Special Economic Zones (SEZ)

Special Economic Zone refers to geographical areas under special rules and regulations, which are introduced to encourage large-scale national and international investments of economic significance in the country. Venezuela introduced tax, financial, and other incentives to public, private, and mixed investors in SEZs for both national and foreign investors who have concluded an investment agreement with the International Center for Productive Investment.

There are 4 types of Special Economic Zones (SEZs):

SEZs for Promotion of Exports;
SEZs for Selective Substitution of Imports (i.e., goods/products predominantly imported and not produced in Venezuela);
SEZs for Technological Development; and
SEZs for production sectors, including production for export.

The following incentives are available to investors in SEZs (other than production sectors):

Refund of total or partial import tax for up to 10 years on the import of goods, equipment, tools, and materials used for the development of a project;
Refund of total or partial income tax and VAT for legal entities established in an SEZ for up to 10 years;
Exemption for certain legal regimes for imports and exports in relation to all supplies, raw materials. and capital goods used for the production of goods and services for export or re-export by authorized legal entities operating in SEZs; and
Additional incentives approved by the president of Venezuela for SEZs.

Five new SEZs that are established via presidential decree include Paraguaná (Falcón state), Puerto Cabello-Morón (Carabobo state), La Guaira (La Guaira state), Margarita (Nueva Esparta state), and La Tortuga Island (Francisco de Miranda Island Territory).

Effective 10 August 2023, Venezuela established 4 new SEZs viz, Tortuga Island SEZ, Aragua State Military SEZ, Paraguana Peninsula SEZ, and La Guaira State SEZ. The incentives include an income tax refund for resident and non-resident companies, public companies, and mixed entities that carry on economic activities in an SEZ and have concluded an agreement with the respective SEZ authority. The following incentives are available for production sectors, including exports:

Tortuga Island SEZ:

100% refund of the income tax paid for the first 20 years; and
50% refund of the income tax paid for the 21st to 25th years;

Aragua State Military SEZ, Paraguana Peninsula SEZ, and La Guaira State SEZ:

100% refund of the income tax paid for the first 4 years of activities;
100% refund of the income tax paid for the 5th and 6th years if more than 60% of production is exported; otherwise, refund limited to 25%; and
75% refund of the income tax paid for the 7th year if more than 60% of production is exported; otherwise, no refund.

Apart from the above, a refund of customs duty on imports for production for up to 10 years and accelerated depreciation for machinery, equipment, and infrastructure for production processes are also available to these SEZs.

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