2018/2019 Edition of the Global Regulatory Update

Treasury and Trade Solutions 64 The Bill included two main parts: 1) a tax reform and several incentives to promote investment; 2) an important reform to the management of the public finances. The impact to investments will likely be seen in the medium term and will also depend on the position of tax authorities and regulators. Key components – Tax and Investment Incentives: • Creation of incentives and exceptions for investments in several domains for up to 10 years. • Several changes in the application of the ISD tax (5% tax for all financial outflows). • 90-day tax amnesty which creates an opportunity to collect more than $500MM. • Incentives to attract investment in the oil and mining industries. Key Components – Public Finances • New rules for long-term public debt sustainability. • General budget cannot be approved with a deficit. • Revenues from the exploitation of non-renewable natural resources (mainly oil) that exceed what is included in the budget will be allocated to a “fiscal stabilization fund”. • Ratification of 40% limit (debt/GDP ratio) and requirement for National Assembly approval if the limit is breached for “investment projects of national interest”. However, if the limit is exceeded, a Fiscal stabilization plan has to be applied. 5) FinTech in LATAM a) Overview of the Landscape The financial technology sector in LATAM has seen strong growth in recent years. Potential to reduce informality and increase access to financial services in the region remains. An Inter-American Development Bank (IDB)-Finnovista 2017 report claims that of 703 regional FinTech firms recorded in 15 countries, 60% were born in 2014-2016. These newly established firms are mainly focusing on lending, payments, insurance and digital banking. Meanwhile, incumbent firms are not only competing but increasingly collaborating or acquiring FinTech partners. Additionally, Brazil, Mexico, Colombia, and Argentina make up 90% of all FinTech activity in the region. With respect to regulation, most regulators in the region have taken a light-touch approach, recognizing the opportunity new financial technologies create to strengthen