RESTRICTED
WORLD TRADE G/SCM/Q2/URY/1
21March 1997
ORGANIZATION(97-1171)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Questions from theEUROPEAN COMMUNITY Regarding theNew
andFullNotification ofURUGUAY1
Thefollowing communication, dated 12March 1997, hasbeenreceived fromthePermanent
Delegation oftheEuropean Community.
_______________
Uruguay submitted on3December 1996 itsnotification ofsubsidy programmes totheWTO
pursuant toArticle XVI:1 GATT 1994 andArticle 25oftheWTO Subsidies Agreement.
Inthisrespect, theCommunity would liketoobtain clarification onanumber ofissues onthe
notified schemes asdescribed below.
Moreover, theCommunity hasobtained information ondifferent subsidy schemes which were
notnotified totheWTO although theirnotification seems necessary pursuant toArticle 25.2ofthe
Subsidies Agreement.
I. NOTIFIED SUBSIDY PROGRAMMES
(a) Incentives forthemotor industry
- Thisprogrammeisclearlycontingentuponexportperformance.CouldUruguayprovide
thetimetable ofhowthisprogramme willbephased outinaccordance withArticle 28
oftheWTO Subsidies Agreement.
II. ADDITIONAL PROGRAMMES NOT NOTIFIED TOTHE WTO
UruguayhasnotnotifiedanumberofprogrammeswhichappeartobenotifiableunderArticle25.
TheCommunity findsthattheschemes described below provide afinancial contribution which confer
benefits tothelocalindustry. Inaddition theschemes areclearly specific (aspertaining toaspecific
sector orcontingent uponexports). Inaddition tothespecific questions asked, theCommunity would
likeclarification whytheseprogrammes werenotnotified totheWTO andrequests that,ifappropriate,
Uruguay supplies anotification under Article 25,using thestandard format.
1G/SCM/N/3/URY+Suppl.1-G/SCM/N/16/URY+Suppl.1.
./.G/SCM/Q2/URY/1
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1. Industrial Promotional Law
Various incentives aregranted under theIndustrial Promotion Law(Law 14,178 of
28March 1974) toprojects formally declared tobeofnational interest. Applications
forthese benefits mustbefiledwiththeMinistry ofIndustry andEnergy. Theproject
should beonethataimstogenerate greater efficiency inproduction andmarketing,
increase ordiversify exports ofmanufactured goods, orincrease theroleoftourism
byexpanding present facilities.
Incentives thatmaybeavailable include:
- Exemptionfromimportduties,consularfees,andunloadingchargesforimports
ofrawmaterials, spare parts, andfixed assets required fortheproject;
- Relief from taxonindustry andcommerce;
- Exemption fromthetaxonnetworth foragiven number ofyears determined
foreachapplicant.
2. Freezones
Ninefreezones arecurrently inoperation inthecountry. Within thefreezones, goods
andrawmaterials maybeimported intothefreezones without thepayment ofcustoms
duties. Businesses established inthefreezones arewholly exempt from Uruguayan
taxes, except social security contributions, provided thatnotlessthan75%ofthework
force isUruguayan.
3. Reinvestment ofincome
Income reinvested inmachinery andequipment (including computer hardware) and
buildings andconstructions usedinthemanufacturing orhotelindustry isexempt from
income taxsubject tocertain limits. Theexempt income maynotexceed 40%ofthe
capital expenditure onmachinery andequipment or20%ofthecapital expenditure
onbuildings andconstructions, normayitexceed 40%oftotaltaxable income for
theyearbefore theexemption istaken intoaccount. Thethirdlimiting factor isthe
amount ofbookprofits fortheyear, sincetheexempt income mustbetransferred from
book profits toanon-distributable reinvestment reserve inthetaxpayer 'sbooks.