 
./.  WORLD TRADE  
ORGANIZATION  G/SCM/Q2/CHL/18 
21 July 2004 
 (04-3155) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Questions from the UNITED STATES Regarding  
the New and Full Notification of CHILE1 
 The following communication, dated 19 July 2004, is being circulated at the request of the 
Delegation of the United States.  
_______________ 
  
 
 The following are questions regarding the notifi cation of Chile pursuant to Article XVI:I of 
the GATT 1994 and Article 25 of the Agreement on Subsidies and Countervailing Measures, in 
document G/SCM/N/95/CHL.   
I. TAX CREDIT FOR INVESTMENT IN THE PROVINCES OF ARICA AND 
PARINACOTA (REGION I) 
 Besides the tourist industry, what other industries benefit from this programme? 
 
II. EXEMPTION FROM FIRST-CATEGORY TAX UNDER THE INCOME TAX LAW 
ON EARNINGS 
1. What are the typical requirements established by  the Ministry of Finance and the Ministry of 
Economic Affairs?  Are companies locat ed in the free zones required, on a de jure  or de facto  basis, to 
export or use domestic over imported goods ( e.g., are there local content/domestic value-added 
requirements)?  
2. Are all companies located in free z ones exempt from "first-category taxes"? 
 3. What is the normal length of time between th e due date for the first-category tax and payment 
of the second-category tax?   4. What other benefits are provided to companies in a free zone? 
 
5. What is the legal status of the companies lo cated in the free zones?  Do they have to be 
incorporated in accord ance to Chilean law? 
 6. It is noted that in document G/SCM/Q2/CHL /16, Chile states that "The free-trade zones 
enjoy, extraterritoriality, that is to say, goods ar e assumed to be abroad a nd are therefore tax-exempt 
                                                     
 
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 unless they enter the rest of the national territory".  Is it Chile’s view that companies located in its free 
trade zones are exempt from the normal disciplin es of the Subsidies Agre ement, such as specific 
company income tax benefits and other normally ac tionable subsidies, including prohibited subsidies 
under Article 3?  If so, please explain the legal basis in the Subsidies Agreement or other WTO 
agreement for this exemption. 
 
III. SIMPLIFIED SYSTEM OF REFUNDS FOR MINOR EXPORTS 
1. Is any export product eligible for this refund? 
 2. Why must qualifying exports have at least 50 per cent imported inputs? 
 
3. How was the three percent figure established?  What is the link between the amount of the 
refund and the amount of duties paid on imported products?  How  was the establishment of this 
figure consistent with the requirements of the Subsidies Agreement?   
__________ 
 
 