RESTRICTED
WORLD TRADE G/SCM/N/2/CHL/Suppl.1
16October 1995
ORGANIZATION(95-2961)
Original: Spanish Committee onSubsidies andCountervailing Measures
NOTIFICATION PURSUANT TOARTICLE 28.1(A) OFSUBSIDIES
INCONSISTENT WITH THE AGREEMENT
CHILE
Supplement
Thefollowing communication, dated 8September 1995, hasbeenreceived fromthePermanent
Mission ofChile.
________________
Asindicated inthenotecirculated asdocument G/SCM/N/2/CHL, Inowenclose thefollowing
Chilean legaltexts:
1. LawNo.18.480, establishing asimplified system forrefunds toexporters.
2. LawNo.18.483, establishing thenewlegalregime fortheautomobile industry.
3. LawNo.18.634, establishing asystem ofdeferred payments ofcustoms duties, fiscal
credit andother taxbenefits.G/SCM/N/2/CHL/Suppl.1
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LawNo.18.480
Ministry ofFinance
Published on19December 1985
Establishing asimplified system fortherefund oftaxes bearing onthecostofinputs usedin
theproduction ofnon-traditional minor exports (published inOfficial Gazette No.32.351, of
19December 1985).
TheGovernment oftheRepublic ofChile hasapproved thefollowing draftlaw:
Article 1:Asimplified system ishereby established fortherefund oftaxes bearing onthe
costofinputs usedintheproduction ofnon-traditional minor exports.
Refunds shallamount to10percent,5percentor3percentrespectively ofthevalue ofexported
products ofdomestic origin, inaccordance withtheprovisions setoutbelow. Thevalue oftheproducts
exported shallbetaken tobetheirf.o.b. value excluding anycommissions orother expenses deductible
from theoutturn oftheexport operation, expressed inUS$attheexchange rateestablished under
Article 122oftheCustoms Regulations.
Inputs ofdomestic origin orimported against payment ofimport duties andtaxes(nationalized),
usedorconsumed inthemanufacture, processing orproduction ofexported goods which arein
themselves excluded fromentitlement totherefund shallnevertheless entitle theexporter totherefund
referred tointhepreceding paragraph onthebasisofthenetinvoiced value oftheinputs inquestion,
oncethegoods havebeenexported. Onapplication bytheexporter, theRegional Directors orOfficers
oftheCustoms Service shalldetermine thenetvalue oftheinputs directly usedorconsumed inthe
production oftheexported goods inaccordance withtherequirements andverification procedures
established bytheDirector oftheNational Customs Service. Refunds inrespect ofinputs maynot
becombined withrebates ofcustoms duties orcharges granted under anyother provisions normay
refunds begranted inrespect ofgoods notcovered bytheprovisions laiddown inLawNo.18.708.
Inrespect ofgoods notproduced entirely inthecountry from materials ofdomestic origin, the
nationalized inputs referred toearlier inthisparagraph mustmeettheconditions laiddown inthefirst
paragraph ofArticle 5.
Therefund isapplicable toallgoods eligible under thepresent lawuntilthedateofentry into
force ofalistunder which theyareexcluded, inaccordance withtheprovisions ofArticles 2,3and4.
Exporters maywaive theirentitlement under thepresent lawinwhole orinpart;insuchcases
proof ofsuchwaiver must beexpressly provided intherelated export declaration.
Article 2:Allexported goods ofdomestic origin listed intheCustoms Tariff onthedateof
theexportdeclarationacceptanceissuedbythecustomsauthoritiesshallbeeligiblefortherefundreferred
toinArticle 1provided thattheentitlement tobenefit under thisprovision wasineffect on
31December 1990.
Exported goods ofdomestic origin listed intheCustoms Tariff onthedateoftheexport
declaration acceptance issued bythecustoms authorities which, on31December 1990, wereexcluded
fromentitlement totherefund maynevertheless benefit under theprovisions ofthislawprovided that
thetotalamount byvalue exported pertariff iteminaccordance withtherelated classification ontheG/SCM/N/2/CHL/Suppl.1
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dateofacceptance inquestion didnotexceed, in1990, anf.o.b. value ofUS$5 million, ascertified
bythecustoms authorities.
Theratesofrefund applicable tothegoods specified inthepreceding paragraphs andtheranges
ofexports concerned areasfollows:
(a) 10percentinrespect ofgoods exported during theyear1990 toanf.o.b. value not
exceeding US$10 million pertariff item, ascertified bythecustoms authorities;
(b) 5percentinrespect ofgoods exported during theyear1990 inanamount exceeding
US$10 million butnotexceeding US$15 million byf.o.b. value pertariff item, as
certified bythecustoms authorities;
(c) 3percentinrespect ofgoods exported during theyear1990 inanamount exceeding
US$15 million butnotexceeding US$18 million byf.o.b. value pertariff item, as
certified bythecustoms authorities.
Theamounts indicated insubparagraphs (a),(b)and(c)shallbeadjusted annually inlinewith
theaverage price index forChile'sforeign trade established bytheChilean Central Bank, taking the
year1990asbase; thesefigures shallalsobeusedtoestablish theannual listofexcluded items provided
forinArticle 3.
Article 3:Alistofitems excluded, classified onthebasis ofthetariff headings ineffect on
thedateonwhich thelistisdrawn up,shallbeestablished every yearbefore 31March byadecree
issued bytheMinistry ofEconomic Affairs, Development andReconstruction andendorsed bythe
Ministry ofFinance. Thelistshallspecify:
(a) those goods which, under theprovisions ofthesecond paragraph ofArticle 2,donot
carry entitlement tobenefit under thislaw;
(b) those goods which, under theprovisions ofArticle 2,donotqualify fortherefund
ratesof10percent,5percentor3percentrespectively since theamounts exported
inthepreceding calendar yearexceeded thelimits ofUS$10 million, US$15 million
andUS$18 million respectively, adjusted inaccordance withtheprovisions ofArticle 2,
lastparagraph.
Inaddition, thelistmayinclude:
(1) goods relating toinvestment projects designed toproduce exports exceeding
US$10 million byvalue, adjusted inaccordance withtheprovisions ofthefinal
paragraph ofArticle 2;
(2) rawmaterials orother inputs constituting theprincipal element inexported products
notcovered bythesystem established inthepresent law. Fortheforegoing ruleto
operate, anapplication giving grounds mustbesubmitted totheMinistry ofEconomic
Affairs, Development andReconstruction, showing thatthevalue oftherawmaterials
orother inputs inrespect ofwhich exclusion from benefit under theprovisions in
question issought account fornotlessthan10percentofthef.o.b. value ofthe
exported goods. Further, toenable therawmaterials orother inputs tobewithdrawn
from thebenefit granted under thislawtheiruseintheproduction ofthefinished
exported goods musthaveaccounted, together orseparately, foratleast20percentG/SCM/N/2/CHL/Suppl.1
Page4
ofthesalesofthematerials orinputs inquestion onthedomestic market during the
twocalendar years preceding thedateoftheapplication;
(3) goods under tariff headings ineffect onthedateofpreparation ofthelistinrespect
ofwhich theamounts exported havefailed toachieve, onaverage overthepreceding
three calendar years, anincrease dulyadjusted inaccordance withtheprovisions of
Article 2,lastparagraph, equalling orexceeding 1.5times theaverage increase inthe
GDP overthesame period.
Allexport declarations relating togoods appearing onthelistofexcluded items carryentitlement
totherefund ifaccepted bythecustoms authorities before thedateofpublication ofthedecree under
which thegoods were excluded.
Article 4:Notwithstanding theprovisions ofArticle 3,thelistofgoods excluded frombenefit
under thepresent lawmaybeextended atanytimeinrespect ofaspecific goods itembyadecree,
giving grounds, issued ontheauthority oftheMinistry ofEconomic Affairs, Development and
Reconstruction intheform indicated inthefirstparagraph ofArticle 3,where thegrounds forsuch
further exclusions specified insubparagraphs (1)and(2)ofthesecond paragraph ofArticle 3arefound
toexist.
Article 4(bis): Forthepurposes ofdrawing upthelistsofitems excluded referred toinArticle 3
above, thecustoms authorities shall inform theMinistry ofEconomic Affairs, Development and
Reconstruction every yearoftheamounts oftheinputs exported, indicating theirrespective tariff
headings, inrespect ofwhich therighttobenefit from therefund inaccordance withtheprovisions
ofthethirdparagraph ofArticle 1hasbeenrecognised. Todetermine whether theinputs inquestion
should beexcluded from entitlement totherefund, theMinistry ofEconomic Affairs, Development
andReconstruction willtotaltherespective amounts transmitted bythecustoms authorities.
Article 5:Forthepurposes ofthepresent law,goods shallbeconsidered tobeofdomestic
origin ifproduced entirely inthecountry using domestic inputs orusing imported rawmaterials,
semi-finished products orpartsorcomponents withac.i.f.value notexceeding 50percentofthef.o.b.
value oftheexported product provided thattheproduction process effects atransformation giving the
finished goods newcharacteristics suchthattheyfallunder atariffheading different fromthatrelating
totheimported elements.
Alsoconsidered tobeofdomestic origin aremineral, vegetable andanimal products extracted,
harvested orcollected orbredandreared within thenational territory, including game andfisheries
products.
Inthecaseofgoods whose origin isdifficult todetermine, theTreasurer 'sOffice mayspecify
inadvance thoserequiring acertificate oforigin issued bythecompetent body, which shallbeestablished
forthispurpose byadecree oftheMinistry ofEconomic Affairs, Development andReconstruction
endorsed bytheMinistry ofFinance.
Article 5(bis): Thefollowing donotqualify under thesimplified refund provisions:
(a) Exports ofgoods incorporating foreign materials which entered thecountry under
provisionssuspendingorreimbursingcustomschargesorspecialduty-freearrangements.
However, thisrestriction shallnotapply togoods incorporating foreign materials or
inputs imported under preferential customs arrangements inthecontext ofthe1980G/SCM/N/2/CHL/Suppl.1
Page5
Treaty ofMontevideo oranyother dulyratified Treaty introducing preferential tariff
provisions;
(b) Goods exported under theprovisions ofLawNo.18.483 orqualifying tobenefit
thereunder;
(c) Individual exporters who,during thepreceding 12months, haveshipped goods eligible
forthe10percentrefund under agiven tariffheading, asregards thatpartofthetotal
exceeding US$10 million inf.o.b. value, dulyadjusted. Theexcess amount will
automatically beentitled tothe5percentrefund under theterms ofArticle 2above.
Noentitlementtorefundarisesinthecaseofgoodsexportedbyanindividualbeneficiary
under agiven tariff heading asregards thatpartofthetotalexceeding US$15 million
inf.o.b. value, dulyadjusted, during thesame 12-month period referred tointhe
preceding paragraph. Theexcess amount willautomatically beentitled tothe3per
centrefund under theterms ofArticle 2above.
Neither doesentitlement totherefund ariseinthecaseofindividual exporters who,
during theperiod indicated intheprevious paragraphs, haveshipped goods eligible
tobenefit under theprovisions ofthepresent law,asregards thatpartofthetotal
exceeding US$18 million inf.o.b. value, dulyadjusted;
(f) Exports ofgoods classified under sub-headings 41.01.01.00, 41.01.02.00 and
41.01.03.00 ofthecustoms tariff.
Article6:ExportersmustsubmitapplicationsforrefundstotheTreasurer'sOffice,accompanied
bythefollowing:
(a) Adequate proof, intheopinion oftheTreasurer 'sOffice, oftheconsideration obtained
forthegoods exported. TheTreasurer 'sOffice mayobject tothefigure given incases
where, onthebasis ofinformation supplied bythecustoms authorities, itproves to
behigher thancurrent prices ontheinternational market forthegoods inquestion;
(b) Asworn declaration totheeffect thatthegoods exported areofdomestic origin within
theterms defined bythepresent law,donotappear onthelistestablished inconformity
withtheprovisions ofArticle 3andarenotinasituation corresponding toanyofthose
described inArticle 5(bis).
Refunds willbemade intheformofacheque drawn ontheTreasurer 'sOffice tothe
order oftheexporter, delivered tothelatter within fiveworking daysfromthereceipt
oftheapplication referred tointheprevious paragraph.
Thetimeallowed forthesubmission ofapplications forrefunds totheTreasurer 'sOffice shall
be120daysfromtheexpiry ofthetime-limit forthereturn oftheforeign exchange inconnection with
theexport transaction inquestion.
IftheTreasurer 'sOffice rejects anapplication fortherefund ofthetaxesreferred toinArticle 1,
theparties concerned canrequest thatthecasebere-examined bytheTreasurer-General, whoshall
giveadefinitive ruling asregards theacceptance ordenial oftheapplication afterhearing theopinion
ofatechnical committee including arepresentative fromtheMinistry ofEconomic Affairs, Development
andReconstruction, whoactsasChairman, arepresentative ofthecustoms authorities andonefrom
theChilean Central Bank. Thiscommittee shallgiveadecision within 60daysfromthedateonwhichG/SCM/N/2/CHL/Suppl.1
Page6
itsopinion wasrequested. Inperforming itstask, thecommittee must takeaccount ofinformation
brought toitsattention andviews putforward bytheinterested parties.
Themembers ofthetechnical committee shallbenominated, onproposals bytheentities they
represent, inaresolution bytheMinistry ofEconomic Affairs, Development andReconstruction, which
shallbepublished intheOfficial Gazette.
Article 7:Allthose improperly obtaining therefund referred tointhepresent lawbysupplying
falseinformation shallbeliable toatermofimprisonment andafineequivalent tothreetimes thesums
received.
Without prejudice totheforegoing, where thecustoms authorities havedetermined thatarefund
hasbeenimproperly obtained theyshallissueanorder foritsrecovery. Thesumrepaid shallbeadjusted
inlinewiththepercentage change intheconsumer price index during theperiod between themonth
preceding thatinwhich therefund waseffectively obtained andthemonth preceding itsrestitution.
Suchorders shallbeenforceable andtherelated repayments shallbesubject totherulesofprocedure
laiddown inthetaxcode. Such orders mustbeissued bytheCustoms Service within three years of
thepayment oftherefunds inquestion. Appeals maybelodged against suchorders inaccordance
withtheprovisions ofArticle 132oftheCustoms Regulations. When lodging anappeal priorrestitution
oftherefund shallnotbenecessary.
Article 8:Theexpenditure entailed bythepayment oftherefunds established bythepresent
lawshallbecharged toanewitemwithout fixed ceiling appearing annually inthepublic sector budget
estimates.
Article 9:Under item50-01-03-25-31 ofthebudget currently inforcethereshallbeestablished
anappropriation008:"SimplifiedRefundsofTaxesBearingonExporters".Nationalcurrency(thousand
million).
JOSÉ T.MERINO CASTRO -FERNANDO MATTHEI AUBEL -RODOLFO STANGE
OELCKERS -CÉSAR RAÚLBENAV ÍDESESCOBAR
Having fullyapproved theforegoing law,Ihereby sanction thelatter andsignittosignal its
promulgation. Itshallhaveeffect asalawoftheRepublic.
Thelawshallberegistered bytheComptroller General oftheRepublic, published intheOfficial
Gazette andentered bytheComptroller intheCode ofLaws.
Santiago, 17December 1985 -AUGUSTO PINOCHET UGARTE -Hernan Büchi, Minister
ofFinance -Jorge Valenzuela, onbehalf oftheMinister ofEconomic Affairs, Development and
Reconstruction.G/SCM/N/2/CHL/Suppl.1
Page7
LawNo.18.483
Ministry ofFinance
Published on28December 1985
LastAmended byLawNo.19.090
LawNo.18.483 establishing anewlegalregime fortheautomobile industry.
TheGovernment oftheRepublic ofChile hasapproved thefollowing draftlaw:
Article 1:Forthepurposes ofthepresent lawthefollowing expressions aredefined below:
(a) part:component ofthevehicle which, ifdisassembled, would beuseless inrespect
ofthepurpose forwhich itisintended;
(b) assembly: agroup offunctionally related andphysically linked parts which fulfils a
specific function inthevehicle andmaybeseparated from itasaunit;
(c) components: automotive parts orassemblies;
(d) localcomponents:partsorassembliesmanufacturedinthecountrybyancillaryprocessor
firms entered intheregister referred toinArticle 8andfulfilling thefollowing
conditions:thec.i.f.valueofimportedinputsincorporatedincomponentsmanufactured
inthecountry mustnotexceed 30percentoftheaverage wholesale priceofthefinished
product netoftaxes ondomestic markets and/or 50percentoftheaverage price on
export markets;
(e) optional components: accessories generally offered bymanufacturers atadditional cost
above listprice, which mayormaynotappear inthespecification;
(f) specification: listofparts, assemblies andmaterials forming partofthevehicle,
identified byanumber andadescription inSpanish, giving theweight ofeachelement
andthepercentage itrepresents ofthetotalkerbweight ofthecomplete vehicle without
fuel,andtheex-factory value ofeachelement andthepercentage itrepresents ofthe
ex-factory value ofthecomplete vehicle inrunning order butwithout fuel. Thevalue
oftheindividual elements, when added together, plusthevalue attributed toassembly,
including welding, polishing andpreparation forpainting, mustequal theex-factory
value ofthecomplete vehicle inrunning order butwithout fuel,forexport from the
factory oforigin, expressed inafreely convertible currency;
(g) exports: salesonexternal markets oflocalcomponents referred tointhespecification,
whether ornotincorporated inSKD orCBU motor vehicle assemblies;
(h) endprocessor: firmentered intheregister referred toinArticle 2below, which carries
outtheassembly ofmotor vehicles;
(i) ancillary processor: firmentered intheregister referred toinArticle 8,which supplies
localcomponents totheendprocessors;G/SCM/N/2/CHL/Suppl.1
Page8
(j) normal value atpoint oforigin: thesalepriceofthevehicle forexport, afterdeducting
thedistributor 'sprofit margin andanytransfer taxes iftheyaretobeincluded inthe
listprice;
(k) localcontent: thevalue oflocalcomponents, including assembly, asapercentage of
theex-factory value forexport ofthecomplete vehicle inrunning order butwithout
fuel;
(l) CKD (completely knocked down): completely disassembled unit,including bodywork,
unwelded, delivered inpartsready forassembly andconsisting ofthefollowing basic
groups, among others: motor, electrical system, transmission, steering, suspension,
brakes andbodywork;
(m) SKD (semi-knocked down): partly disassembled unit,intowhich localcomponents,
previously entered intheregister referred toinArticle 8,willbeincorporated;
(n) CBU (completely built-up unit): finished motor vehicle inrunning order, whether
assembled inChile orinthecountry oforigin;
(ñ) unused vehicles: vehicles which, onthedateofacceptance oftherelated import
declaration bytheCustoms Service, correspond tothesame orthefollowing model
year. Alsoconsidered asunused arevehicles oftheimmediately preceding model year
provided thatthedateofacceptance oftheimport declaration bytheCustoms Service
isnotlaterthan30April oftheyearinquestion;
(o) export development programme: aprogramme aimed atincreasing thevolume ofannual
exports, asfrom1991, beyond theaverage for1989and1990. Theprogramme enables
endprocessors tobenefit from anextension oftheperiod during which thetax
concessions referred toinArticle 10remain ineffect;
(p) excess exports: thedifference between thevalue ofexport salesbyanendprocessor
inagiven yearandtheaverage value ofthesalesbythesame processor in1989 and
1990;
(q) excess taxcredits: thedifference between theamount oftaxcredit granted inagiven
yearinrespect oflocal content toanendprocessor participating intheexport
development programme andtheamount which would havebeengranted inthesame
yeartothesame firmhaditnotparticipated intheprogramme.
Article 2:Endprocessor firms seeking toavailthemselves oftheprovisions ofthepresent
lawmust register withtheMotor Vehicle Commission, andmust also:
(a) register makes which aretheirexclusive property orforwhich theyholdalicence to
manufacturefromtheproprietor,whichmayalsocovertheprovisionofrelatedtechnical
assistance;
(b) statewhether theyintend toassemble CKD orSKD units;
(c) present theirannual manufacturing programmes forstudy, amendment orperiodic
revision. Suchprogrammes mustinclude thecomplete specification ofthemake and
model ofvehicle tobeassembled inthecountry. Where SKD units areconcerned,G/SCM/N/2/CHL/Suppl.1
Page9
theprogramme submitted mustspecify, foreachmodel, thelocalcomponents tobe
incorporated;
(d) statewhether theyintend toparticipate intheexport development programme.
Article 3:Imports ofcomponents forassembly bytheendprocessors referred tounder Article 1
shallbesubject toadvalorem duties of11percentinlieuofthecharges specified inthecustoms tariff.
Thetime-limit forthepayment ofthese duties shallbe60daysfromthedateofentry ofthe
merchandise;thefirmsinquestionmustsignapromissorynotetoprovidewrittenevidenceoftheamount
owed. Thedebtshallbeexpressed inUS$andmustbepaidattherateofexchange fixedinaccordance
withArticle 122oftheCustoms Regulations.
TheExecutive Secretary oftheMotor Vehicle Commission shallexamine, asregards their
technical aspects, theimport andexport reports submitted byendprocessors inaccordance withthe
programmes ineffect, taking account oftheleveloflocalcontent achieved inrelation totheamounts
offoreign currencies tobeapproved andthepayment ofcustoms duties inthemanner indicated in
thepreceding paragraph.
Notwithstanding theprovisions ofthepreceding paragraphs, imports ofCKD andSKDunits
byendprocessors offset byexports oflocalcomponents bytheendprocessors themselves orbyancillary
processors,inaccordancewithprogrammesapprovedbytheMotorVehicleCommission,shallbewholly
orpartly exempt frompayment ofadvalorem duties where thegoods areeffectively exported within
thetwelve months preceding orfollowing thedateofauthentication oftheimport declaration. Where
theseconditions arenotfulfilled, theMotor Vehicle Commission, which isresponsible forverification
insuchcases, shallinform theCustoms Service toenable thecorresponding duties tobecharged on
thatproportion oftheimports inquestion which hasnotbeenoffset; therelated duties shallbepaid
inaccordance withtherules laiddown inLawNo.1.032 of1975.
Inapproving programmes foroffsetting exports against imports theMotor Vehicle Commission
must consider theex-factory values oftheCKD orSKD units inrelation totheex-factory value of
thelocalcomponents manufactured bytheendprocessors orancillary processor firms toenable itto
verify entitlement tothisbenefit inrespect ofimports corresponding toanamount notexceeding the
amount exported within thestipulated time-limits.
Theex-factory values shall betaken tobethose given inthespecifications or,where no
specifications exist, theyshallbefixed bytheMotor Vehicle Commission.
Article 4:Forthemanufacture ofautomotive components theancillary processors shallimport
rawmaterials andfinished orsemi-finished parts subject tothecustoms tariff, without prejudice to
therightgranted tothesefirms totakeadvantage ofcustoms provisions ofageneral character applicable
toexport activities.
Article 5:Imports ofCBUs andCKD orSKD unitsshallbesubject toadvalorem duties of
11percentinlieuofthecharges specified inthecustoms tariff. Thecustoms authorities shallassess
thevalue ofimported vehicles inaccordance withthenormal newvalue atthepoint oforigin ofthe
mostrecent model, transported c.i.f., orthefigure given intherelated invoice, whichever isthehigher.
Article 6:Thefollowing vehicles shallbeexcluded fromtheprovisions laiddown inthepresent
law:
(a) wheeled orcaterpillar tractors, except roadtractors forsemi-trailers;G/SCM/N/2/CHL/Suppl.1
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(b) ambulances andpolice vans;
(c) armoured vehicles forthetransport ofvaluables orforpolice ormilitary use;
(d) special-purpose motor vehicles specified under heading 8703 ofthecustoms tariff;
(e) chassis fitted withengines, forthevehicles specified under (a)to(d)ofthisarticle;
(f) self-propelled works trucks asspecified under heading 8707 ofthecustoms tariff;
(g) motorcycles andcycles fitted withmotors;
(h) vehicles designed foroff-road transport;
(i) goods vehicles withaloadcapacity ofover2,000 kgs.;
(j) passenger vehicles seating over15persons, including thedriver.
Without prejudice totheprovisions ofthepreceding paragraph, exports ofpartsintended for
incorporation inanyofthevehicles referred totherein maybeeffected under therules established
bythepresent law,qualifying fortheexemptions andadvantages thereby introduced, which latter shall
beincompatible withbenefits available under LawNo.18.708.
Article 7:Endprocessors referred toinArticle 2above which assemble vehicles fromCKD
unitsmusthaveincorporate aminimum of13percentlocalcontent. Vehicles assembled fromSKD
units must haveatleast3percentlocalcontent.
Theforegoing percentages shallbeobtained fromthespecifications. Thevalue ofeachlocal
component shallbethatshown intherelated specifications asapercentage ofthenormal ex-factory
value.
Specifications andamendments thereto shallbeapproved bytheMotor Vehicle Commission,
which mayintroduce changes especially asregards theprices ofcomponents andtheircorresponding
percentages iftheCommission believes thatthelatter donotadequately reflect reality; theCommission
mayalsodelete orcombine components.
Inrespect oftheassembly ofpassenger vehicles fromCKD units, thepercentage localcontent
required under thefirstparagraph ofthisarticle shallinclude 3.25percenttocorrespond totheassembly
process. Inthecaseofgoods vehicles assembled fromCKDunits, theassembly process shallcorrespond
to2percentlocalcontent.
Exports oflocalcomponents which donotcorrespond tooffsetting exports asreferred toin
thefourth paragraph ofArticle 3maybeimputed tothepercentage localcontent required under the
firstparagraph inrespect ofvehicles assembled fromCKD unitsoncondition thattheexports inquestion
qualify fortheadvantages established under Article 11.
Article 8:TheMotor Vehicle Commission shallkeeparegister ofancillary processor firms
andthecomponents theysupply totheendprocessors, toenable ittodetermine andensure thatthe
manufacturers inquestion arecomplying withtheprovisions ofthepresent law.
TheCommission,actingthroughitsExecutiveSecretary,shallexamine,asregardstheirtechnical
aspects, export reports submitted byancillary processor firms inconformity withtheprogrammesG/SCM/N/2/CHL/Suppl.1
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approved. TheCommission mayalsorequire these firms tosubmit corresponding import reports.
Article 9:Until 31December 1998, endprocessor firms shallbeentitled toataxcredit in
respect ofthelocalcontent ofvehicles produced andtransferred (sold) within thecountry oroffsetting
exports orother exports oflocalcomponents.
Thecredit shallamount toupto35percentofthecustoms value ofthecorresponding CBU
foreachvehicle produced andtransferred within thecountry, expressed inthenational currency at
therateofexchange fixed under Article 122oftheCustoms Regulations ineffect onthedateonwhich
thetaxcredit isgranted.
Indetermining themaximum amount oftaxcredit tobeaccorded toendprocessor firms in
accordance withtheprovisions ofthisarticle, thetotalamount ofadvalorem import duties ontherelated
CKD orSKDunitsunpaid inapplication oftheexemptions referred toinArticle 3shallbeconsidered
asanintegral partofsuchcredit.
Article 10:Taxcredit inrespect ofthelocalcontent shallbegranted solely toendprocessor
firms assembling vehicles from CKD units.
Theamount ofthecredit shallbedetermined asapercentage oftheproduct ofthecustoms
value oftherespective CBUs andtheproportion oflocalcontent, suchcontent toinclude boththelocal
componentsandtheassemblyprocess.Forfirmsnotparticipatingintheexportdevelopmentprogramme,
thispercentage isfixed at40percenttoremain ineffect until31December 1991 anddecreasing
thereafter by10percentage points perannum asfrom 1January 1992.
Forfirms participating intheexport development programme, thedatefrom which thetax
credit starts todecrease by10percentage points perannum shallbepostponed until1January 1996.
Thisprovision shallremain ineffect forfirms whose excess exports, fromtheyear1991, totalatleast
three times theamount oftheexcess taxcredit granted tothem.
Toverify compliance withtheconditions laiddown inthepreceding paragraph, from 1992
onwards theMotor Vehicle Commission shall, during thefirst15working daysofeachyear, compare
thevalue ofexcess exports effected during thepreceding yearwithafigure corresponding tothree
times theamount ofexcess taxcredit granted tothefirminrespect ofvehicles produced andtransferred
inthesame year.
Eachtimethestipulated condition isnotfulfilled, thetaxcredit granted tothefirminrespect
ofthelocalcontent shallbereduced by10percentage points ineachoftheyears remaining untilthe
cessation ofthebenefit inquestion, including theyearinwhich verification tookplace. Ifthefirm
failstomeetthestipulated condition during twoconsecutive years itshallbeeliminated definitively
from theexport development programme.
Toeffect thecomparison referred tointhefourth paragraph ofthepresent article, account
shallbetaken ofthef.o.b. value ofexports oflocalcomponents during theyear,including theoffsetting
exports referred toinArticle 3andtheamount represented bylocalcontent inthef.o.b. value, expressed
inUS$, oftheSKD unitsorCBUs exported. Theaverage value ofthegoods exported intheyears
1989 and1990 shallbeadjusted inlinewiththechange inthemonthly index ofwholesale prices in
theUSA between December 1989 andthemonth ofJuneintheyeartowhich thecalculations apply.
Thetotalamount oftaxcredit granted inrespect oflocalcontent during agiven yearshallbeobtained
byadding together therespective monthly amounts, expressed inUS$attherateofexchange fixed
inaccordance withArticle 122oftheCustoms Regulations ineffect onthedateonwhich thecredits
were granted.G/SCM/N/2/CHL/Suppl.1
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Article 11:Taxcredits designed tostimulate exports oflocalcomponents shallbecalculated
asapercentage ofthef.o.b. value oftheexported goods subject toamaximum of11percentofthe
customs value oftheCKD orSKDunitsimported ortobeimported under programmes approved by
theMotor Vehicle Commission, noaccount being taken forthispurpose oftheoffsetting exports referred
tounder Article 3.Thepercentage inquestion shallbe11percentuntil31December 1995, decreasing
by2.75percentage points eachyearasfrom 1January 1996.
Forthepurposes ofthisarticle thevalue ofthelocalcomponents exported shallbetaken to
bethef.o.b. value ofthegoods inquestion, excluding commissions andanyother expenses deductible
fromthefinaloutturn oftheexport operation, expressed inUS$attheexchange ratefixedinconformity
withArticle 122oftheCustoms Regulations.
Article 11(bis): Endprocessor firms shallbeentitled toataxcredit equivalent tothefigure
obtained byapplying thepercentages indicated inArticle 11tothelocalcontent fraction ofthef.o.b.
value oftheSKD units orCBUs theyexport.
Article 12:Thetaxcredit introduced under theprovisions ofArticles 10and11,subject to
thelimitspecified inArticle 9,canonlybegranted inrespect oflocally produced vehicles transferred
within thecountry.
Excess exports oflocalcomponents recorded byendprocessor firms on31December ofeach
yearnottaken intoaccount asaresult ofthelimitimposed bythepresent article maynevertheless
betaken intoaccount indetermining theamount ofthetaxcredit towhich these firms areentitled in
thefollowing yearsubject totheproviso thattheportion oftherelated taxcredit corresponding toexcess
exports intheprevious yearmaynotexceed 200percentofthecredit arising from exports oflocal
components during thesubsequent year. Innocasemaythemaximum amount ofthetaxcredit granted
toendprocessor firms exceed thelimitlaiddown inArticle 9.
Article 12(bis): Vehicles produced andtransferred within thecountry byendprocessors may
notbeexported unless theexporter places inescrow anamount equal tothetaxcredit granted tothe
endprocessor inrespect ofsuchvehicles byvirtue oftheprovisions ofArticle 9.Thisamount shall
beadjusted inlinewiththechange inthemonthly consumer priceindex between themonth preceding
thegranting ofthecredit andthatpreceding itsreimbursement.
Tothisend,theMotor Vehicle Commission shallissue acertificate indicating theamount of
thetaxcredit tobereimbursed inrespect ofthevehicle orvehicles tobeexported within 15working
daysfromthedateonwhich theexporter requests it.Thiscertificate, together withthereceipt from
theTreasury, willberequired bytheCustoms Service inconnection withtheexport formalities.
Endprocessor firms shallstipulate, onthesalesinvoices relating tovehicles transferred within
thecountry, thatthelattermaynotbeexported unless theconditions laiddown inthisarticle arefulfilled.
Article 13:Theadvantages introduced under Article 9maynotbecombined withanyothers
ofasimilar nature which, ingeneral, havebeenormaybeestablished inother legalprovisions, with
theexception ofcustoms procedures granting taxcredits equivalent totheamount ofcustoms duties
paidonimports offoreign inputs tobeincorporated orconsumed inthemanufacture ofproducts intended
forexport andexceptional concessions granted fortheacquisition ofcapital goods. Theforegoing
provision doesnotapply toexports notbenefiting from thetaxcredits specified inArticle 11.
Article 14:Todetermine entitlement tothetaxcredits referred toinArticles 9and11(bis),
endprocessors mustsubmit totheMotor Vehicle Commission, within thefirstfiveworking daysof
eachmonth, thefollowing information relating totheimmediately preceding month:G/SCM/N/2/CHL/Suppl.1
Page13
(a) actual production foreachmake andmodel;
(b) thevalue ofsalesandnumber ofvehicles transferred, foreachmake andmodel;
(c) exports oflocalcomponents andSKDassemblies orCBUs, foreachmake andmodel,
giving thecorresponding f.o.b. values;
(d) imports;
(e) anyother information required bytheMotor Vehicle Commission.
Onreceipt oftheinformation indicated above, theMotor Vehicle Commission shallsubmit
totheTreasurer 'sOffice within thefollowing 10working daysalistforeachendprocessor indicating
thenumber ofunitstransferred intheimmediately preceding month andtheamount ofthetaxcredit
towhich eachfirmisentitled, afterdeduction oftheadvalorem duties unpaid inrespect ofimports
ofCKD orSKD units inconformity withtheprovisions ofthethirdparagraph ofArticle 9.
TheTreasurer 'sOffice shallissue, toorder ofeachfirminquestion, acertificate oftaxcredit
entitlement within 10working daysofthereceipt oftherelated lists. These certificates maybeused
forthepayment ofcustoms duties, taxes, interest andfinesgenerally collected bytheTreasurer 'sOffice.
Article 14(bis): Where anendprocessor assembles vehicles under alicence tomanufacture
granted bytheproprietors oftwoormore makes, theadvantages indicated under thefourth paragraph
ofArticle 3andArticles 9and11(bis) shallbegranted inrespect ofeachindividual make. Similarly,
theconditions required fortheextension oftheperiod during which thetaxconcessions referred to
inArticle 10remain ineffect shallbeassessed separately foreachmake.
Tothisend,when approving theoffsetting programmes referred toinArticle 3,theMotor
Vehicle Commission shallissue acertificate specifying themake onwhose account theexports are
tobemade andtowhich thecorresponding import concessions willbegranted.
Toperform thecalculations referred tointhefourth paragraph ofArticle 10,theamounts of
excess exports andexcess taxcredit shall bedetermined foreachmake ofvehicle assembled, in
conformitywiththeregistersmaintainedbytheMotorVehicleCommissionandtheinformationrequired
bythelatter from theendprocessors inquestion.
Article 15:TheMotor Vehicle Commission, which isthebody responsible forensuring
compliance withtheprovisions ofthislawandexercising theauthority vested initunder thelatter,
shallbeestablished byadecree andshallhavethefollowing members:
- theExecutive Vice-President oftheProduction Development Agency, whoshallact
aschairman;
- arepresentative oftheMinistry ofFinance;
- arepresentative oftheMinistry ofEconomic Affairs, Development andReconstruction;
- amember representing theDirector oftheInland Revenue Service;
- amember representing theDirector oftheCustoms Service.G/SCM/N/2/CHL/Suppl.1
Page14
Onaproposal bytheCommission, theExecutive Vice-President oftheProduction Development
Agency shallappoint anExecutive Secretary whoshallattend meetings inanon-voting capacity, and
shallhavethetaskofexecuting measures agreed bytheCommission through theexercise ofpowers
expressly delegated tohim/her bytheCommission.
Forthepurposes ofthislaw,theMotor Vehicle Commission, acting through itsExecutive
Secretariat, shallestablish itsownrulesofprocedure andadopt thedecisions required fortheexecution
ofitstaskswhich mustbepublished intheOfficial Gazette. Persons deeming themselves tobeinjured
bytheCommission 'sdecisions may, within 30daysfrom thedateofpublication thereof, lodge an
appeal before theCourt ofAppeal inSantiago, which willgivejudgement summarily assoleinstance.
TheProductionDevelopmentAgencyshallprovidetheCommissionwiththeresourcesnecessary
fortheexecution ofitstasks.
Article 16:Failure tocomply withanyprovision ofthepresent law,thesubmission offalse
informationorfalsifiedormisleadinglyincompletedocuments,orthereceiptofunduepaymentsobtained
viafraudulent documentation shallrender theoffender liable toafineofupto200percentofthe
customs value ofthecorresponding CBUs bydecision oftheMotor Vehicle Commission, without
prejudice toanyother related legalaction.
TheMotor Vehicle Commission shallberesponsible fortheapplication ofthepenalties laid
down inthepresent law,which shallbeimposed byadministrative order oftheExecutive Secretary;
finesmust bepaidwithin 10daysfrom notification ofthepenalty.
Theoffender orhisrepresentative shallbenotified inperson byanofficial process server or
byregistered letter senttoanyoftheoffender 'sregistered addresses; inthelatter casethetime-limit
shallrunfromthreedaysfollowing theposting oftheletter. Theoffender maylodge anappeal before
theCourt ofAppeal inSantiago within thetime-limit stipulated intheprevious paragraph afterplacing
onethirdoftheamount ofthefineinescrow. Thecourt shallnotify theMotor Vehicle Commission
within sixdaysandwhether ornotthisformality hasbeencompleted, afterhearing theopinion ofits
advocate general, willhanddown ajudgement against which nofurther appeal ispossible.
Thecopyoftheexecutive decision shallhavebinding force. Theonlypossible grounds of
appeal shallbeprescription orpayment, without prejudice totheclaim against thedebtor.
Article 17:While theappeal ispending, theamount collected inrespect ofthefineshallbe
keptinaspecial account from which itcanberefunded intheevent ofafinaljudgement infavour
oftheappellant. Theamount reimbursed shallbeadjusted inlinewiththechange intheconsumer
priceindex between themonth preceding thatinwhich thefunds wereplaced inescrow andthemonth
preceding thatinwhich restitution wasmade. Similarly, ifthecourt upholds theamount ofthefine,
thebalance notplaced inescrow shallbeadjusted inlinewiththechange intheaforesaid index between
themonth preceding thatinwhich onethirdofthefinewasdeposited andthatpreceding thedateof
payment oftheremainder.
Article 18:Thefollowing amendments shallbeintroduced toDecree Law 825of1974:
(a) Thefollowing shallbesubstituted forthetextofArticle 43(bis):
"Article 43(bis): Without prejudice tothetaxestablished under TitleIIofthislaw,
theimport, whether ornotonaregular basis, ofvehicles, components necessary for
theirassembly inthecountry orsemi-assembled vehicles normally intended forthe
transport ofpassengers orgoods shallbeliable tothepayment ofanadditional tax,G/SCM/N/2/CHL/Suppl.1
Page15
theamount ofwhich shallbedetermined byapplying tothecustoms value apercentage
obtained bymultiplying thecylinder capacity oftheengine expressed incubic
centimetres byafactor of0.06andsubtracting 35from theresult. Innocasemay
thepercentage applied belessthan15percentnormaytheamount resulting from
theapplication ofthistaxexceed US$7,000. Theforegoing figure shallbeadjusted
byadecree oftheMinistry ofFinance witheffect from1January ofeachyearinline
withthechange intheUSwholesale price index during the12-month period falling
between 1November oftheyearpreceding thepromulgation ofthedecree and
30October oftheyearpreceding itsentry intoforce.
Asregards theimport ofcomponents ofvehicles orsemi-assembled vehicles, the
customs value taken intoaccount forthepurposes ofcalculating thetaxreferred to
above shallbethatofthecompleted vehicle asestablished bythecustoms authorities,
taking account ofthevalue corresponding tothelocalcontent.
Inthecaseoftheimport oflightgoods vehicles withaloadcapacity of500-2,000 kgs.,
orvehicles ofthejeepcategory orvans, following theclassification established by
theInternal Revenue Service andinitsexclusive opinion, orofcomponents necessary
fortheirassembly inthecountry, orsemi-assembled vehicles oftheforegoing types,
theamount ofthetaxestablished under thisarticle shallbereduced by75percent.
Innocasemaythepercentage applied belessthan5percentorgreater than15per
cent.
Similarly, imports ofvehicles intended forthetransport ofpassengers withaseating
capacity offrom10to15persons including thedriver, components necessary fortheir
assemblyinthecountryorthevehiclessemi-assembled,theamountofthetaxestablished
under thisarticle shallbereduced by75percentwithaminimum rateof20percent.
Thetaxestablished inthisarticle shallnotbeapplied toimports ofmotor vehicles
intended forthetransport ofpassengers withaseating capacity ofover15persons
including thedriver, nortotheimport oftrucks, lightgoods vehicles orvanswith
aloadcapacity ofover2,000 kgs. Similarly, thetaxshallnotapply toimports of
components orsemi-assembled vehicles fortheassembly inthecountry ofthevehicles
referred tointhepresent paragraph.
This taxshall notapply tovehicles entered inthecases provided forunder
subparagraphs (b)and(c)ofArticle 12.Inaddition, thetaxshallnotapply totractors,
works trucks, mobile homes, vehicles designed foroff-the-road use,police vans,
ambulances, hearses, armoured vehicles fortransport oringeneral tospecial-purpose
vehicles classified under heading 8703 ofthecustoms tariff.
Vehicles ofprevious model years, whether neworused, shallbeliable forthetax
established inthisarticle, assessed onthebasisofthecustoms value when newofthe
most recent model oritsequivalent, reduced by10percentforeachyearofthe
vehicle 'sageuptoamaximum of50percent.
Thetaxapplying toimports ofcomponents orsemi-assembled vehicles, forassembly
shallbepaidwithin 60daysfollowing theirimport; payment shallbemade tothe
Customs Service inUS$.
Toobtain therelease ofcomponents orsemi-assembled vehicles, theimporter must
signapromissory notefortheamount ofthetaxestablished under thisarticle. OnG/SCM/N/2/CHL/Suppl.1
Page16
thesignature oftheaforementioned promissory note,theTreasurer 'sOffice shallcancel
therelated payment voucher.
Without prejudice tothepowers oftheInternal Revenue Service, theCustoms Service
shallverify thecorrect assessment andapplication ofthetaxestablished under this
article".
(b) Thefollowing Article 46shallbeadded:
"Article 46: Without prejudice tothetaxes established inTitle IIandunder
Article 43(bis), imports ofmotor vehicles, components necessary fortheirassembly
inthecountry orsemi-assembled vehicles normally intended forthetransport of
passengers shallbeliable toataxof85percentonthatportion ofthecustoms value
exceeding US$5,000. Similarly, imports oflightgoods vehicles withaloadcapacity
offrom 500to2,000 kgs., vehicles ofthejeepcategory andvans, exclusively in
accordance with theclassification established bytheInternal Revenue Service,
components necessary fortheassembly ofthese vehicles inthecountry, or
semi-assembled vehicles oftheforegoing types, shallbeliable toataxof100percent
onthatportion ofthecustoms value exceeding US$6,000. Inthelattercase,theamount
ofthetaxmaynotexceed 85percentonthatpartofthecustoms value which exceeds
US$5,000.
Fortheapplication ofthistaxtoimports ofvehicle components andsemi-assembled
vehicles thecustoms value shallbeconsidered tobethatofthecompleted vehicle, as
established bytheCustoms Service, taking account ofthevalue corresponding tothe
localcontent.
Vehicles ofprevious model years, whether neworused, shallbeliable forthetax
established inthisArticle, assessed onthebasis ofthecustoms value when newof
themostrecent model oritsequivalent, reduced by10percentforeachyearofthe
vehicle 'sageuptoamaximum of50percent.
Thetaxapplying toimports ofcomponents orsemi-assembled vehicles forassembly
inthecountry shallbepaidwithin 60daysfollowing thedateofentry intothecountry
oftherespective components; payment shallbemade totheCustoms Service inUS$.
Toobtain therelease ofcomponents orsemi-assembled vehicles, theimporter must
signapromissory notefortheamount ofthetaxtoorder oftheTreasurer General
oftheRepublic, which shall bereturned onpayment ofthetaxinquestion. The
Treasurer 'sOffice shallcancel therelated payment voucher onthesignature ofthe
aforementioned promissory note.
Thetaxestablished inthisarticle shallnotapply toimports ofvehicles intended for
passenger transport withaseating capacity ofover15persons including thedriver
nortoimports oftrucks andlight goods vehicles, withaloadcapacity ofover
2,000 kgs.,nortoimports ofcomponents orsemi-assembled vehicles oftheforegoing
types forassembly inthecountry.
Thistaxshallnotapply tovehicles entered inthose casesspecified under subparagraphs
(b)and(c)ofArticle 12,nortovehicles imported from freezones under duty-free
arrangements, asreferred tointhedecree having force ofLawNo.341of1977issued
bytheMinistry ofFinance, intotherespective freezoneextension.G/SCM/N/2/CHL/Suppl.1
Page17
Thistaxshallnotapply totractors, works trucks, mobile homes, vehicles intended
foroff-the-road use,police vehicles, ambulances, hearses, armoured vehicles intended
fortransport and,ingeneral, special-purpose vehicles classified under heading 8703
ofthecustoms tariff.
Without prejudice tothepowers oftheInternal Revenue Service, theCustoms Service
shallverify thecorrect assessment andapplication ofthetaxestablished under this
article".
(c) Thefollowing Article 46(bis) shallbeincorporated:
"Article 46(bis): Theamounts expressed inUS$referred tointheprevious article
shall beadjusted byadecree issued bytheMinistry ofFinance witheffect from
1January ofeachyearinlinewiththechange intheUSwholesale priceindex during
the12-monthperiodfallingbetween1Novemberoftheyearprecedingthepromulgation
ofthedecree and30October oftheyearpreceding itsentry intoforce.
Theadjustment provided forinthisarticle shallbemade starting 1January 1987".
(d) Thefollowing newArticles 47and47(bis) shallbeadded:
"Article 47:Inthecaseofvehicles imported from freezones asreferred tointhe
Decree having legalforce No.341of1977issued bytheMinistry ofFinance intothe
respective freezone extension, fortheapplication ofthetaxestablished under
Article 43(bis) account shallbetaken ofthecustoms value determined intherestof
thecountry forvehicles ofsimilar characteristics."
"Article47(bis):Intheeventthatanimporterofcomponentsorsemi-assembledvehicles
forassembly inthecountry failstopaythetaxes specified inArticles 43(bis) and46
within thetime-limits laiddown bytheaforesaid provisions, anytaxes ofthesame
kindowed inrespect ofsubsequent imports mustbepaidimmediately solongasthe
taxes inquestion remain unpaid, without prejudice toanyother penalties which may
beimposed inrespect ofthedelay".
Article 19:Thetaxestablished inArticle 43(bis) ofDecree LawNo.825of1974 shallbe
reduced by10percentperannum witheffect from 1January 1990.
Article 20:Decree LawNo.1239of1975andArticle 12ofLawNo.18.211 shallbeabolished
witheffect from 1January 1986.
Article 21:From thedateofpublication ofthepresent law,onlyunused vehicles maybe
imported.
Theprovisions ofthisarticle shallnotapply toambulances, police vans, hearses, fireengines,
ladder trucks, street cleaning andsweeping vehicles, snow ploughs, irrigation vehicles, crane trucks,
lightingvehicles,mobileworkshops,concrete-mixertrucks,mobileX-rayunits,securityvans,breakdown
vans, mobile homes, vehicles foroff-the-road transport, andother similar special-purpose vehicles
notintended fortransport inthestrict sense. Neither shallthese provisions apply tovehicles imported
under thespecial customs procedures specified inSection 0ofthecustoms tariff, nortothose benefiting
from totalorpartial exemption from duties orother import charges.G/SCM/N/2/CHL/Suppl.1
Page18
Transitional provisions
Article 1:Until 31December 1986 theminimum localcontent referred toinArticle 7ofthe
present lawshallbe4percentandmaynotbeoffset inthemanner indicated inthefinalparagraph
oftheaforesaid article.
Article 2:Theaccumulated balances, on31December 1985, ofexports oflocalcomponents
effectedinaccordancewithprogrammesapprovedbytheProductionDevelopmentAgencyinconformity
withtheprovisions ofDecree LawNo.1239 of1975 shallgiverisetoataxcredit which maybe
offsetagainstthepaymentofcustomsdutiesandotherchargesbearingonimportsofcomponentsrequired
byendprocessors fortheassembly inthecountry ofmotor vehicles.
Thetotalamount ofcredit established bythepresent article maybegranted intwoequal annual
instalments during theyears 1986 and1987.
Exports offsetting imports effected inconformity withArticles 13,14and15ofDecree
LawNo.1239 of1975, which hadnotbeendispatched onthedateofentry intoforce ofthislaw,
mustbeeffected atthelatest by31December 1986. Failure tocomply withthisrulewillrender the
exporter liable topenalties imposed bytheExecutive Committee oftheChilean Central Bank, involving
afineamounting to100percentofthec.i.f.value oftheimport report(s) corresponding totheimports
notoffset.
Article 3:Foroneyearfromthedateofentry intoforce ofthepresent law,localcomponents
manufactured inthecountry byancillary processors entered intheregister referred toinArticle 19
ofDecree LawNo.1239 of1975andmeeting theconditions regarding theleveloflocaladded value
indicated inArticle 12oftheaforementioned textshallbedeemed tocomply withthepercentages
required under Article 1subparagraph (d)ofthepresent law.
Article 4:Thetaxes introduced under Article 43(bis) and46ofDecree LawNo.825of1974
shallapply tothose vehicles listed intheaforementioned articles which, on31December 1985, had
beencompleted butnottransferred orwereinthecourse ofassembly, taking account forthispurpose
ofthecustoms value ofvehicles ofsimilar characteristics on1January 1986, subject tothefollowing
reductions: forthetaximposed under Article 43(bis), areduction of25percentandfortheduesreferred
toinArticle 46,areduction of80percent.
Inimplementation oftheprovisions ofthisarticle, taxpayers mustsubmit, within 15daysfrom
thedateofpublication ofthepresent law,asworn declaration specifying thenumber ofvehicles meeting
theconditions described above.
Onthesolebasis oftheaforementioned declaration andwithout prejudice toitspowers of
verification, theInland Revenue Service shallproceed toissuedemands forthepayment oftherelated
taxes, theamounts being expressed inmonthly instalments.
Thedemands referred tointheprevious paragraph mustbepaidwithin 60daysfollowing the
dateofentry intoforce ofthislaw.
Article5:Inthecaseofcomponentsrequiredfortheassemblyinthecountryofvehiclesintended
forthetransport ofgoods orpassengers imported byendprocessor firms falling within thepurview,
on31December 1985, ofDecree LawNo.1239of1975, thetaxestablished inArticle 43(bis) ofDecree
LawNo.825of1974shallbereduced by30percentuntil31December 1988. Similarly, theduties
referred toinArticle 46oftheaforementioned textshall bereduced by80percentuntil
31December 1988.G/SCM/N/2/CHL/Suppl.1
Page19
Inthecaseofimports ofcomponents notliable forthetaxestablished inArticle 46ofthe
aforementioned decree law,thereductions provided forinthepreceding paragraph maynotexceed
30percentofthecustoms value ofeachcomponent, subject toamaximum ofUS$1,000.
Asregards components liable forthetaxestablished inArticle 46,thereductions provided
forinthefirstparagraph maynotexceed, taken together, 30percentofthecustoms value ofthe
imported goods, subject toalimitofUS$2,500 percomponents.
Innocasemaythereductionsreferredtointhisarticleapplytoimportsofcomponentsexceeding
innumber thetotalnumber ofvehicles ofsimilar characteristics, multiplied byafactor of1.35, produced
andtransferred bytheendprocessor firms during theyearpreceding thatinwhich thereduction came
intoeffect.
Taxes paidinexcess willnotbereimbursed, butmaybeoffset bythetaxpayers inquestion
against taxes bearing ongoods imported after theentry intoforce ofthepresent lawon
12December 1986. Innocase, inanygiven instance, mayasumexceeding onethirdoftheamount
corresponding toliabilities under thesame taxinrespect offuture imports beoffset against thelatter
where theimports inquestion consist ofcomponents required fortheassembly inthecountry ofvehicles
similar tothose referred tointhepreceding paragraph orsemi-assembled vehicles ofthesame type.
Article 6:Abolished.
Article 7:Until 31December 1986, imports ofcomponents required fortheassembly inthe
country ofgoods vehicles withaloadcapacity ofupto1,672 kgs.andwithengines ofacylinder capacity
exceeding 850ccbyendprocessor firms which, on31December 1985, fellwithin thepurview of
Decree LawNo.1239 of1975, shallbeliable toadvalorem duties equivalent to50percentofthe
general ratelaiddown inthecustoms tariff.
Theadvalorem duties referred tointhepreceding paragraph shallapply solely toimports of
components required fortheassembly ofanumber ofunitsequivalent tothetotalnumber ofvehicles
withsimilar characteristics produced andtransferred byendprocessor firms between 1November 1984
and31October 1985.
Article 8:Thetaxestablished inArticle 43(bis) ofDecree LawNo.825of1974 shallnot
apply toimports ofusedvehicles fromthefreezones referred tointhedecree having legalforceNo.341
of1977 issued bytheMinister ofFinance intotherespective freezoneextension, provided thatthe
vehicles inquestion were acquired outside thecountry prior to2September 1984. Theimporter
concerned mustprovide evidence oftheaforesaid dateofacquisition intheformrequired bytheDirector
oftheCustoms Service.
Theprovisions ofthisArticle shallhaveeffect fromthedateofpublication ofthepresent law.
Article 9:TheCommission referred toinArticle 15above shallbesetupanditsmembers
nominated within 30daysfromthedateofpublication ofthepresent law,andmustestablish itsown
rules ofprocedure within 30daysofthedateofitsconstitution.
Article 10:During theyears 1987 and1988 themaximum amount oftaxcredit indicated in
Article 9ofthepresent lawmaybeexceeded by25percent.
JOSE T.MERINO CASTRO, Admiral, Commander inChief oftheChilean Navy, Member
oftheCabinet. -FERNANDO MATTHEI AUBEL, AirMarshal, Commander inChief oftheAirG/SCM/N/2/CHL/Suppl.1
Page20
Force, Member oftheCabinet. -RODOLFO STANGE OELCKERS, Director General ofCustoms -
JULIO CANESS ROBERT, Lieutenant General oftheArmy, Member oftheCabinet.
Having fullyapproved theforegoing law,Ihereby sanction thelatter andsignittosignal its
promulgation. Itshallhaveeffect asalawoftheRepublic.
Thelawshallberegistered bytheComptroller General oftheRepublic, published intheOfficial
Gazette andentered bytheComptroller intheCode ofLaws.
Santiago, 27December 1985. -AUGUSTO PINOCHET UGARTE, General oftheArmy,
President oftheRepublic. -Hernan Büchi Buc,Minister ofFinance.
Transcribed foryourattention. Respectfully yours, Manuel Concha Martínez, Colonel ofthe
Army, Under-Secretary ofState forFinance.G/SCM/N/2/CHL/Suppl.1
Page21
LawNo.18.634
Ministry ofFinance
Published on5August 1987
LastAmended byDecree 611oftheMinistry ofFinance
LawNo.18.634 establishing asystem ofdeferred payments ofcustoms duties, fiscal credit
andother taxbenefits.
(Published intheOfficial Gazette No.32.838 of5August 1987)
TheGovernment oftheRepublic ofChile hasapproved thefollowing draftlaw:
1. General provisions
Article 1:Benefits relating tothedeferred payment ofcustoms duties, taxcredit forthe
acquisition ofcapital goods andother taxconcessions tobeindicated inthefollowing articles shall
beestablished.
Article2:Forthepurposesofthepresentlaw,"capitalgoods"shallbetakentomeanmachinery,
vehicles, equipment andtools directly orindirectly intended fortheproduction ofgoods orservices
orthemarketing thereof. Thegoods inquestion must besuchthattheirproductive capacity isnot
lostafterfirstusebutcontinues fornotlessthanthree years within agradual process ofwear or
depreciation.
Goods participating indirectly intheproduction process shallbeconsidered tobethose intended
tofulfil complementary orsupport functions, suchasmarket preparation, selection, maintenance, or
themarketing oftheproducts inquestion.
Vehicles whose exclusive function istransport byroadshallonlybeentitled tobenefit under
thislawiftheyhavealoadcapacity exceeding 2,000 kgs.oraminimum seating capacity of15persons,
including thedriver. Thislastrequirement shallnotbeapplicable inthecaseofpublic passenger
transport vehicles meeting theconditions laiddown intheregulations.
Goods intended fordomestic use,recreation, oranyothernon-productive purpose, asclassified
bytheCustoms Service, donotconstitute capital goods.
Article 3:Parts, components, spares andaccessories relating tothegoods referred toin
Article2,firstparagraph,shallbeeligibletobenefitunderthepresentlawprovidedthattheyareacquired
together withthecapital goods inthecaseofgoods manufactured inthecountry, orareimported under
thesame customs document where goods manufactured inaforeign country areconcerned. Ineither
casethevalue oftheparts, components, spares andaccessories must notexceed 10percentofthe
value oftheaforesaid capital goods.
Similarly, components, parts, spares andaccessories shallbeentitled tobenefit under thepresent
lawprovided thattheyareintended forincorporation inthecapital goods referred toinArticle 2,first
paragraph, andthateachindividual itemcorresponds totheminimum value laiddown inArticle 7.G/SCM/N/2/CHL/Suppl.1
Page22
Article 4:Thecapital goods referred tointhepresent lawmustappear onalistwhich shall
beestablished byadecree oftheMinister ofFinance issued under theformula "byorder ofthePresident
oftheRepublic" andendorsed bytheMinister forEconomic Affairs, Development andReconstruction.
Thelistmaybeamended bythesame procedure inrespect ofgoods which although having the
characteristics ofcapital goods were notincluded orthose which were included butdonotmeetall
therequirements laiddown inArticle 2ofthepresent law.
Those concerned mayapply totheMinistry ofFinance torequest theinclusion in,orexclusion
from, thelistreferred tointheprevious paragraph ofaparticular capital good.
Atechnical committee including arepresentative oftheMinister ofFinance, whoshallactas
Chairman, arepresentative oftheMinister forEconomic Affairs, Development andReconstruction,
arepresentative oftheChilean Central Bank appointed byitsExecutive Committee, theHead ofthe
Operations Department oftheNational Customs Directorate andasenior official oftheTreasury, shall
consider applications regarding theinclusion inorexclusion fromthelistofparticular capital goods,
afterexamining information submitted bytheparties concerned andcalling foranyfurther information
asmaybenecessary. Similarly, before reaching adecision theCommittee must receive applicants,
iftheysorequest, toheartheirviews. Therepresentatives oftheMinisters ofFinance andEconomic
Affairs, Development andReconstruction shallbeappointed bydecisions oftheirrespective ministers,
which mustbepublished intheOfficial Gazette. Similarly, theresolution oftheExecutive Committee
oftheChilean Central Bank appointing itsrepresentative must alsobepublished.
TheCommittee shall takeadecision within 45daysfollowing thereceipt oftherelated
application, recommending thatitbeapproved ordenied. TheMinister ofFinance must announce
hisdecision within 15daysfrom thereceipt oftheCommittee 'srecommendation.
Thedecree referred tointhefirstparagraph andanycomplementary decrees shallspecify the
arrangements forpayment applying toeachofthecapital goods included inthelistreferred tointhe
foregoing provisions.
Article 5:Whenever theprovisions ofthepresent lawallude totheexchange rateineffect
ingiven circumstances, thisshallbeunderstood tomean theratefixed bytheChilean Central Bank
forthepurposes ofArticle 122oftheCustoms Regulations.
II. Deferred payment ofcustoms duties
Article6:Paymentofcustomsdutiesandtaxesarisingfromtheimportofcapitalgoods,whether
purchased orleased, maybedeferred foruptoseven years from thedateofauthentication ofthe
respective import declaration. Thisconcession doesnotapply toanysurtaxes orcountervailing duties
established inconformity withArticle 10ofLawNo.18.525 nortothesurcharge provided forin
Regulation No.3oftheGeneral Supplementary Regulations referred toinArticle 2.2ofthe
aforementioned law inrespect offishing vessels and factory ships classified under
subheadings 89-01-03-00 and89-01-89-00 respectively oftheCustoms Tariff.
Thebenefit provided forintheprevious paragraph andthearrangements foritsapplication
shallbeextended tothetaxreferred toinArticle 43(bis) ofDecree LawNo.825of1974 bearing on
imports ofmotor vehicles intended astaxisforthetransport ofpassengers whose c.i.f. value doesnot
exceed US$6,985.16. Thelatter figure shallbeadjusted annually inthemanner andcircumstances
indicated inthesecond paragraph ofArticle 7.
Article 7:Forthepurposes ofthissystem ofpayment, thec.i.f. value ofimported capital
goods mustbeatleastUS$3,492.58 ortheequivalent inothercurrencies, except forthose goods referredG/SCM/N/2/CHL/Suppl.1
Page23
toinArticle 9(b), forwhich thec.i.f. value must exceed US$4,423.93 ortheequivalent inother
currencies.
Thesums expressed inUS$specified inthisarticle shallbeadjusted annually witheffect from
1July1988byadecree issued bytheMinistry ofFinance inlinewiththechange intheUSwholesale
price index inthe12-month period falling between 1Mayoftheyearpreceding thecalculation ofthe
adjustment and30April oftheyearinwhich itcomes intoeffect.
Thevalues indicated inthefirstparagraph ofthisarticle shallbeapplied individually toeach
capital good inrespect ofwhich thebenefit isrequested.
Article 8:Toqualify forthedeferred payment scheme inrespect ofimports ofcapital goods
conforming toRegulation No.1oftheregulations governing assessment procedures referred toin
Article 2.2ofLawNo.18.525, importers musthaveavailable animport declaration foreachindividual
capital goodwhich complies withtherequirements forentitlement under theaforementioned scheme.
Theforegoing shallnotapply tocapital goods which formasingle unit,butwhich byreason oftheir
nature ortheavailability ofmeans oftransport, aredelivered inmore thanoneshipment.
Article 9:Customs duties andtaxes arising from imports ofmerchandise qualifying forthe
application ofthesystem ofpayment provided forinArticle 6ofthepresent lawmustbepaidinone
orother ofthefollowing ways:
(a) inuptothree equal instalments, falling dueattheendofthethird, fifthandseventh
years following theauthentication oftherelated import declaration;
(b) inuptoseven equal annual instalments ofwhich thefirstshallfalldueoneyearafter
theauthentication oftherelated import declaration. Thismethod ofpayment mayonly
beapproved inrespect ofvehicles intended forthetransport ofpersons orgoods by
road, including tractor vehicles, which donotqualify fortheother arrangements
provided forinthisarticle;
(c) intwoequal instalments falling dueattheendofthefifthandseventh years following
theauthentication oftherelated import declaration where thisarrangement isjustified
bythequantity ofcapital goods involved andthetimerequired tobring them into
operation. Thisarrangement shallbegranted byadecree oftheMinister ofFinance
endorsed bytheMinister ofEconomic Affairs, Development andReconstruction;
(d) asregards those goods inrespect ofwhich, inapplication ofthedomestic tax
regulations,adepreciationperiodoflessthansevenyearsisnormallyassumed,payment
arrangements shallbedetermined inthefollowing manner:
- where theperiod ofdepreciation isassumed tobethree years, payment shall
bemade inasingle instalment falling dueattheendoftheperiod inquestion;
- where theperiod ofdepreciation isassumed tobefouryears, payment must
bemade intwoinstalments falling dueinthethirdandfourth years;
- where theperiod ofdepreciation isassumed tobefiveyears, payment shall
bemade intwoinstalments falling dueinthethirdandfifthyears;
- where theperiod ofdepreciation isassumed tobesixyears, payment shall
bemade inuptothreeinstalments falling dueinthethird, fifthandsixthyears;G/SCM/N/2/CHL/Suppl.1
Page24
(e) inthecaseofcapital goods leased foroneormore years without anoption tobuy,
thenumber ofannual instalments fixed shallcorrespond totheperiod covered bythe
contract, withthefirstinstalment falling dueoneyearfromthedateofauthentication
oftherelated import declaration. Inallcases therules setoutunder TitleIIofthe
present lawshallbeapplicable wherever relevant.
Article 10:Theinstalments referred tointhepreceding article shallbesubject tothefollowing
rules:
(a) theamounts shallbeexpressed inUS$andpayment shall bemade inthenational
currency attherateofexchange ineffect onthedateofpayment;
(b) theamount oftheinstalments shallbedetermined bydividing thetotalamount oftax
tobedeferred, netofinterest, bythenumber ofinstalments resulting from the
application oftherules regarding payment arrangements setoutinArticle 9ofthe
present law. Theamount ofeachinstalment maynotbelessthanUS$500 except in
thecaseofvehicles referred toinArticle 9,subparagraph (b),where theminimum
instalment shallbeUS$200. Ineither case, thefinalinstalment shallcorrespond to
thebalance remaining;
(c) inallcases, instalments shallbearinterest fixed bytheExecutive Committee ofthe
Chilean Central Bank, which mustbepaidtogether withtheinstalment inquestion.
Theinterest rateshall befixed half-yearly byadecision published intheOfficial
Gazette; itshall beapplied toallinstalments arising from thedeferred payments
provisions andshall bethatineffect inthesix-month period inwhich theimport
declaration acceptance wasissued;
(d) indetermining theamounts oftherespective instalments, noaccount shallbetaken
ofdeductions oftaxunder Article 3ofDecree LawNo.3.475 of1980, without
prejudice totheirreimbursement inthemanner stipulated intheregulations;
(e) inthecaseofadvance payment ofinstalments, interest shallbecharged onlyupto
thedateofpayment.
III. Taxcredit
Article 11:Inthecaseofunused capital goods manufactured inthecountry, thefirsttime
thegoods change hands thepurchaser shallbeentitled toarebate equivalent to73percentofthecustoms
dutyineffect, determined onthebasis ofthenetinvoiced price lessthevalue ofanymerchandise
imported under thedeferred payments system andincorporated inthecapital good. Thistaxcredit
shallbepaidbytheTreasurer 'sOffice bycheque made outtothepurchaser.
Forentitlement tothebenefit referred tointheprevious paragraph, therelated capital good
mustitselfmeettheconditions forimport under thedeferred payments scheme established inthepresent
law.
Article 12:Solely forthepurposes indicated intheprevious article, theCustoms Service shall
verify thattheinvoiced pricecorresponds tothenormal salevalue ofidentical orsimilar goods available
onthenational orinternational markets onthedateoftheinvoice. Tothisend,where appropriate,
therulesregarding valuation laiddown inArticles 6,7,8and9ofLawNo.18.525 shallbeapplicable.G/SCM/N/2/CHL/Suppl.1
Page25
Fortheexercise ofthepowers conferred onitbythepreceding paragraph, theCustoms Service
mayrequest thecooperation ofother public orprivate bodies andthedecisions itadopts regarding
thevalue ofthegoods shall besubject toappeal, inaccordance withtheprocedure laiddown in
Articles 132andfollowing oftheCustoms Regulations.
Article 13:Forentitlement totaxcredit thefollowing conditions must befulfilled:
(a) thecapital good inquestion must haveaminimum value, inthenational currency,
excluding value added tax,equivalent toUS$3,492.58, attherateofexchange ineffect
onthedateoftheinvoice, thisfigure being subject toannual adjustment inthemanner
specified inthesecond paragraph ofArticle 7ofthepresent law;
(b) thecapital goods inquestion musthavebeenmade intheordinary course ofbusiness
ofthemanufacturing firm, asdetermined bytheCustoms Service.
Article 14:Taxcredit shallnotbegranted inrespect ofcapital goods manufactured inafree
zoneorfreezoneextension, orbenefiting from preferential measures under LawNo.18.392 orany
other exceptional taxprovisions which havebeenormaybeestablished infavour ofspecific zones
orproduction sites.
Article 15:Tobenefit from thetaxcredit arrangements, purchasers ofcapital goods must
submit anapplication totheTreasurer 'sOffice, attaching therelated invoice andasworn declaration
bythemanufacturer affirming thatthegoods purchased arenewandstating whether anycomponents
orpartsincorporated wereimported withthebenefit ofthedeferred payments scheme. Iftheywere,
therelated c.i.f. value shallbegiven, expressed inUS$attheexchange rateineffect onthedateof
theinvoice. TheTreasurer 'sOffice shallspecify anyfurther information which mustbeattached to
theapplication.
TheTreasurer 'sOffice shallpaythetaxcredit within 30daysfrom thesubmission ofthe
application.
Article 16:Sums received inrespect oftaxcredit mustberepaid tothetaxauthorities following
thepayment arrangements specified inArticle 9,which shallbeapplicable onthesame terms and
conditions, taking account ofthedateoftheinvoice relating tothepurchase ofthedomestic capital
goods indetermining theappropriate time-limits.
Tothisendthepurchaser ofthecapital goods mustsign,infavour oftheTreasurer General,
anumber ofpromissory notes corresponding tothepayment arrangements adopted, fortheequivalent
ofthesums tobereceived, expressed inUS$attherateofexchange ineffect onthedateoftheinvoice,
plustheinterest fixed bytheExecutive Committee oftheChilean Central Bank ineffect onthesame
date, inaccordance withtheprovisions ofArticle 10(c) ofthepresent law.
Thepromissory notes shallbepaidinthenational currency attherateofexchange ineffect
ontheduedate. Intheevent ofdelay, thepunitive interest provided forunder Decree LawNo.1032
of1975 shallbeapplied.
Intheevent ofadvance payment ofaninstalment, interest shallbecharged onlyuptothedate
ofpayment.G/SCM/N/2/CHL/Suppl.1
Page26
IV. Debt relief
Article 17:Persons selling onforeign markets products obtained using capital goods acquired
under thetaxcredit ordeferred payment schemes established bythepresent laworproviding services
inother countries using suchcapital goods mayreduce theirdebtrepayment instalments inaccordance
withtherulessetoutinthefollowingarticles.Beneficiariesapplyingthepaymentarrangementsspecified
inArticle 9(b)ofthepresent lawshallnotqualify forthisconcession except asregards international
freight charges.
Asregards theprovision ofinternational transport services, debtrelief shallapply solely to
freight charges relating tothetransport ofgoods toandfrom foreign countries.
Theprovision ofservices inforeign countries using capital goods which leftthecountry under
atemporary export certificate shallalsobeconsidered asexport activities inrespect oftheactual returns,
provided thattherelated contract isregistered withtheCustoms Service.
Thefollowing mayalsobeconsidered asexport activities bythose providing theservices in
question:
(1) services provided directly inforeign countries, inrespect ofthevalue ofsupport
activitiesandtherelatedintellectualinput,providedthattherequirementsandformalities
applying toexport operations have been fulfilled asdetermined bythecustoms
authorities;
(2) services toforeign tourists provided byhotel andcatering establishments inrespect
ofpurchases offoreign currencies fromtheformer, dulyrecorded, forpaying forthe
services provided bytheestablishments inquestion inaccordance withtheprovisions
laiddown inthesecond paragraphs ofArticle 20.1and2.
Article 18:Fordebtrelief tobeaccorded thefollowing requirements must befulfilled:
(a) capital goods imported under thedeferred payments scheme oracquired withthebenefit
oftaxcredit arrangements mustbeentered under thefixedassets ofthefirms producing
ormarketing theexported goods orproviding services inforeign countries. This
requirement shallnotapply where thecapital goodinquestion isleased, withorwithout
option tobuy;
(b) during theperiod towhich debtrelief applies, thecapital goodmusthaveparticipated
directly orindirectly intheproduction ofgoods intended forexport ortheprovision
ofservices inforeign countries, including international freight services;
(c) theexporter mustbethenatural orlegalperson whoimported thegoods orobtained
thetaxcredit, orhislegalsuccessor. Processors shallbeconsidered asexporters where
theirgoods aresolddirectly toothers whoexport them, whether aspurchased orfurther
processed, orareincorporated inexported goods orconsumed intheproduction thereof.
Similarly, those providing services toexporters ortoprocessors selling theirgoods
toothers whoexport them shall alsobeconsidered asexporters provided thatthe
aforesaid services arenecessary fortheexport operation inquestion, asdetermined
bythecustoms authorities.G/SCM/N/2/CHL/Suppl.1
Page27
Article19:Thecustomsauthoritiesshallbeempoweredtodetermineandapprovethepercentage
andamount ofrelief tobegranted andshalldenythisbenefit incases offailure tocomply withall
therequirements stipulated bythelaw.
Article 20:Forthecalculation oftheamount ofrelief tobegranted, thefollowing rulesshall
apply:
(1) Thepercentage reduction applying tothefirstinstalment shall bedetermined by
multiplying by100thefigure obtained bydividing thevalue oftheexports inquestion
bythetotalvalue ofthebeneficiary 'ssalesduring theperiod oftwoyears counting
backwards from thelastdayofthesecond month preceding theduedateofthe
instalment. Inthecaseofthevehicles referred tounder Article 9(b)ofthepresent
law,which have been used toprovide international goods transport services, the
aforementioned period shallbereduced tooneyear,counting backwards inthemanner
indicated. Inthecasedescribed inArticle 17,lastparagraph, No.2above, the
percentage reduction applied tothefirstinstalment shallbedetermined bymultiplying
by100thefigure obtained bydividing thevalue expressed inthenational currency
ofthepurchases offoreign exchange fromforeign tourists bythevalue inthenational
currency oftheservices provided bytheestablishment inquestion tobothnationals
andforeign tourists during theperiod oftwoyears counting backwards fromthelast
dayofthesecond month preceding theduedateoftheinstalment;
(2) Thepercentage reduction applying tothesecond andthird instalments shall be
determined bymultiplying by100thefigure obtained bydividing thevalue ofthe
exports inquestion bythetotalvalue ofthebeneficiary 'ssalesduring theperiod falling
between thefirstdayofthemonth preceding theduedateoftheprevious instalment
andthelastdayofthesecond month preceding theduedateofthenextinstalment.
Inthecasedescribed inArticle 17,lastparagraph, No.2,thepercentage reduction
applied tothesecond andthirdinstalments shallbedetermined inaccordance withthe
ruleslaiddown inthesecond paragraph ofpoint 1above withreference totheperiod
specified intheprevious paragraph;
(3) Thereduction applying toeachinstalment maynotexceed thef.o.b. value ofthegoods
exported during thecorresponding period;
(4) Todetermine thevalue ofexports inthenational currency, account mustbetaken of
thef.o.b. values inUS$during theperiod towhich thereduction applies, converted
intothenational currency attherateofexchange ineffect attheendofthe
aforementioned period.
Incases where thegoods wereexported byathirdparty, account mustbetaken
oftheinvoiced value ofthegoods intended forexport, converted intoUS$attherate
ofexchange ineffect onthedateofissue oftheaforesaid invoice. Values expressed
inUS$mustbeconverted intothenational currency attherateofexchange ineffect
attheendoftheperiod towhich thereduction applies;
(5) Todetermine thevalue ofsalesonthedomestic market account mustbetaken ofnet
salesineachmonth falling within theperiod towhich thereduction applies, adjusted
inlinewiththechange intheconsumer priceindex established bytheNational Statistical
Institute between thefinaldayofthemonth preceding thesaleinquestion andthefinal
dayofthemonth preceding theendoftheperiod towhich thereduction applies;G/SCM/N/2/CHL/Suppl.1
Page28
(6) Forapplicationtothefirstinstalment,thepercentagereductionestablishedinaccordance
withtherules setoutabove shallbemultiplied by2.5. Inrespect oftheremaining
instalments, thepercentage reduction shallbemultiplied by1.66. Inbothcases, if
theresulting figure doesnotcover theentire instalment, thebalance mustbepaidon
theduedate;ifitexceeds theamount oftheinstalment, however, theexcess maynot
beapplied tothefollowing instalment;
(7) If,during theperiod towhich thereduction applies, thecapital good inquestion has
alsobeenusedfortheproduction ofgoods soldonthedomestic market, thepercentage
ofthetotalsalesofthegoods produced accounted forbyexports mustbedetermined.
Where theaforementioned percentage islower thanthatobtained bycomparing thefirm'stotal
salesandexport figures, thepercentage reduction shallbetaken tobethatobtained onthebasis of
thetotalsalesandexports ofthegoods produced using thecapital good inquestion.
Asregards capital goods leased without anoption tobuy,theamount ofthereduction shall
becalculated solely onthebasis ofthetotalsales andexports ofmerchandise produced bythe
aforementioned capital good. Inallcases areduction canonlybegranted ifthevalue oftheexported
goods produced bytheleased equipment equals orexceeds theamount ofthesaidbenefit.
Article 21:Without prejudice totheforegoing, before submitting animport declaration or
application fortaxcredit, those complying withtherequirements laiddown inthepresent lawmay
apply totheCustoms Service requesting thatdebtrelief should begranted solely onthebasisofexports
andsalesofmerchandise produced wholly orpartly using capital goods qualifying forbenefit under
thedeferred payments ortaxcredit arrangements inaccordance withtherulesestablished intheprevious
article. However, thisconcession canonlybegranted incases where thecapital goodinquestion has
beenimported oracquired withthespecific object oflaunching anewproduction line.
Theinterested party mustalsosubmit detailed technical characteristics ofthecapital good in
question, theproduction programme inwhich itistodirectly participate andfigures regarding the
projected salesondomestic andforeign markets ofmerchandise wholly orpartly produced through
itsuse.
Only those persons complying withtheprovisions ofthisarticle maybenefit fromdebtrelief
intheform laiddown inthefirstparagraph above, provided thatthepercentage ofgoods exported
bythemhasnotdeclined inrelation totheirtotalsalesduring theperiod ofapplication ofdebtreduction
inrespect ofthecapital goods imported under theterms ofthisarticle. Inother cases thedebtreduction
procedure provided forinArticle 20ofthepresent lawshallapply inrespect ofallinstalments due.
Article 22:Applications regarding theestablishment oftheamount ofdebtrelief must be
submitted tothecustoms office which processed theimport declaration inthecaseofgoods imported
under thedeferred payments scheme ortheoffice which processed theexport declaration incaseswhere
taxcredit wasgranted.
Applicationsmustbesubmittedwithin15daysfollowingtheendofthedebtreliefperiodapplying
toeachinstalment, accompanied byasworn declaration totheeffect thatduring eachrelief period
thecapital good inquestion hasbeenusedinthemanner laiddown inArticle 18(b), indicating the
percentage represented byitscontribution.
TheCustoms Service shallcallforanyfurther information itrequires inconnection withthe
application, inorder toascertain compliance withtherequirements stipulated forentitlement todebt
relief.G/SCM/N/2/CHL/Suppl.1
Page29
Article 23:Failure tosubmit theapplication referred tointheprevious article attheproper
timedoesnotdeprive thedebtor ofentitlement todebtrelief, which maystillbeapplied afterthedue
dateoftheinstalment inquestion. However, thisdoesnotexempt thedebtor frompayment ofinterest
onthetotalamount oftheinstalment, arising fromthefailure topayofthelatter within theprescribed
period. Interest onthedelayed instalment shallbeapplied uptothedateofthedecision establishing
theamount ofthedebtreduction.
V. Obligations andrestrictions
Article 24:Insofarasinstalments areneither paidnorsubject todebtrelief, thedebtor must
enter inasuspense account asumindollars equal totheamount ofthedebtinquestion. Thesums
paidshallbedeemed toincrease thevalue ofthecapital assets which gaverisetothepayment with
effect from thedateofthelatter. Inaddition, asregards capital brought ininaccordance withthe
provisions ofDecree LawNo.600of1974, theamount effectively paidshallbeconsidered asacapital
contribution witheffect from thedateoftheaforementioned payment.
Article 25:Inrespect ofcapital goods entering thecountry under thedeferred payments scheme
andthose acquired inthecountry withthebenefit oftaxcredit arrangements, aguarantee shallbegiven
totheTreasury regarding thefullandtimely payment oftheentire debt, taking precedence overany
other debt. TheTreasurer 'sOffice shallbeempowered totakelegal action torecover theamount
owed byauctioning thegoods inquestion. Intheevent offailure topayoneormore instalments or
theinterest thereon, payment oftheentire amount ofthedebttogether withtherelated interest shall
berequired without further formality, thetime-limit being deemed tohaveexpired.
Intheevent thatthegoods inquestion areinsured, andanaccident occurs, theTreasury shall
beempowered torecover thebalance oftheoutstanding debtagainst theindemnity. Thisobligation
shallbeexpressly referred tointherelated policy.
Article 26:Whilst thedebthasnotbeenpaidinfull,capital goods inrespect ofwhich benefits
havebeenaccorded under thepresent lawmustcontinue tobeusedforoneormore oftheproductive
purposes referred toinArticle 2above andmaynotbeexported.
Capital goods acquired mayonlybealienated orleased when theimporter orpresent owner,
asthecasemaybe,haspaidthedebtinfullorwhen thepurchaser orlessee hasassumed inwriting
anobligation topaytheoutstanding balance. Inthelatter case,alienation orleasing maybeauthorised
bythecustoms authorities subject tothesigning ofanotarized contract inwhich thetextoftherelated
decision bytheaforesaid authorities shallbequoted.
Article 27:Purchasers orlessees whoassume anobligation topaythedebtmaybeeligible
fordebtrelief under therules established bythepresent law. Tofulfil therequirements relating to
theperiod ofdebtreduction during which theacquisition orleasing tookplace, thepurchaser orlessee
mayaddtogether salesandexports effected byhispredecessor during themonth preceding thetransfer
orleasing. Tothisend,thedateofacquisition orleasing shallbedeemed tobethefirstdayofthe
month inwhich ittookplace.
Article 28:TheCustoms Service shallestablish thenecessary verification systems toensure
adequate supervision ofallpersons obtaining benefits under theprovisions ofthislaw,andshallbe
empoweredtoinspectinstallations,checktheaccountsofthefirmsinquestionandrequire,inappropriate
circumstances, thatoutside technicians orauditors becalled ontogiveanopinion atthebeneficiary 's
expense.G/SCM/N/2/CHL/Suppl.1
Page30
VI. Responsibilities
Article 29:Those who, through fraud ordeceit, obtain debtrelief inanamount greater than
theirlegalentitlement shallbeliable tothepenalties specified inArticle 470,No.8ofthePenal Code.
Article 30:Persons exporting oralienating goods inrespect ofwhich taxcredit hasbeen
accorded, orusing them fornon-productive purposes while therelated debthasnotbeenpaidinfull
orwithout obtaining prior authorization fromtheCustoms Service shall, inthecaseofalienation, be
liable tothepenalties stipulated inArticle 470,No.8,ofthePenal Code.
Article 31:Anyprocessor issuing asalesinvoice containing falseinformation regarding the
nature orvalue oftherelated merchandise withtheobject ofenabling thepurchaser tobenefit under
thetaxcredit arrangements referred toinArticle 11above shallbeliable toatermofimprisonment
andafineequal tothree times thesums improperly obtained. Persons obtaining taxcredit through
fraud ordeceit shallalsobeliable totheaforementioned penalties.
Without prejudice totheforegoing, boththeprocessor andthepurchaser shall bejointly
responsible fortherestitution ofsumsimproperly obtained, adjusted inlinewiththepercentage change
intheconsumer price index intheperiod falling between themonth preceding thatinwhich thetax
credit wasgranted andthemonth preceding thatinwhich itwasreimbursed.
Article 32:Failure tosubmit theapplication referred toinArticle 22above attheproper time
shallrender theapplicant liable tothepenalties specified inArticle 183(ñ) oftheCustoms Regulations,
whatever benefit mayhavebeenobtained.
VII. Taxprovisions
Article 33:Thefollowing amendments shallbeintroduced toDecree LawNo.825of1975:
(a) Thefollowing finalparagraph shallbeadded toArticle 27(bis):
"Forthepurposes oftheprovisions ofthisarticle, moveable goods imported under
aleasing contract withorwithout option tobuyshallbeconsidered asforming part
oftheimporter 'sfixed assets inrespect oftheimport duespaid, provided thatsuch
goods, bytheirnature andcharacteristics, would normally besoclassified";
(b) InArticle 64:
(1) Thefollowing paragraph shallbeadded toparagraph 4afterthefullstop:
"The instalments referred toshallbearthesame interest asthatfixed forthe
deferred payment ofcustoms duties relating toimports ofcapital goods";
(2) Thefollowing finalparagraph shallbeadded:
"The Internal Revenue Service mayauthorise payment ofthevalue-added tax
bearing onthefirstsaleinthecountry ofpassenger transport vehicles with
aseating capacity formore than15persons, including thedriver, inequal
monthly,quarterlyorhalf-yearlyinstalmentsforuptoamaximumof60months
fromthedateofissue oftherelated invoice. Tothisend,thepurchaser shall
beliable forthevalue-added taxapplying tothefirsttransfer inthecountry
ofthevehicles referred to;nevertheless theissueoftherelated documents shallG/SCM/N/2/CHL/Suppl.1
Page31
remain anobligation onthevendor although nosumcorresponding tothetax
inquestion maybecharged onthesales invoice, without prejudice tothe
vendor 'srighttoapply thetaxcredit fortherelevant period against other debts
orthevoluntary provisional taxreferred toinArticle 89oftheIncome Tax
Law. Thevalue added taxinstalments referred tomustbeexpressed inmonthly
units, bearing amonthly interest of0.5percentandshallbebased ontheir
value onthedateofpayment ofeachinstalment. TheInland Revenue Service
mayrequire suchsecurity asitdeems necessary forthesumdueinapplication
oftheprovisions ofthisparagraph".
Article 34:Thefollowing No.(6)shallbeadded toArticle 59oftheIncome TaxLawcontained
inDecree LawNo.824of1974:
"(6) Theamounts paidbythelessee inaccordance withaleasing contract withoption to
buyrelating tocapital goods imported under thedeferred payments scheme forimport
duties.
Thetaxshallapply totheshare corresponding totheprofit orinterest inherent inthe
operation which, forthispurpose, shallbepresumed tocorrespond to5percentof
theamount ofeachinstalment paidunder thecontract referred to.
Inallcases thetaxreferred tointhepreceding paragraph shallapply solely tosums
paidorcredited inaccordance withaleasing contract authorised bytheChilean Central
Bank, taking account ofthenormal value ofthegoods inquestion ontheinternational
market".
VIII. Other provisions
Article 35:Thefollowing subparagraph (g)shallbeadded toArticle 187oftheCustoms
Regulations, deleting theconjunction "and" attheendofsubparagraph (e)andreplacing thefinalfull
stopofsubparagraph (f)byasemi-colon followed bytheconjunction "and":
"(g) exporting, alienating orusing foranon-productive purpose goods inrespect ofwhich
thebenefit ofthedeferred payment ofcustoms duties hasbeenaccorded, while the
debthasnotbeenpaidinfullor,inthecaseofalienation, authorization from the
customs authorities hasnotbeenobtained".
Article 36:Legal provisions establishing totalorpartial exemption fromcustoms duties shall
notbeapplicable inrespect ofcapital goods qualifying forimport under thedeferred payments scheme
established bythepresent law.
Article 37:Thefollowing shallbesubstituted forthetextofsubparagraph (a)ofGeneral
RuleNo.3oftheSupplementary General Rules referred tointhesecond paragraph ofArticle 2of
LawNo.18.525:
"(a) tocapital goods, withtheexception ofthose referred tounder heading 89.01.03.00
oftheCustoms Tariff, qualifying forthedeferred payment ofcustoms duties withno
restriction regarding theirminimum value".
Article 38:LawNo.16.069 andDecree Laws Nos.1.226, of1975, and2.563, of1979, shall
beabolished. References tothesetwolatter lawsorgeneric references tothedeferred payments scheme
forcustoms duties inother legislative provisions shallbeunderstood torelate tothepresent law.G/SCM/N/2/CHL/Suppl.1
Page32
IX. Transitional provisions
SoleArticle: Imports ofcapital goods covered byimport documents approved before theentry
intoforce ofthepresent lawmaycontinue tobenefit fromexemptions accorded under legislation since
abolished. Thesame rightshallbegranted toimporters who, prior tothepublication ofthepresent
law,obtained fromtheCustoms Service adecision approving theapplication ofRuleNo.1oftherules
governing assessment procedures, withrespect toallmerchandise covered bytheaforementioned
decision.
FERNANDOMATTHEIAUBEL,AirMarshal,Commander-in-ChiefoftheAirForce,Member
oftheCabinet. -RODOLFO STANGE OELCKERS, General oftheCarabineros, Member ofthe
Cabinet -HUMBERTO GORDON RUBIO, Lieutenant General oftheArmy, Member oftheCabinet -
HERN ÁNRIVERA CALDER ÓN,ViceAdmiral, Commander oftheFleet, Deputy Member ofthe
Cabinet.
Having fullyapproved theforegoing law,Ihereby sanction thelatter andsignittosignal its
promulgation. Itshallhaveeffect asalawoftheRepublic.
Thelawshallberegistered bytheComptroller General oftheRepublic, published intheOfficial
Gazette andentered intheCode ofLaws bytheComptroller.
Santiago, 23July1987-AUGUSTO PINOCHET UGARTE, General oftheArmy, President
oftheRepublic -Hernan Büchi Buc,Minister ofFinance -Manuel Concha Martinez, Brigadier of
theArmy, Minister forEconomic Affairs, Development andReconstruction.
Transcribed foryour attention. Respectfully yours, -Manuel Brito Viñales, Deputy
Under-Secretary ofFinance.