WORLD TRADE  
ORGANIZATION  G/SCM/N/114/GTM 
30 June 2004  
 
(04-2817) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Extension Under SCM Article 27.4 of the Transition Period for the  
Elimination of Export Subsidies Pursuant to the Procedures  
in Documents G/SCM/39  
 
Updating Notification  
 
GUATEMALA 
 
 
 The following communication, dated 21 June 2004,  is being circulated at the request of the 
delegation of Guatemala.  
_______________ 
  
 Pursuant to Article XVI.1 of the General Ag reement on Tariffs and Trade (GATT) 1994 and 
Article 25.2 of the WTO Agreement on Subsidi es and Countervailing Measures (SCM Agreement) 
and as provided in paragra phs 1(d) and (e) of the Procedures for Extensions under Article 27.4 for 
Certain Developing Country Members (document G/SCM/39 of 20 N ovember 2001), I hereby submit 
Guatemala's annual notification seeking a continuation of the extension granted by the Decisions of 
22 November 2002, circulated in documents G/SC M/72, G/SCM/73 and G/SCM/74 and the Decisions 
of 28 October 2003, circulated in documen ts G/SCM/72/Add.1, G/SCM/73/Add.1 and 
G/SCM/74/Add.1.   The aim of this notification is to fulfil the transparency and standstill requirements in 
paragraphs 3 and 4 of document G/ SCM/39.  As required by this document, the programmes notified 
in document G/SCM/N/71/GTM have not been modified  in any way to make them more favourable.  
This notification is without prejudice to Gu atemala's rights under the WTO Agreements. 
 G/SCM/N/114/GTM 
Page 2  
 
CONTENTS 
  
Page
 
 
PROGRAMME 
  
I. Exemption from Company Tax;  exemption from customs duties and other  
import taxes, including Value-Added Ta x (VAT), on machinery, equipment,  
parts, components and accessories required for the production process of  
companies under special customs regimes......................................................................... 3 
  II. Exemption from Company Tax;  exemption from customs duties and other  
import taxes, including Value-Added Ta x (VAT), on machinery, equipment,  
parts, components and accessories required for the production process relating  to activities of managers and users of Free Zones ......................................................... 4 
  III. Exemption from Company Tax;  exemption from customs duties and other  
import taxes, including Value-Added Ta x (VAT), on machinery, equipment,£ 
parts, components and accessories required for the production process of  commercial and industrial enterprises ope rating in the Industrial and Trade 
Free Zone (ZOLIC) ......................................................................................................... 5 
  G/SCM/N/114/GTM 
 Page 3 
 
 
PROGRAMME I 
 
1. Description  
  (a) Exemption from Company Tax on income from the export of goods produced or 
assembled in Guatemala and exported under special customs regimes to non-Central 
American countries. 
  (b) Exemption from customs duties and other import taxes, including Value-Added Tax 
(VAT), on machinery, equipment, parts,  components and accessories required for the 
production process. 
 2. Period of notification
 
  June 2004 
 
3. Objective
 
  To promote, encourage and develop the producti on in national customs territory of goods for 
export to non-Central American countries.  
4. Background and authority
 
 Background
 
  The Government of Guatemala considers th at appropriate conditions for encouraging 
investment of national and foreign capital need to  be promoted in order to reduce the high poverty 
levels stemming, inter alia , from the internal armed conflict as we ll as to raise employment levels and 
improve the distribution in income.  Authority
 
 
 Legislative Decree No. 29-89 of 23 May 1989. 
 5. Form of the subsidy
 
  The subsidy takes the form of a tax exemption, but its effect is greatly reduced given the other 
national taxes payable. 
 6. To whom and how the subsidy is provided (whether to producers,  exporters or others, through 
what mechanisms, whether it is a fixed sum or fluctuating amount per unit and, if the latter, 
how the amount is determined).  
 
 The subsidy is granted to companies by wa y of an exemption from Company Tax on income 
from the export of goods produced or assembled in  Guatemala and exported under special customs 
regimes to non-Central American countries.   To be eligible for the programme, companies must be recognized by the Ministry of the 
Economy. 
 G/SCM/N/114/GTM 
Page 4  
 
7. Subsidy per unit, or, in cases where this is not possible, the total or annual amount budgeted
 
for this subsidy (indicating, if possible, the average subsidy per unit for the year covered by  
the notification, the previous year or bo th).  A full explanation will be provided.  
  Subsidies are granted in accordance with the exporters' income,  they cannot therefore be 
quantified given that they vary each fiscal year. 
 8. Duration of the subsidy and/or any other time -limit which could affect it, including the date of
 
inception/commencement.  
 
 This subsidy programme is applicable for up to ten years. 
 9. Statistical data permitting an assessment of the effects of the subsidy on trade. The specific 
nature and scope of such statistics is left to the judgement of the notifying Member.  It is, 
however, desirable – to the extent possible, relevant and/or determ inable – that such 
information include statistics relating to the pr oduction, consumption, im ports and exports of 
the subsidized product(s).  
  No such statistical information is available.   PROGRAMME II 
 
1. Description
 
 (a) Exemption from Company Tax on income ex clusively from the activities of managers  
 and users of the Free Zone. 
 (b) Exemption from customs duties and other import taxes, including Value-Added Tax   (VAT), on machinery, equipment, parts,  components and accessories required for the  
 production process.  
2. Period of notification
 
  June 2004  3. Objective
 
 
 To promote and regulate the establishment in  Guatemala of Free Zones, the activities of 
which, in particular measures to boost foreign tr ade, create employment and stimulate technology 
transfer, serve to encourage national development.  4. Background and authority
 
 
Background  
  In an endeavour to encourage the development of regions which have been marginalized as a 
result of the internal armed conflict and to re duce poverty levels, a Free Zone system has been 
established as an instrument to create employme nt, attract investment and encourage technology 
transfer.  Authority
 
 
 Legislative Decree No. 65-89 of 14 November 1989.  G/SCM/N/114/GTM 
 Page 5 
 
 
 5. Form of the subsidy
 
  The subsidy takes the form of a tax exemption.  
6. To whom and how the subsidy is provided (whether to producer s, exporters or others, through
 
 that mechanisms, whether it is a fixed sum or  fluctuating amount per unit and, if the latter , 
 how the amount is determined) . 
  The beneficiaries of this incentive are the managers and users of Free Zones. 
 
 To  enjoy these fiscal benefits, companies must  be fully authorized by the Ministry of the 
Economy.  7. Subsidy per unit or, in cases where this is not  possible, the total or annual amount budgeted
 
for this subsidy (indicating, if possible, the average subsidy per unit for the year covered by  
the notification, the previous year or bo th).  A full explanation will be provided . 
  Subsidies are granted in accordance with the ex porters' income;  they cannot therefore be 
quantified given that they vary each fiscal year.  
8. Duration of the subsidy and/or any other time -limit which could affect it, including the date of
 
 inception/commencement . 
  This subsidy programme is applicable for up to ten years.  
9. Statistical data permitting an assessment of th e effects of the subsidy on trade.  The specific
 
 nature and scope of such statistics is left to  the judgement of the notifying Member.  It is,  
 however, desirable – to the extent possible,  relevant and/or dete rminable – that such  
 information include statistics relating to the production, consumption, imports and exports of  
 the subsidized product(s) . 
 
 No such statistical information is available. 
 
PROGRAMME III 
 
1. Description  
 
(a) Exemption from Company Tax on income from the activities of managers and users  
 of the Industrial and Trade Free Zone (ZOLIC).  (b) Exemption from customs duties and other import taxes, including Value-Added Tax   (VAT), on machinery, equipment, parts,  components and accessories required for the  
 production process. 
 2. Period of notification
 
  June 2004 
 
3. Objective
 
  To promote the economic development of the province of Izabal, where the population – mostly Garifuna – is the most backward in the c ountry in terms of social and economic development, G/SCM/N/114/GTM 
Page 6  
 
and capitalize on its geographical location as the sole  access point to Guatemala from the Atlantic 
Ocean.  4. Background and authority
 
 
Background  
  Measure to encourage investment as a m echanism for promoting the development of 
Guatemala's Garifuna population.  
Authority
 
  Decree No. 22-73 of 21 March 1973.  5. Form of the subsidy
 
 
 The subsidy takes the form of a tax exemption.  6. To whom and how the subsidy is provided (whether to producer s, exporters or others, through
 
 what mechanisms, whether it is a fixed sum or  fluctuating amount per unit and, if the latter,  
 how the amount is determined).  
 
 The beneficiaries of these incentives are comme rcial and7or industrial enterprises operating 
under this special regime.  7. Subsidy per unit or, in cases where this is not  possible, the total or annual amount budgeted
 
 for this subsidy (indicating, if possible, th e average subsidy per unit for the year covered by  
 the notifications, the previous year or both).  A full explanation will be provided.  
  Subsidies are granted in accordance with the bene ficiaries' income;  they cannot therefore be 
quantified given that they vary each fiscal year.  
8. Duration of the subsidy and/or any other time-l imit which could affect it, including the date of 
inception/commencement.  
   This subsidy programme is applicable for up to ten years.  
9. Statistical data permitting an assessment of th e effects of the subsidy on trade.  The specific
 
 nature and scope of such statistics is left to  the judgement of the notifying Member.  It is,  
 however, desirable – to the extent possible,  relevant and/or dete rminable – that such  
 information include statistics relating to the production, consumption, imports and exports of  
 the subsidized product(s).  
 
 No such statistical information is available. 
  
__________