The Constitutional Court issued the ruling 44-16-IN/22 by which it declared the second paragraph of the Third Reformatory Provision of the Law of Solidarity and Citizen Co-responsibility for the Reconstruction and Reactivation of the Areas Affected by the Earthquake of April 16, 2016, as unconstitutional (hereinafter the "Solidarity Law"):
Such paragraph amended the Internal Tax Regime Law and provided that:
"Promoters, advisors, consultants, and law firms are required to report under oath to the Tax Authority -according to the forms and deadlines established by general resolution issued for such purpose-, a report on the incorporation, use and ownership of companies located in tax havens or lower taxation jurisdictions by Ecuadorian beneficial owners. Each failure to comply with this rule will be punished with a fine of up to 10 basic fractions of income tax, without prejudice to any criminal liability that may arise."
The Constitutional Court considered that the rule did not comply with the principle of unity of law established in Article 136 of the Constitution of the Republic of Ecuador since:
- It regulates a permanent obligation which purpose does not
coincide with the purpose of the Solidarity Law, the reconstruction
and reactivation of the areas affected by the earthquake of April
16, 2016.
- Its inclusion implies an inadequate dispersion or the
rules applicable to matters involving professional secrecy and
client-attorney confidentiality.
- The obligation did not allow in any way to immediately collect any economic resources to face the natural disaster. Therefore, it lacks thematic and teleological connection with the Solidarity Law.
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