Although the use of artificial intelligence is of concern to every public agency, the National Data Protection Authority (ANPD) exercises jurisdiction over the use of artificial intelligence in Brazil. The ANPD has issued two analyses regarding the contents of the Draft Bill itself. The analyses highlighted the intersections between the existing Brazilian General Law of Data Protection and the main subjects the Draft Bill intends to regulate, such as protection of rights, governance mechanisms, artificial intelligence risk classification, and competent authority.
Another important step towards the accomplishment of the legislation’s goals was ANPD’s Call for Contributions to the regulatory sandbox for artificial intelligence and data protection that remained open until early November 2023. This project, designed in collaboration with the Development Bank of Latin America and the Caribbean (CAF), aimed to foster the exchange and experiences of all relevant actors and the development of regulatory sandboxes in the region. This project not only contributes to the standardization of the regulation in Latin America, but also joins countries with similar socioeconomic backgrounds facing similar challenges in developing their technological and artificial intelligence sectors.
B. Constitutional Amendment Proposal No. 45/2019 - Tax Reform in Brazil: So Close Yet So Far
Recently, the long-awaited reform of the national tax system in Brazil gained ground with the approval of the original text of the Constitutional Amendment Proposal No. 45/2019 by the Federal Senate (Proposal). In accordance with the Brazilian Federal Constitution, the Proposal will return to the House of Representatives for a new vote. If the number of necessary votes is reached, the Proposal can finally be enacted.
The Brazilian tax system is one of the most complex systems in the world. Its tax burden is also one of the highest, despite public services being notoriously deficient in several aspects—especially in the health and public safety sectors. While the need for tax reform has been expressed widely, lawmakers have disagreed about the focus of reform, given the competing interests of different sectors of society represented in the National Congress.
The Brazilian reform is expected to have two components: the Contribution on Goods and Services (CBS), which will replace three federal taxes (IPI, PIS and COFINS), and the Tax on Goods and Services (IBS), which will unify ICMS (state tax) and ISS (municipal tax). The debate will revolve around the appropriate tax rate, since, if the predictions come true, the Brazilian VAT not only will increase the tax burden but may also raise the rate to as high as twenty-eight percent—the highest in the world.
In addition to the unification of taxes, the tax reform also aims to simplify taxation itself. Currently, upon a single triggering event, several taxes may apply along with ancillary obligations that are often contradictory. This is because current tax laws at the three levels of power (federal, state, and municipal) multiply and overlap with each other, leaving a trail of legal uncertainty behind.
II. Chile
A. New Constitutional Referendum
As a result of the protests of October 2019, Chile has faced two processes to amend its Constitution. The first process ended with a referendum on September 4, 2022, in which the vast majority (i.e., 61.89 percent of the population) voted against the proposed draft. Then, a new constitutional process followed. A popularly elected Constitutional Counsel drafted the current proposal, which is based on a draft prepared by a congressionally appointed expert commission. The Constitutional Council presented its final draft on November 7, 2023. Chileans will vote on December 17, 2023, to approve or reject the new proposal.
B. New Law on Economic Crimes
On August 17, 2023, Law No. 21,595 on Economic Crimes (the Economic Crimes Law) was published in the Official Gazette. This bill systematizes economic crimes and attacks against the environment, modifies various legal bodies concerning crimes against the socioeconomic order, and adapts the penalties applicable to all of them. The Economic Crimes Law includes the following innovations:
(i) The systematization of crimes related to business activities under four major categories of crimes;
(ii) The codification of new crimes, such as so-called environmental crimes, and the creation of the concept of labor exploitation of workers, among others;
(iii) The establishment of new penalties and sanctions, and the strengthening of existing ones, seeking to ensure that those who commit an economic crime actually serve a prison sentence; and
(iv) The exponential increase of base crimes for which legal entities may be criminally liable.
C. New Bill for Personal Data Protection
On May 8, 2023, the Chilean Congress approved a bill that updates the current regulation on the protection of personal data and creates the Personal Data Protection Agency (the Personal Data Protection Law). This new law has not yet been published in the Official Gazette as its preventive constitutional control is pending before the Constitutional Court. The current law on data protection was passed in 1999. Although the current law has been amended several times, it was necessary to create a new legal framework that responds to the current needs of information exchange and use of new technologies to achieve the delicate balance between the individual’s privacy protection and data transfer.
The Personal Data Protection Law modernizes the legal regulations that govern the processing of personal data, an issue the current law does not address. Article 3 of the bill establishes the principles of lawfulness, fairness, purpose, proportionality, quality, accountability, security, transparency, information, and confidentiality.
Another fundamental novelty of this new law is the creation of a control authority, the Personal Data Protection Agency, which will have regulatory, supervisory, sanctioning, and certifying powers. This Agency will oversee and supervise the compliance with the provisions of the new law and will oversee sanctioning its infractions.
Lastly, the penalties under the new law are considerably more onerous. It establishes fines of up to 20,000 UTM (approximately equivalent to $14,500,000), and in the most serious cases, the suspension of the processing of personal data for up to thirty days, in addition to a catalog of infractions. In contrast, the current law establishes a maximum fine of fifty UTM (approximately equivalent to $3,600), and does not contain a catalog of infractions.
D. National Lithium Strategy
In April 2023, Chile’s President announced the creation of the National Lithium Strategy. As defined by the current government, this strategy “is a set of measures that seek to incorporate capital, technology, sustainability, and value addition to the productive sector in harmony with the communities.” Through the National Lithium Strategy, the government seeks to encourage the Chilean State’s mining of lithium, the generation of value-added lithium products and investment in technology and research.
One of the most important features of this plan is the creation of the National Lithium Company (NLC), whose organization depends on the approval of Congress. The NLC will seek partnerships with private companies for the sustainable development of lithium exploration, mining, and value-adding projects. According to the President, this public-private action, as articulated by the NLC, will increase the national production of lithium and attract new players and expand the industry through joint initiatives. This initiative will allow greater sustainable production in the Salar de Atacama and new projects in other salt flats in the country.
As of this date, the Chilean government has not presented Congress with the drafts for the bills necessary to implement the National Lithium Strategy nor for the creation of the NLC.
E. Financial Conglomerates Law Proposal
The Chilean Financial Market Commission (CMF, by its Spanish acronym) is analyzing the inclusion of financial conglomerates as part of the institutions under its supervision and is proposing a legal framework to regulate them (the Financial Conglomerates Law).
The CMF defines financial conglomerates as the group of companies belonging to the same economic group (as defined in the Securities Market Law) which has at least one regulated financial entity and any other entity engaged in financial activities. Regulated financial entities includes but is not limited to insurance companies, banks, credit card issuers, and securities intermediaries. Financial activities of other entities (to be defined in the Financial Conglomerates Law), whether regulated or not by the CMF, include actions carried out abroad by companies belonging to local conglomerates.
Under this proposal, all financial conglomerates operating in Chile would become entities subject to regulation and supervision by the CMF, except for those that the CMF excludes under certain criteria. Entities classified as financial conglomerates would have to meet specific conditions and requirements, including:
(i) Separating its financial activities from other activities of the group;
(ii) Incorporating a financial parent company domiciled in Chile, subject to a licensing and registration process. Both the initial structure of the conglomerate and any material changes would be subject to the approval of the CMF;
(iii) Possessing sufficient consolidated equity to face the risks derived from its activities; and
(iv) Publishing financial statements with particular emphasis on the disclosure of information of interest to the market associated with the organization as a financial conglomerate.
In addition, the controlling shareholders of the financial parent company would have to comply with strict character requirements. The CMF may also impose mandatory policies on transactions and exposures between the companies of the conglomerate and those related to them within the economic group.
The CMF would have broad powers of supervision to include the authority to suspend the registration of bonds and other debt instruments, require capital regularization plans, restrict the payment of dividends, and revoke the authorization to operate as a conglomerate, among others.
F. New Regulation for Labeling and Advertising Alcoholic Beverages
On July 7, 2023, the new regulation for labeling and advertising of alcoholic beverages was published in the Official Gazette. Alcoholic beverage labels now must contain the calories and health warnings regarding alcohol consumption and its relationship with pregnancy, driving, and minors. Likewise, the new regulation prohibits advertising directed to minors, advertising of alcoholic beverages on TV between 6:00 am to 10:00 pm, and advertising of alcoholic beverages on the radio between 4:00 to 6:00 pm. Further, all forms of advertising (e.g., written media, posters, audiovisual and radio spots) must contain health warnings.
III. Colombia
A. Trade Agreements
On January 10, 2023, Colombia issued Law No. 2284 of 2023, ratifying the inclusion of Singapore as an associated state of the Pacific Alliance. The Pacific Alliance signed a Free Trade Agreement (FTA) with Singapore on January 26, 2022. This FTA aims to bolster the operations of the Asian market in the American field and address general issues such as market access.
The FTA outlines the following objectives to promote trade:
(i) Establish parameters for trade and investment between Singapore and the member countries of the Pacific Alliance;
(ii) Stimulate trade in goods and services and attract investment; and
(iii) Facilitate trade in goods with Singapore.
It is worth nothing that in 2019 (pre-pandemic), trade with Singapore amounted to $6.1 billion, representing 33.2 percent of the total trade in goods with Latin America.
The inclusion of Singapore as an Associated State to the Pacific Alliance aims not only to benefit Singapore, but also to provide a new approach to benefits for Latin America. Colombia has highlighted that one of the significant opportunities arising from this FTA is in the digital market. This is due to the ease of structuring technological projects in Singapore and the abundance of talent in operations related to electronic media.
B. Relations with Venezuela
September 26, 2023, marks one year since the re-opening of the border and commercial flows between Colombia and Venezuela, advancing a process of commercial reconnection and allowing regional economic growth. On July 10, 2023, Colombia issued Law No. 2301 of 2023, whereby it ratified the Agreement between the Republic of Colombia and the Bolivarian Republic of Venezuela regarding international ground transport of cargo and passengers. Colombia is willing to promote the two countries’ relationship through the implementation of different agreements, such as the Agreement Between the Bolivarian Republic of Venezuela and the Republic of Colombia Regarding the Reciprocal Promotion and Protection of Investments.
C. Supply Chain Safety
On April 17, 2023, the Mutual Recognition Agreement (MRA) was signed between the Colombian Authorized Economic Operator (AEO) (in Spanish (Operador Economico Autorizado) (OEA)) and the U.S. Customs-Trade Partnership Against Terrorism (CTPAT) Programs. The World Customs Organization (WCO) promoted the AEO authorization to implement security measures in the logistics chains of member countries based on each organization’s risk management of global risks that affect them. In the review procedure, it came to light that the AEO is one of the most rigorous and comprehensive programs in Latin America.
D. Reduction of the Legal Labor Schedule
On July 16, 2023, the implementation of Law No. 2101 of 2021 began. This law approved the gradual reduction of the workday, as well as the workweek by one hour (to forty-seven hours per week) starting two years after the law’s implementation. In the third year, an additional reduction of one hour will bring the workweek to forty-six hours. Starting in the fourth year, the workweek will reduce by two hours annually until reaching a total of forty-two hours per week.
E. Regulation of Environmental Liabilities
On September 13, 2023, the Colombian Government issued Law No. 2327 of 2023, establishing the definition of environmental liabilities and providing guidelines for their management, along with other relevant provisions. Under the law, the National Government must define guidelines for the management of environmental liabilities and formulate an action plan as well as a follow-up mechanism. Additionally, the law established the Environmental Liabilities Information System, which will serve as the sole instrument for managing information related to the strategy for handling environmental liabilities. Its purpose is to identify, monitor, intervene, follow up on liabilities, and other situations that the Ministry of Environment and Sustainable Development designates.
F. Regional Holding
On August 31, 2023, the Colombian Stock Exchange shareholders meeting decided to begin the process of integrating the stock exchanges of Chile, Peru, and Colombia. This integration process will last between approximately eighteen and twenty-four years. The integration presents an opportunity for investors in the region by facilitating the exchange of securities between these three countries, and by promoting the eventual possibility of integration with markets that are in growth or that do not have significant economic activity.
G. Tax on Sugar and Ultra-Processed Food
On December 13, 2022, Colombia issued Law No. 2277 of 2022 (tax reform) that was pending in 2022. This tax reform introduced taxes on ultra-processed products that contain high levels of sodium, fat, or sugar. The implementation of this tax began on November 1, 2023, applying to drinks or products classified as ultra-processed sugar drinks or ultra-processed food products high in sugar, sodium, and saturated fats. The law will increase the tax base and the tax rate annually until the year 2025, reaching twenty percent of the value of the product. The burden of the tax falls on producers, importers, and those who benefit from the commercialization of the products.
H. Promotion and Protection of Technology Agreement with China
On October 25, 2023, the Colombian Government signed three memorandums of understanding establishing a bilateral agreement with China in the technological field. The main purpose of these documents is to strengthen the digital economy, allow Colombian students to participate in internships in Chinese technology companies, and establish collaboration between the Colombian public media systems and the China Media Group, represented by Shen Haixiong.
These agreements support the digital transformation in Colombia. In addition, they promote Colombian public television and facilitate opportunities of Colombian citizens to participate in internships in Chinese technology companies. The agreement related to the digital economy promotes digital development in diverse areas, from traditional industries to technological innovation, including the implementation of smart city pilots. It also seeks to foster policy cooperation and regulatory information exchange in the information and communications technologies sector. This collaboration is planned for three years and is touted as an opportunity to take advantage of the Chinese experience in 5G technology in various areas to improve the quality of life of Colombians.
IV. Ecuador
A. Impeachment Trial Against President Lasso
Since President Guillermo Lasso was sworn in, his working relationship with the National Assembly (controlled by the opposition party) has been confrontational, and his attempts to negotiate a majority have proved unsuccessful. As a result, President Lasso was unable to pass major legislative initiatives. The year 2023 proved to be particularly troublesome. Amid allegations of corruption in the press that sparked protests, on March 16, 2023, fifty-nine members of the National Assembly submitted a letter requesting the initiation of an impeachment trial against President Lasso. The trial moved forward, but before the motion to remove the President from office could be decided, on May 17, 2023, the President used his power to dissolve the National Assembly and called for early elections for the Presidency and the National Assembly (to complete the term).
The dissolution of the National Assembly resulted in several significant effects, including:
(i) The immediate termination of the members of the National Assembly, but with the possibility of running for re-election;
(ii) The President’s continuation in office, governing by means of economic emergency executive decrees, which will become effective with the approval of the Constitutional Court and their publication in the Official Gazette; and
(iii) The swearing-in of the new National Assembly on November 17th and the President on November 23rd. Both the new National Assembly and the President will be in office for about eighteen months.
B. Organic Law for Digital and Audiovisual Transformation
On February 7, 2023 the Organic Law for Digital and Audiovisual Transformation (Ley Orgánica para la Transformación Digital y Audiovisual, in Spanish) was enacted. This law made significant advances by implementing a digital transformation in the justice administration system. Its features include changing the subpoena regime, mandatory digital filing (along with hardcopies), and telematic hearings.
C. Law for Business Optimization and Promotion of Corporate Governance
On March 2, 2023, the Ley Orgánica Reformatoria a la Ley de Compañías para la Optimización Empresarial y el Fomento del Gobierno Corporativo was enacted, amending the Ley de Compañías (Companies Law) to simplify procedures for the establishment of companies, reduce costs, allow the resignation of managers when the shareholders do not accept it as per a special procedure, allow assignment of equity among equity-holders of a limited liability corporation without universal consent, and expressly allow for private shareholder agreements, among others. The changes introduced with this new law help modernize the business sector and promote corporate governance.
D. Law for the Prevention, Detection and Eradication of Money Laundering
On April 3, 2023, the law that amends the Organic Law for the Prevention, Detection and Eradication of the Crime of Asset Laundering and of Financing of Crime, expanding the reporting obligations of certain financial transactions, was enacted. Since the dollarization of Ecuador’s economy, the country has faced complications regarding money and asset laundering, and organized crime has grown considerably. This law introduces important changes to combat these problems and represents one of many attempts and legislative changes to address the problems.
E. Tax Reform to Strenghten the Family Economy
By means of Decree No. 742 of May 17, 2023, President Guillermo Lasso signed the tax reform Law for the Strengthening of the Family Economy. The law went into effect upon authorization from the Constitutional Court. This law was introduced to remedy the issues in the unpopular tax reform that President Lasso himself had passed a few months earlier, which considerably affected his popularity. Specifically, the law reversed the Lasso Administration’s tax reform (which reduced deductible expenses for income tax purposes, thus increasing the tax burden on middle class families) and further reduced certain taxes. While the new law has resulted in a considerable reduction in the state collection of taxes, it has benefited taxpayers.
F. Personal Data Protection Law
In 2021, Ecuador made significant advances in terms of privacy and data protection with the Personal Data Protection Law. The law provided companies with two years to adapt their activities to ensure compliance. During this period, the law requires the creation of the National Data Protection authority and the appointment of a Superintendent of Data Protection. On May 26, 2023, the law’s sanctioning regime came into force.
On November 6, 2023, the Regulation to the Organic Law on Personal Data Protection was enacted. Among other issues, this law establishes the content and procedure to request enforcement of the rights protected by the law; access, rectification, updating, suppression, opposition and portability of personal data, regulation of the data protection authority, and the establishment and organization of the Public Registry to administer it.
G. Referendum on the Future of Oil Exploration Within the Yasuní National Park
On August 20, 2023, Ecuadorian voters rejected continued oil drilling in the Yasuní National Park within the rainforest area of Ecuador. While the issue arose before oil drilling began, voting had been delayed for years. As a result, production entered into full swing in the main oil field, known as “Block 43.” The majority of local voters would have approved continued drilling. The referendum took place on the same day as the snap elections to elect the 137 members of the National Assembly as well as the President and Vice-president of Ecuador. The government has confirmed that it will end operations in the field in February 2024.
H. Regulation to the Organic Law of Communication
On August 28, 2023, the Reglamento General a la Ley Orgánica de Comunicación was published. It incorporates rules for the self-regulation of the media, including addressing the issuance of codes of conduct as well as editorial and information policies that generate a balance between responsibility and freedom of information, among other issues.
I. Regulation to the Fintech Law
The Regulation to the Fintech Law was enacted on November 6, 2023. The purpose of this law is to regulate the activities carried out by technological initiatives in financial matters, including the financial, securities, and insurance markets.
Mariana Ayrolla Navega De Alcântara contributed to the section on Brazil. Francisco Ugarte Larraín, Alejandra Daroch Mercado and María Alicia Corbo Serani contributed to the section on Chile. José Francisco Mafla contributed to the section on Colombia. Diego Ramírez Mesec contributed the section on Ecuador.
