Presidential Decree No. 3,426, in effect since 15 May 2018, created a Special Economic Zone in the Palavecino Municipality and another in the Iribarren Municipality, both in the state of Lara (the "Zones").1 The first Zone is in the rural settlement of La Galería, Las Tres Topias sector, Industrial Zone of Cabudare. The second Zone is in the Industrial Zones of the Iribarren Municipality.

Presidential Decree No. 3,652, in force since 2 November 2018, established that the Zones will have as a special purpose the export of goods, employing industrial and agricultural potential.2 Decree No. 3,652 established the following tax benefits in the Zones:

  • The companies installed in the Zones can benefit from the investment and international trade agreements subscribed by Venezuela.
  • The import of goods, equipment, tools and materials made by individuals or legal entities (whether private or government-owned) for the reactivation, modernization and construction of infrastructure in the Palavecino and Iribarren municipalities, will not be subject to customs duties or fee. The installation agreement must establish such duties and fees.
  • Legal entities established in the Zones may enjoy a 100% income tax ("I/T") exoneration, as established in the agreement of the Board of Directors of the Zone.
  • If the beneficiary of the exoneration in the first year of operation uses at least 70% of its production for export, it shall maintain the 100% exoneration benefit. Otherwise, it must pay 50% of the I/T rate. The benefit will be maintained during the first five years of operation.
  • If the beneficiary of the exoneration, from the sixth year of operation, maintains an export level of 70% of its production, they will obtain a 75% reduction in the I/T fee. Otherwise, it will benefit from a 25% exoneration. The benefit will be maintained until the 10th year of operation. After the 11th year of operation, if the beneficiary of the exoneration maintains an export level of 70% of its production, it will obtain a 50% reduction in the I/T rate. Otherwise, it will only get a 25% I/T exoneration.

When the beneficiaries of the exoneration incorporate national components in their production processes, they will obtain I/T reductions according to the following table: