of delegations or representations of foreign states for cultural events” provided that these events are sponsored by a Bolivian state entity.
It is estimated that these modifications will have an impact on benefits for taxpayers, and they will also generate greater tax collection for the government.
In 2022, Brazil made significant advances in terms of privacy and data protection.
Although the law regulating personal data protection is recent (having been enacted in 2018 and becoming effective at the end of 2020), the country is taking significant steps to ensure that the rights of data subjects are effectively fulfilled.
Two important measures have been presented during this period: the elevation of personal data protection to the status of a fundamental right and the transformation of the National Data Protection Authority into an independent authority.
The publication of a rule by the agency responsible for regulating the electricity sector in the country established minimum levels of cybersecurity to be adopted by all agents operating in the sector.
The objectives of the State in its activities are defined by the Brazilian Federal Constitution. Article 5 lists the fundamental guarantees of Brazilian citizens, which are rights to which everyone is entitled, and which must be provided by the State. These include health, education, and security.
Fundamental rights have the status of an inviolable clause. This implies that they cannot be altered without amending the Constitution. The elevation of some articles to the status of an inviolable clause is aimed at preventing rights already enshrined in the Federal Constitution from being withdrawn through a simple amendment.
Amendment 115/2022 to the Constitution was enacted in 2022, which includes the protection of personal data, including in digital media, in the list of guarantees and fundamental rights. This amendment also determines that the Union has exclusive competence to legislate on the matter, which means that States and Municipalities will not be able to create laws that deal with the subject.
The measure is important because, in addition to adding data protection to the rights already guaranteed by law in Brazil, it also guarantees greater power for the National Data Protection Authority, given that the body is now responsible for a fundamental right. This will increase the authority’s importance and, consequently, guarantee greater investments in its performance.
Another significant advance in Brazil is the conversion of the National Data Protection Authority into a special authority. When it was created, the authority responsible for ensuring the protection of personal data was part of the structure of the Presidency of the Republic because there was not, at the time, budget available to create a stand-alone structure.
Through Provisional Measure Number 1.124/2022, the National Authority was converted into a special autarchy, an autarchy with specific rules and a special regime. The concept of autarchy is defined by item I of article 5 of Decree-Law No. 200/67, which provides as follows: “Autarchy—the autonomous service, created by law, with legal personality, assets, and its revenue, to carry out activities typical of Public Administration, which require, for their better functioning, decentralized administrative and financial management.”
The transformation will link the ANPD to another authority, such as the Office of the Attorney General, guaranteeing greater independence of action. This will raise the country’s classification level in the protection of personal data in the international scenario, in addition to making the Authority more similar to the agency model adopted in Europe.
The amendment also ensures greater freedom for the National Authority to inspect and, if necessary, sanction the government itself for any breaches of the General Data Protection Law. This will result in greater protection of the personal data of Brazilian holders.
Resolution 964/2021 was issued by the National Electric Energy Agency (ANEEL) on December 14, 2021, and became effective July 1, 2022. The resolution determines standards and requirements for agents in the Brazilian electricity sector and aims to establish guidelines and a minimum content for cybersecurity policies.
The guidelines established by the authority aim to standardize the security measures to be adopted, thus establishing a stricter cybersecurity protocol that follows international norms and standards. In addition, they promote the dissemination of the cybersecurity culture, making agents prepared to identify and remedy risks, in addition to promptly recovering from any incidents that may occur. The norm also established minimum requirements for the cybersecurity policies set out by the agents, making mandatory items such as the agent’s objectives for cybersecurity and its “ability to prevent, detect, [and] respond” to cybernetic incidents.
The policy must also be updated periodically and disseminated among workers in the responsible areas, and a responsible officer must be designated. It must be approved by a board of directors and “be compatible with the sensitivity of the data and information under its responsibility.”
These measures now require agents to apply at least one cybersecurity maturity model annually, ensure the traceability of information, and maintain a record of greater impacts that include information received from companies providing services to third parties. The norm also brought standardization regarding the notification of security incidents and information sharing.
Resolution No. 964/2021 is an important step forward for Brazil in establishing a stricter standard of cybersecurity in the electricity sector, which is of strategic importance for infrastructure and vital for the country’s economic development. Furthermore, the energy sector is endowed with great sensitivity to the country’s sovereignty, given that possible cyberattacks directed at the energy sector may cause major problems in all sectors and layers of the population.
Another objective of the country with the introduction of normative resolutions honoring the best international practices is that this is a contributing factor for Brazil to become an effective member of the Organization for Economic Cooperation and Development (OECD), considering that the rise from the country that today figures as a potential member to an effective and permanent member of the organization’s staff is an old wish.
On October 12, 2022, the Chilean Congress approved the bill for promoting competition and financial inclusion of innovation and technology in the provision of financial services (Fintech Law). The new law has not yet been published in the Official Gazette as it is before the Constitutional Court for the established procedure of preventive constitutional control. According to Article 1 of the Fintech Law, the purpose of this regulation is to “establish a general framework to encourage the provision of financial services through technological means by providers governed by [this law.]” These providers are those who render the following services: (1) crowdfunding platforms; (2) alternative transaction systems; (3) credit and investment advisory services; (4) custody of financial instruments; and (5) order routing and intermediation of financial instruments.
As the former president of Chile, Sebastián Piñera, said in his message for the presentation of the bill, the Fintech Law represents a significant advance to promote financial innovation and greater competition in the financial system, as well as the development of new financial products and services for consumers. Furthermore, fintech companies have proven to be a key element in driving the economic boom in Chile, reducing the costs of financial services, extending access to such services, enabling greater transparency and competition in financial offerings, and using technology to provide more effective solutions.
The Fintech Law provides that entities that carry out intermediation and custody operations, or provide transaction platforms and advice on financial instruments (including crypto assets) will be regulated by the Financial Market Commission (CMF, by its Spanish acronym) and must prove compliance with the requirements set by the authority in order to operate. The CMF will have broad powers of supervision, regulation, and information requirements. In addition, it will have the possibility of issuing differentiated regulations for each actor, considering the nature of the service provided, the number or type of participants, and the volume of transactions or instruments traded, among other factors. The Fintech Law also regulates payment initiation service providers, who will be able to provide services to make electronic transfers from customers’ accounts to third party accounts, operating as a means of payment without the need to use cards.
The use of crypto assets as a means of payment is expressly recognized in the new regulation, extending the powers of the Central Bank of Chile to consider as means of payment crypto assets whose value is determinable and backed by money and which meet the requirements established by the issuing institute.
On the other hand, Title III of the Fintech Law creates an Open Banking System that will enable financial service providers to exchange customer financial information, thus addressing the information asymmetry faced by incoming players and facilitating the development of new financial product and service offerings.
Ultimately, with the Fintech Law, different laws governing traditional financial institutions are amended in order to achieve regulatory symmetry in the provision of similar financial services, and certain entry barriers to fintech companies are lowered. Amendments were made to the Corporations Law, the Securities Market Law, the General Banking Law, the Constitutional Law of the Central Bank and the Commercial Code, among others.
On August 25, 2022, and after a public consultation carried out within the framework of the modernization process of its foreign exchange regulations, the Central Bank of Chile added a new Chapter III to its Compendium of International Exchange Regulations (New Chapter). This amendment seeks to allow a more expeditious access to the Formal Exchange Market for financial institutions supervised by the CMF and to simplify the submission of information for non-banking institutions.
The New Chapter allows the following non-banking institutions to participate in the Formal Exchange Market: (1) stockbrokers and securities agents; (2) foreign banks with a representative office in Chile supervised by the CMF; and (3) legal entities, domiciled and resident in Chile, whose exclusive purpose is to intervene in international exchange transactions as determined by the Central Bank. These entities shall correspond to open stock corporations and must be registered in the Securities Registry of the CMF. Further, they must also submit to the Central Bank a request for authorization for such purpose, accompanied by the information indicated in Annex 1 of the New Chapter; and, additionally, they must certify their registration in the Securities Registry of the CMF, as well as that they have, as of the date of the request, a net worth of not less than the equivalent of approximately USD $442,070, which they must maintain on a permanent basis. Additionally, the New Chapter simplifies the requirements for non-banking institutions to enter the Formal Exchange Market.
The Central Bank’s aim is that the New Chapter will encourage greater participation in the Formal Exchange Market by non-banking entities. The foregoing furthers the Central Bank’s mandate to ensure that the Formal Exchange Market is made up of a sufficient number of persons or entities to allow it to operate under conditions of adequate competition, as established in accordance with the provisions of Article 43 the law that regulates the Central Bank.
On January 26, 2022, the Pacific Alliance, including the Colombian government, signed the Free Trade Agreement (FTA) with Singapore. The FTA is pending approval from the Colombian Congress. Once this procedure has been completed, the law will be issued, ratifying the FTA from the Colombian side.
The FTA has been signed to strengthen the operations of the Asian market in the American Field and regulate general issues such as market access, investment, and trade facilitation. This will enhance and facilitate the export of those products that were already being sent to Singapore from Colombia, such as fuel oils, coffee, and flowers, and the expansion of the country’s export basket to include new products that will be subject to tariff preferences.
A new Tax Reform was presented by the government to Congress and then passed into law in November. This reform includes higher taxes for dividends, namely fifteen percent of the dividends if the shareholder is an individual, ten percent of the dividends if the shareholder is a local company, and twenty percent of the dividends if foreign companies are shareholders. The new reform includes regulation over the national carbon tax, presented as one of the strategies that the government will apply to encourage compliance with greenhouse gas (GHG) mitigation goals at the national level.
The reform also provides new rules for the income tax rate of free trade zone users, namely, income from exporting goods and services, as well as from providing health services to patients not residing in Colombia by special permanent free trade zones for health services or industrial users of health services of a permanent free trade zone. Free trade zones devoted to the development of infrastructure related to ports and airports will maintain the preferential income tax rate of twenty percent. For operations other than those described above, the general rate will apply.
With the election of a new president, Colombia restored relations with Venezuela, which relations had been suspended in 2019. On September 9, 2022, the Colombian and Venezuelan governments announced that the borders between the countries would be reopened, and trade relations were reestablished on September 26, 2022. Trade operations between Colombia and Venezuela constituted seventeen percent of the total trade operations of Colombia in 2022, unlike in 2021, when the trade operations with Venezuela constituted only one percent of the total trade operations of Colombia.
Decree 1476 was issued in August; it includes provisions for the implementation of hydrogen for energy generation. The Decree indicates the mechanisms and conditions for the applications of incentives that the government will apply to the companies that are willing to venture into the hydrogen industry in connection with transport, energy, and vehicles.
This new Decree includes regulation for green hydrogen projects where non-conventional renewable energy is used in the process of production of hydrogen. It limits the capacity to seek energy suppliers to companies that use self-generated electricity or non-conventional renewable energy sources. Decree 1476 also regulates blue hydrogen projects which use fossil fuels in the process of production of hydrogen. It indicates that “Blue hydrogen projects must have a Carbon Capture, Use, and Storage (CCUS) system that allows the capture of carbon dioxide generated at large scales in fixed sources.”
Law 2204, the most recent law in the Colombian hemp industry, became effective in 2022. Law 2204 allows legal entities and individuals, as well as other associative schemes, to carry out activities of cultivation, trade, import, export, acquisition in any capacity, storage, transport, and final disposal of grain, seeds for sowing, plants in vegetative state or vegetable component, or vegetable component obtained from hemp, whose tetrahydrocannabinol (THC) content, including isomers, salts, and acid forms, is equal to or less than 0.3% for industrial and scientific purposes in Colombia.
The new law includes regulation over the companies in which the government is willing to have control over which companies have the authorization for the operation in the hemp industry, establishing requirements such as authorizations, registers, and special regimens for the international operation of hemp products. In the same manner, Law 2204 provides benefits for agricultural and livestock production.
2022 was an active year in the Financial Technology Industry. In 2021, the government presented a framework that allows for the testing of innovative services in the financial market under the supervision of the Authority for Financial Operations (Superintendencia Financiera); however, this project has mostly been executed in 2022.
For the development of the framework, External Regulation 002 was issued to clarify the provision of financial services through banking correspondents. External Regulation 005 was issued to regulate the procurement activity by non-monitored service providers, and External Regulation 014 was issued to regulate collaborative financing through the securities market.
Mauricio Becerra de la Roca Donoso and Manfred Arauz Olvarria (Bolivia); Renato Opice Blum and Adriana Cansian (Brazil); Francisco Ugarte Larrain, Alejandra Daroch Mercado and Maria Alicia Corbo Serani (Chile).
