The National Executive, based on Decree No. 3.413, dated May 10, 2018, which declares, for the seventh time in a row, the State of Economic Emergency throughout the national territory, has created 2 special economic zones (SEZ), with the name of SEZ Guarenas-Guatire (Decree No. 3,440 – Official Gazette No. 41,427 of June 26, 2018) and SEZ Tinaquillo-San Carlos (Decree No. 3,486 – Official Gazette No. 6,387 Extraordinary of No. 3 July 2018).
These zones, with an extension of 558 Km2 and 4,465 Km2 respectively, add up to the 2 the National Executive had created at the end of 2014, and which are known as the SEZ Ureña-San Antonio Border SEZ and the SEZ Paraguaná.
Furthermore, it is observed that the Guarenas-Guatire SEZ is limited to the Industrial Zones of Guayabal del Este; el Márquez Sur; las Flores; Clorís; Terrinca, el Care, el Rodeo, Loma Linda, Araira, Kempis, El Ingenio, Las Planadas, Vega Abajo, Sojo, Márquez Norte, Barrancas, Martin Piedras, and Fajardo, located in the Jurisdiction of the Municipalities Ambrosio Plaza and Ezequiel Zamora of the Miranda state, while the Tinaquillo-San Carlos SEZ is limited to the territories of Tinaco, Tinaquillo, Ezequiel Zamora and Lima Blanco municipalities.
The decrees indicate that Venezuelans and foreigners residing in Venezuela, linked to the realization of productive activities and that will have access to the mechanisms of distribution, disclosure of goods and services established in the Decree, within the framework of the laws of security and defence of the Nation and other current regulations are possible beneficiaries. The decrees also indicate that the regulations that natural or legal persons that operate within the territorial jurisdiction established by each Decree, will enjoy additional benefits, if they meet the conditions established by the current legal system, the Integral Development Plan and the specific installation agreements.
Both Decrees state:
- Companies installed in the Special Economic Zone may benefit from the investment and international trade agreements signed by the Bolivarian Republic of Venezuela, provided that they comply with its regulations; to this effect, the ministry with competence in matters of foreign trade and international investment will be responsible for the issuance of the respective certificate of origin, as established in the Law of Simplification of Administrative Procedures.
- Import of equipment, tools and materials exclusively for the construction of the infrastructure and buildings of facilities used for the development of the Special Economic Zone, by the administrative entities and the users, will not cause taxes and customs duties. The equipment, tools and materials must be specified in the Installation Agreement.
- Legal entities established in the Special Economic Zone will have a 100% exemption from Income Tax (ISLR), in the period agreed in the Installation Agreement with the Stewardship Council.
- If in the first year of operation, enterprises manage to allocate at least 70% of its production to export, they will maintain the benefit of exemption from 100% of the Income Tax (ISLR), otherwise they will have to pay 50% of the rate corresponding to the ISLR. This benefit will be maintained during the first five years of operation.
- If from the second (2nd) year of operation they maintain an export level of 70%, they will obtain a reduction of 75% in the rate corresponding to the Income Tax (ISLR), otherwise they will only obtain the 25% exemption from Income Tax (ISLR). This condition will remain until the tenth year of operation.
- As of the eleventh (11th) year of operation, by maintaining an export level of 70%, it will obtain a 50% reduction in the corresponding rate of Income Tax (ISLR), otherwise, they will obtain a 25% exemption from Income Tax (ISLR).
- The juridical persons established in the Special Economic Zone, which make necessary infrastructure investments for the development of this zone, will be able to obtain special benefits that will be agreed with the National Executive, in accordance with the works they carry out.
- In addition, the percentage of reduction of the Income Tax (ISLR) will be increased, when the company established in the Special Economic Zone manages to incorporate national components in its productive processes based on the table indicated in each Decree.
In cases in which the sum of the reductions of Income Tax (ISLR) granted for compliance with the conditions is greater than 100%, it is exonerated up to 100% of the Income Tax (ISLR) caused.
Conditions to be fulfilled in order to obtain the benefits indicated in the Decree
A common feature of both special economic zones is that for companies and institutions to enjoy the benefits contemplated in the Decree, they must comply not only with the conditions established by the current legal system and the Integral Development Plan, but also with specific installation agreements, which among other things will indicate that these companies and institutions must:
- Open or maintain a bank accounts in the national public banking system.
- Report its operations every six months to the Stewardship Council of the Special Economic Zone.
- Stay in operations for at least a period of 5 years to start enjoying other benefits.
- To end their operations, the liquidation of assets, credits, debts and handling of resulting surpluses, must be carried out according to legal procedures established in the Bolivarian Republic of Venezuela.
- They must ensure the incorporation of national components within their productive processes, in order to enjoy additional benefits to those established.
- The currencies generated by the percentage of production destined for export should be handled through the national bank (in the case of the Tinaquillo-San Carlos SEZ by the national public bank) which, according to the decree, will generate attractive financial products for the investors that help in the fulfillment of the established term, for the benefit of both parties and in accordance with the Constitutional Law of Foreign Productive Investment.
- The percentage of production that will be interned in the country may be exempt from the payment of national taxes in accordance with the decision of the President of the Republic and in compliance with the corresponding legal system. In particular, it should be noted that for the Tinaquillo-San Carlos SEZ, the goods will be distributed preferably by the State’s commercial networks and in accordance with the Providence, by means of which general accounting criteria are established for the determination of fair prices of the Superintendence of Fair Prices.
Of the fiscal regime
Both decrees indicate that those goods and services produced within the Special Economic Zone will enjoy protection of the established fiscal regime, and in the case of imported goods and services, they must meet the following conditions:
- Be covered by the customs and transportation documentation indicated in the Decree with the Rank, Value and Force of Law of Reform of the Decree with Rank, Value and Force of the Organic Law of Customs, its regulation and the pertinent legal regulation, also complying with the customs procedure of admission to the Special Economic Zone in question.
- Comply with the sanitary provisions established in the current legal system.
- Demonstrate the correspondence between the imported goods and the processes and activities of their operating consignees.
When the Decrees are analyzed in detail, it is observed that both zones will require, in order to be really taken advantage of, that in the next 4 to 6 months, the respective Strategic Plans of Integral Development of each zone are developed. In this order, it should be noted that the decrees indicate that those plans will contain programs, projects and measures to develop the economic, social, territorial, political and cultural dimensions of the subregion, within the framework of its regional, national and international integration in accordance with current regulations.
Similarly, it is noted that before installation in each area, it will be necessary to sign a specific agreement of installation, which will contain specific provisions that each person, whether natural or legal, will have to comply with and that will be verified by the Stewardship Council.
Luis Mariano Rodríguez Rojas
Legal Affairs Manager