LAW NO 3420 LAW OF 8 JUNE 2006

EVO MORALES AYMA CONSTITUTIONAL PRESIDENT OF THE REPUBLIC

For the Honorable National Congress, it has sanctioned the following Law: THE HONORABLE NATIONAL CONGRESS, D E C R E T A: SPECIAL ECONOMIC AREA FOR EXPORT AND TOURISM

DEL TROPICO DE COCHABAMBA TITRE I

GENERAL PROVISIONS ARTICLE 1. (Object). The purpose of this Law is to establish the legal norms regarding the implementation of productivity and competitiveness conditions for all those productive enterprises that have carried out and make investments in the Economic Zone. Special Export and Tourism of the Tropic of Cochabamba, through special treatment in the legal, administrative, tax and financial fields that allows, among other benefits:

Promote productive investment, formality and promote the economic development of the region.

To strengthen industry, tourism, agricultural, livestock and forestry activities; exports and any other productive enterprise.

Generate alternatives to the illicit activity of drug trafficking.

Create sources of employment, improve the quality of life of the population and fight poverty.

Contribute to the transfer of technology and the generation of added value. ARTICLE 2. (Definitions). For the purposes of this Law, it is understood by: PRODUCTIVE COMPLEX OR CLUSTER: Sectoral and/or geographical concentration of companies engaged in the same activities or in closely related activities, both backwards (suppliers of inputs and equipment), forward (processing and user industries) and towards the sides (services and closely related activities), with major external economies, agglomeration and specialisation. PRODUCTIVE ENTREPRENEURSHIP: Licit activity, consisting of the identification, evaluation and development of an idea to transform it into an operational business concept or a product, by obtaining the necessary resources for its execution and subsequent marketing (productive and tourist activities). IICENTRO: Cooperation modality between small and medium-sized enterprises for the search of common objectives, such as the acquisition of raw materials, primary manufacturing processes, research and development of technologies and access to financing. MAYILA: Production system in the form of subcontracting, in which intermediate inputs and imported raw materials are transformed, by means of processes that generate added value, whose final products are marketed abroad. INDUSTRIAL PARK: Geographically defined area and specially designed for the settlement of industrial plants under appropriate conditions of location, infrastructure, equipment and services, with a permanent administration for its operation. TECHNOLOGICAL PARK: Technology transfer center, training of enterprises and new businesses based on the guiding knowledge of the country's research according to its requirements.

DEVELOPMENT POLE: A motor economic unit or a set of economic units which have an attractive effect on the other units related to them and which determine a change of structure in the region, with increasing levels of production of the whole. TOURISM PROJECT: It is any public or private initiative aimed at the study, planning and implementation of programs and activities relevant to the design of tourism products, assessment of the natural, cultural and productive heritage, local community and strengthening or creating spaces for recreation, recreation, education, lodging. JOINT ECONOMIC PARTNERSHIP: The one formed between the State, Prefectures, Municipalities, Corporations, Public Enterprises or other entities that are dependent on the State and private capital, for the exploitation of companies that have the purpose of collective interest or implantation, promotion or development of industrial, commercial or service activities. SPECIAL ECONOMIC AREA: It is the geographical space within which the conformation of development poles, industrial parks, technological parks, machicenters and productive complexes will be promoted. ARTICLE 3. (Geographical Area). It is understood by Special Economic Zone Exportadora and Tourist of the Tropic, to the geographical area between the towns of Cristal Mayu and Bulo Obulo of the Subregion North of the Department of Cochabamba, which corresponds to the integrity the municipality of Villa Tunari of the province Chapare; the tropical zone of the Municipality of Tiraque (Sub-Mayor of Shinahota) of the Province of the same name; the tropical zone of the Municipality of Entre Ríos, and the entire geographical extent of the Municipalities of Chimore and Puerto Villarrroel of Carrasco Province; according to the Political Division Administration of the Department of Cochabamba. It is established that this Law will be applicable to a specific area, to be established in Regulation, of the Industrial Park of Santibanez and of the Airport? Jorge Wilsterman?, in order to promote projects of cold, export and maquila chains. ARTICLE 4. (Applicability) . The rules of this Law are applicable to all natural persons, private or mixed-economy enterprises; national or foreign; associations of small producers, peasant economic organizations and cooperatives legally established, that they make new investments or extensions in their investments in the Special Export and Tourism Economic Zone of the Tropic of Cochabamba. The benefits of this Law are excluded from the legal or natural persons, private or mixed-economy enterprises which carry out extractive activities in the mining and mining areas, as well as banking and financial institutions and those providing related services. TITLE II

INCENTIVE SCHEME ARTICLE 5. (Incentives). Any productive enterprise established in the Special Economic Area of the Exportadora and Tourism of the Tropic of Cochabamba will enjoy the following incentives to be granted by the Central Government and the Municipal Governments, in the the scope of their respective powers laid down by law and shall include:

Exemption from the Tax on Business Utilities (IUE) for a period of ten (10) years from the beginning of production, provided that the amount of the paid tribute is reinvested in its integrity, in the next fiscal management, within the same productive unit or in another productive unit within the Special Economic Zone.

Exemption from the Tariff Tax (GA) and Value Added Tax (VAT) for imports of industrial plants and capital goods, not produced in the country, during the period of installation of new investments or extension of the same, the productive activity.

Single payment of three (3%) percent for minor imports of raw materials, inputs, accessories, materials, tools, spare parts, parts and parts of foreign origin that do not occur in the country. Except those which already enjoy the release of tariff levies.

Exemption from the Tax on Transactions (IT) for the sale of goods used within the Special Economic Zone and which are part of the same productive export chain, within that zone.

Exemption from the payment of the Property Tax Property (IPBI), for a period of up to three years, at the discretion of the respective Municipal Government, for any new construction and/or construction to be carried out for the operation of the productive or tourist enterprise in the Special Economic Zone.

Partial discount of the municipal domain taxes on the amounts invested in works of urban improvement or neighborhood made in a coordinated way with the Municipal Governments. The percentages and deadlines will be established in each case by means of resolutions of the respective Municipal Governments.

Municipal governments will be able to grant other municipal tax and administrative incentives, such as the exemption from the payment of patents and the change of land use for the installation of productive enterprises, the same as must be established by Municipal Ordinance.

ARTICLE 6. (public investment). The National Government, the Department of the Department, the Municipal Governments of the Special Economic Zone, and all public institutions involved in regional development, will carry out joint actions aimed at prioritizing the infrastructure such as roads, roads, access routes and lighting, natural gas networks, telecommunications services, energy, basic services and related civil infrastructure, to the Special Export and Tourism Area of the Tropico de Cochabamba. ARTICLE 7. (Municipal Programmes). The Ministries of Production and Microenterprise and Rural Development, Agricultural and Environment, through its specialized operational entities will promote in coordination with the Municipal Governments of the Special Economic Zone, the execution, financing and co-financing with local or international sources of the following programs:

Information services, training, technical assistance and business plan development for productive units.

Qualification and training of human resources in the productive and tourist processes of the Tropic of Cochabamba.

Technological development and innovation to contribute to a competitive production and sustainable development in harmony with the environment.

Policies for the management of productive and tourist units for their continuous improvement.

Improvement of the quality of goods and services.

Promotion of the sociativity between productive and tourist units.

Strengthening the development of tourism through certification and accreditation of the quality of services. TITLE III

REQUIREMENTS AND OBLIGATIONS ARTICLE 8. (rating).

For access to the benefits of this Law, the productive units will have to present their investment and expansion proposals to the Council of the Special Export and Tourism Economic Zone of the Tropic of Cochabamba, for their qualification, (a) to be determined by the corresponding Regulation to be formalised in the accession contracts concluded between the Driving Council and the Productive Entrepreneurship.

The Governing Council shall be composed of a representative of the following institutions: Ministry of Rural Development, Agricultural and Environment, which will preside over it; Ministry of Production and Microenterprise; Ministry of Public Works, Services and Housing; Ministry of Development Planning; Prefecture of the Department of Cochabamba; Mancomunidad de Municipalities del Tropico de Cochabamba; Departmental Chamber of Industry; Departmental Chamber of Exporters; Chamber of Agriculture Tropico; Association of Hoteliers of the Tropic and Association of Tropic Producers .

The Governing Council shall establish agile and expeditious procedures, including the administrative framework for the application of economic operators in the event of rejection of their applications.

ARTICLE 9. (From the Obligations). All production units that are benefiting from the benefits provided for in this Law shall have the following obligations:

Comply with the applicable tax rules with the exceptions mentioned in Title III.

Comply with the investment plan approved by the Council of the Special Export and Tourism Economic Zone of the Tropic of Cochabamba at the time of the corresponding benefits.

Strictly observe the rules laid down in the General Labour Law and its related rules, as well as Law 1333 of the Environment and its sectoral provisions.

Report to the National Tax Service, the National Customs and the Municipal Government, as appropriate, the production start date, for verification purposes.

ARTICLE 10. (Failure). The benefits granted by this Law shall automatically cease from the moment when any of the obligations and requirements laid down in the Act and in their respective Regulations have been breached. TITLE IV

FINAL PROVISIONS ARTICLE 11. (Effective). The measures provided for in this Law shall enter into force on the first day of the month following the date of enactment of their respective regulations. ARTICLE 12. (Extension of the Benefit). The measures provided for in this Law will also be extended to the activities dedicated exclusively to the export that are developed in the Industrial Park of Santivanez, as well as to the processes of cold, maquila and export that are perform inside the airport? Jorge Wilsterman?. ARTICLE 13. (Regulation). The Executive Branch shall establish the corresponding regulations within a maximum period of ninety (90) days from the enactment of this Law. Refer to the Executive Branch for constitutional purposes. It is given in the Session Room of the Honorable National Congress, at the eighteen days of the month of May two thousand six years. Fdo. Santos Ramirez Valverde, Edmundo Novillo Aguilar Ricardo Alberto Diaz, Felix Rojas Gutierrez, Oscar Chirinos Alanoca, Alex Cerrogrande Acarapi. Therefore, it was enacted so that it has and will comply with the law of the Republic. Palace of Government of the city of La Paz, on the eight days of the month of June of two thousand six years. FDO. EVO MORALES AYMA, Juan Ramon Quintana Taborga, Carlos Villegas Quiroga, Luis Alberto Arce Catacora, Celinda Sosa Lunda, Salvador ric Riera, Hugo Salvatierra Gutierrez.