RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/W/25/Add.1
29 May 2000
(00-2166)
Working Party on GATS Rules
SUBSIDIES FOR SERVICES SECTORS
INFORMATION CONTAINED IN WTO TRADE POLICY REVIEWS
Background Note by the Secretariat
Addendum
I. INTRODUCTION
1. To enhance information on subsidy programmes in the area of services, the Working Party on
GATS Rules, at its meeting of 4 and 5 May 2000, requested the Secretariat to update a previous Note(S/WPGR/W/25, circulated on 26 January 1998) based on 31 Trade Policy Reviews (TPRs).  While
the initial document covered the period from January 1995 to December 1997, the current Note aims
to extract similar information from the 37 TPRs published since.
2. Although this Note draws on information from all TPRs published from 1998 to present under
the aegis of the WTO, it cannot claim to give a representative picture.  First, the selection of countriesfor review does not reflect analytical purposes, but the country schedule established by the Trade
Policy Review Body.  Second, coverage and content of reports are largely determined by the
availability of data as well as the Secretariat's asse ssment of country-specific review priorities at the time
of drafting.  The fact that some reports do not in clude subsidy-related information, therefore, does not
necessarily point to the absence of such schemes in the countries concerned.  Nevertheless, the TPR
reports may be considered a reasonably reliable source of information in this area.  They normally take
into account not only material provided by nati onal governments, but any additional information
deemed relevant, including reports by international organizations and academic research papers.  The
factual accuracy of the individual reports has been checked by the country under review.
3. Reflecting data limitations and/or resource cons traints, TPR reports have not always sought to
trace the compound effects of various subsidies in individual sectors or to gauge their relative
importance.  Also, it has proved difficult to detail the underlying policy objectives of manyprogrammes.  For example, a particular support scheme may be social in nature or informed by
industrial policy considerations, geared toward improving consumer welfare or upgrading sectoral
performance, enhancing overall economic efficiency or simply shielding vulnerable domestic
suppliers from import competition.   
II. CONCEPTS  AND  DEFINITIONS
4. The subsidy definition generally used for Trade Policy Reviews is based on the definition
contained in the WTO Agreement on Subsidies and Countervailing Measures.  Accordingly, a subsidy is
deemed to involve a financial contribution by a gove rnment or public body which confers a benefit.  The
TPR reports thus tend to cover assistance granted in  the form of direct tr ansfers of funds, including
grants, loans and equity infusions; potential direct tran sfers of funds or liabilities, e.g. loan guarantees;
government revenue foregone; supply of goods and services other than general infrastructure;  purchase
of goods;  payments to funding mech anisms;  or income and price support.S/WPGR/W/25/Add.1
Page 2
5. As noted before, the application of this definiti on to services sectors has not appeared to pose
problems in principle.  However, it may prove diffi cult in individual cases to identify the ultimate
beneficiary of a subsidy, which may have been des tined for downstream users rather than the immediate
recipient.  Exemptions from indir ect taxes, in particular VAT, have generally been ignored for the
purposes of this overview as such measures in ma ny cases are aimed to support consumption rather than
production of the service concerned.  Some measures  may have been intended primarily to promote
public policy or infrastructural objectives.  Given the infrastructural importance of many services
sectors and their role as generally available inputs, it could thus be misleading to equate certain
recipients, e.g., railways, with actual beneficiaries which might include any social or economic group
relying on rail transport.  Moreover, Members may use different terminology or have different
demarcations between the public and private sectors.1  The ambiguities arising from these factors no
doubt affect cross-country comparability.
III. POLICY  PATTERNS
6. Available evidence suggests that WTO Members tend to concentrate their services-related
subsidies on three sectors:  maritime transport, tourism, and financial services.  This is consistent with
patterns revealed in the previous compilation.  Of the 37 Members covered in the TPR reports under
study in this update, at least 12 have aided their mar itime transport sector.  This compares to the pattern
found previously, where 23 of 442 Members covered by the TPRs were reported to have subsidized
maritime transport.  In the current sample, 22 Me mbers have offered tourism subsidies; while the
previous group had had 14 governments promoting inve stment in the hotel a nd tourism sector.  For
financial services, the current group of 37 has at leas t 8 Members offering subsidies (including measures
applied in the wake of financial crises, which may be falling under the GATS' prudential carve-out forfinancial services).  Of the Members covered by the previous Note, at least 10 had assisted their offshore
banking sector or rescued ailing domestic banks.  However, such findings may be influenced by the
reports' focus on sectors where politically or econom ically important developments have been under
way.
3
7. The following Table confirms the high number of programmes for tourism.  They are being
operated mainly in developing countries.  Possibly reflecting fiscal constraints, these programmes tend
to rely on tax holidays and other fiscal advantages  and do not normally provide for actual disbursements.
Support schemes for transport and financial services, however, seem to exist across the full spectrum of
WTO Members.  Support policies favouring shipping companies have often used tax incentives.  In
financial services, a number of initiatives may have been ad hoc  in nature, driven by the perceived need
to prevent the imminent collapse of large banks, rath er than influenced by longer-term policy strategies.
A trend not previously apparent seems to be for governments to encourage the development of the
financial services sector through tax incentives and/or offshore schemes.
                                                     
  1  For example, the provision of basic health services may be ensured through:  (a) cost-free treatment
in state-owned hospitals;  (b) the extension of public funds to commercially independent hospitals;  or (c)government-sponsored premiums for basic health insurance.  While conferring the same benefits to the sametarget group, such measures might be defined, respectively, as the provision of infrastructural services, subsidiesfor the health sector, social transfers and/or subsidies for insurers.
2 Counting individually the EC Member States.
3 As a general feature, it appears that areas such as financial services have been reviewed in more detail
than, for example, rail or road transport and professional services.S/WPGR/W/25/Add.1
Page 3
Table 1:
Subsidies for individual services sectors - information from TPR Reports, 1995 to 1997
 /g216   MEASURE   /g216 Direct grants Preferential
credit &
guaranteesEquity
injectionsTax
incentivesDuty-free
inputs &
free zonesOther &
unspecified
measuresNumber
of
countries
/g218    SECTOR     /g218
Tourism Botswana
CanadaIsraelTurkeyCanada
Nigeria*
Iceland
IndiaJamaicaSouth AfricaTrinidad &     Tobago
TurkeySouth Africa Nigeria*
Argentina
Egypt
IndiaIsraelJamaicaNicaraguaPhilippines
Solomon Is.
TanzaniaTrinidad &     TobagoTurkeyUruguayArgentina
EgyptIndiaJamaicaKenya
Nicaragua
PeruSolomon Is.TanzaniaTrinidad &     TobagoTurkeyUruguayGuinea*
LesothoSingapore
22
Transportation
generallyCanada Philippines 2
Maritime transport Australia
IndiaSolomon Islands*India
ThailandU.S.Egypt
HK, ChinaIndiaJamaicaPeru
Singapore
TurkeyU.S.Egypt
JamaicaPapua N.G.PeruTurkey
12
Air transport Papua N.G. Hungary* Egypt Hungary
Papua N.G.3
Rail transport India
Kenya2
Road transport
Banking Indonesia
ThailandHK, Chima
ThailandSingapore
TanzaniaU.S.Trinidad &
     Tobago*JamaicaSingaporeTanzania
Thailand8
Other financial
servicesIndonesia
ThailandHK, Chima
ThailandSingapore
U.S.Singapore
ThailandTrinidad &     Tobago*6
S/WPGR/W/25/Add.1
Page 4
 /g216   MEASURE   /g216 Direct grants Preferential
credit &
guaranteesEquity
injectionsTax
incentivesDuty-free
inputs &
free zonesOther &
unspecified
measuresNumber
of
countries
/g218    SECTOR     /g218
Software,
information
technology,
communications,
and information
processingCanada Jamaica Canada
Egypt
IndiaIndia
JamaicaTrinidad &
    Tobago*
Uruguay6
Construction U.S. Argentina Argentina
BoliviaTrinidad &    Tobago
Turkey5
Recreation, culture
& sportsCanada Jamaica Bolivia Bolivia
Israel4
Telecom PeruSingaporeIndia India Trinidad &
    Tobago* 4
Audiovisual
servicesArgentina
CanadaCanada
JamaicaTanzaniaJamaica
Tanzania4
Wholesale & retail
trade, distributionTurkey Trinidad &
     TobagoTanzania 3
Real estate India Canada Trinidad &
    Tobago3
Other &
unspecified sectorsAustralia Australia
BangladeshTurkeyCanada Singapore Hungary
Singapore6
Number of cases 18 25 7 43 40 3 90S/WPGR/W/25/Add.1
Page 5
ANNEX
Content of Individual Trade Policy Reviews
As an update to the previous document, whic h had covered TPR reports from January 1995 to
December 1997 (S/WPGR/W/25), the content of this Annex is directly taken, with some minor
editing, from reports published since that time.  References deal with subsidy programmes for
individual services sectors.  Not included is information on generally available subsidies, for example
in the context of regional development or research programmes, and company-internal cross-
subsidization between monopoly and market-oriented activities in sectors such as
telecommunications.  Reductions or exemptions on a value-added tax (VAT) or on other indirect taxes
have for the most part been considered as consumer subsidies and have not been included.4   (Schemes
exist, for example, to benefit consumption of medical, transport, or educational services.)  Capital
injections to financial institutions during a financial crisis have been listed as subsidies for a Member's
financial services sector, regardless of the prudential carve-out for financial services in the Fifth
Protocol to the GATS.
INDIA - WT/TPR/S/33 (1998)
pages 86-87, paras. 138, 140
To promote the development and exports of the software  industry seven Software Technology
Parks (STPs) and an Electronic Hardware Technolo gy Park (EHTP) Scheme are in place… EHTPs and
STPs are allowed zero duty on all imports, 100 per cent foreign participation, and tax holidays … Data
are not available on the amount of total forgone revenue attributed to these fiscal benefits.
page 92, para. 48
Other major recipients of total non-plan subsidies include the railways , for which subsidies
have remained around 3 per cent since 1995/96.
page 93, Table III.19
Explicit (non-plan) subsidies, in part
(Rs million)
1995/96 1996/97 1997/98a
Other subsidies
Payments to State Governments in lieu of sales tax on aviation fuel sold to internationalairlines (including Air India)283.3 16.2 0.1
Subsidy for operations of charter flights for Haj pilgrims 170.5 373.8 420.0
Subsidy to the railways for dividend relief and other concessions 4,177.3 4,657.1 5,367.2
Insurance schemes for the poor 160.0 140.0 160.0
Subsidy for coal transport by rail-cum-sea route 0.5 0.0 0.0
Subsidy to Shipping Corporation of India for uneconomic shipping lines 124.0 110.0 110.0
Compensation for exchange loss 1,425.2 1,499.5 1,539.5
…
- National Housing Bank 22.0 28.9 29.0
- Housing Development Finance Corpn. 590.0 539.5 800.0
a Budgeted.
Source: Government of India (1996c), Budget 1996/97 , Expenditure Budget;  and Government of India (1997b), Budget 1997/98 ,
Expenditure Budget.
                                                     
4 VAT exemptions applicable to the tourism sector, ho wever, have been included as these are not likely
to be targeted at the consumers.S/WPGR/W/25/Add.1
Page 6
page 96, para. 155
Section 80IA of India's Income Tax Act grants tax holidays for a period of five consecutive
assessment years in a number of cases, including industrial undertakings, hotels, ships , the development
and maintenance of any infrastructure facility, research and development, and the commercial
production of mineral oil…
page 151, paras. 117, 118
For export industries, additional incentives, such as a five-year tax holiday, tax exemption on
income from exports, duty-free imports of inputs a nd access to some imports on the restricted list
through Special Import Licenses (SIL s), are also provided.  There is no ceiling on the amount of foreign
equity participation in the software  and hardware technology parks a nd export-processing zones (EPZs),
or in 100 per cent export oriented units.
page 163, paras. 156, 158
The major Indian ports are organized as Port Tr usts, i.e. semi-autonomous statutory entities with
a non-profit objective organized under the Indian Ports Act, 1908 and the Major Ports Trust Act,  1963.
In addition to infrastructure planning and constructi on, Port Trusts have the power to operate ship and
cargo handling facilities and services (such as pilo tage, cargo, storage and container stations) and to
frame regulations. The Port Authorities have their own budgets, and can raise dues (tariffs are set
individually for each port) and incur debts subject to  government approval.  The financial situation of
the Port Trusts is mixed, with some ports requiring  financial support, such as subsidies, concessional
lending for some capital expenditures, or  restructuring of debts.  Since the ports do not pay taxes, even
on their commercial activities, they have a nega tive impact on the Government's fiscal position.5
Another significant feature of the new guidelines on private-sector participation is that it opens
up  port development  on build-operate-transfer (BOT), or simila r schemes, for up to 30 years, relieving
scarce public resources of the cost of financing.  Financial incentives to port investors include a five-
year tax holiday, a five-year tax concession period a nd, as an incentive to financial institutions who
provide long-term finance, a deduction of taxabl e income derived from financing of investments
provided that this amount is credited to a special re serve.  Additional fiscal incentives are also being
provided to encourage the development of port infr astructure.  Several State Governments are going
ahead with minor port projects involving the private sector.
page 166, para. 169
The National Telecommunication Policy, 1994 (NTP ) states that "Private investment and
association of the private sector would be needed in a big way to bridge the resources gap.  Private
initiative would be used to complement the Depart mental efforts to raise additional resources, both
through increased internal generation and adopting innovative means like leasing, deferred payments,
BOT (build-operate-transfer), BLT (b uild-lease-transfer), etc.".  In  line with this policy, private
[telecommunications ] services providers have been extended fiscal benefits such as tax holidays,
additional access to external commercial borrowing, etc.
page 170-71, para. 184 plus Box IV.4
Special incentives are offered to national and foreign investors in the tourism  industry,
including interest subsidy, income tax incentives, import concessions, and concessional licensing for
                                                     
     5World Bank (1995a).S/WPGR/W/25/Add.1
Page 7
imports of special items for the hotel industry (Box IV.4).  Preferences in access to water and
electricity are also extended to the industry.
Incentives in the tourism industry
Incentives to the tourism industry provided by the Central Government include:
- An interest subsidy of 3 per cent on loans from financial institutions is available to one-, two-, and  three-star categories of hotel
projects outside the metropolitan cities of Bombay, Calcutta, Delhi and Madras.  A subsidy of 5 per cent is available to such h otel
projects if they are in the travel circuits and destinations identified for intensive development in the National Action Plan f or Tourism.
- Heritage hotels are eligible for the 5 per cent interest subsidy.- As a fiscal incentive, 50 per cent of profits derived by hotels , travel agents and tour operators in foreign exchange are exem pt from
income tax.  The balance of profits in foreign exchange is also exempt provided it is re-invested in tourism projects.
- Import of special items for the hotel industry is permitted subject to import entitlement.  Concessional customs duty is charg ed for
imports of specified goods required for initial setting up or substantial expansion of hotels.  Moreover, the tourism sector ca n import at
a concessional rate of duty under the Export Promotion Capital Goods (EPCG) Scheme.
- Announced in the 1997/98 Budget, new hotels located in a hilly area, rural area, place of pilgrimage, or a specified place of tourist
importance, receive a tax deduction of 50 per cent of profits and exemption from expenditure tax.  In respect of hotels located  in other
places, excluding the four metropolitan cities, the tax deduction is 30 per cent of the profits.
Source:  Government of India (1996k), Department of Tourism Annual Report 1995/96
 and Government of India (1997b), Budget 1997/98 .
SOUTH AFRICA – WT/TPR/S/34 (1998)
page 130, para. 135
The Industrial Development Corporation (IDC ) provides two financing schemes, at its
prevailing interest rates, for the promotion of tourism in South Africa.  Under both schemes, owners,
members or shareholders are required to finance at least 40% of their total assets.  Under the Eco-
tourism Scheme, for projects in conservation areas, financing is normally provided in the form of loan
facilities, and in risk participation, including equity, to promoters who are not in a position to provide
sufficient equity capital.  The General Tourism Scheme finances the renovation, refurbishment and
extension of existing accommodation.  The maximum IDC funding per project under this Scheme islimited to R 10 million, subject to the condition that turnover for accommodation represents at least
70% of the total turnover.
The following incentive schemes exist:  Eco-Tourism Scheme, General Tourism Scheme,
Business Loans for Retail Financial Intermediaries, Seed Loans for Retail Financial Intermediaries,
Capacity building support for Retail Financial Intermediaries.
BOTSWANA – WT/TPR/S/35 (1998)
pages 47-48, paras. 51-53
The Financial Assistance Policy (FAP) is the most significant positive inducement for
investment in Botswana.  The policy was introduced in 1982, and substantially revised for the third
time in 1995.  It applies only to manufacturing, small-scale mining, mineral processing, agriculture
other than beef production, and tourism , and to selected linking service industries (which supply the
primary qualifying sectors).…
All FAP assistance is provided in  the form of non-repayable grants.  These grants are aimed at
promoting the creation of self-sustainable enterprises, with the proviso that economic and/or social
returns to Botswana are greater than the purely financial returns to the projects assisted.  However,S/WPGR/W/25/Add.1
Page 8
qualifying businesses must have a reasonable chance of becoming financially viable.  A project must
therefore demonstrate a real economic rate of return to Botswana of at least 6%.
pages 65-66 (page 66 on LAN version), para. 73
The tourist industry is encouraged principally through financial assistance under the FAP;
this may be in the form of capital grants, unskilled labour grants, or training grants.  The total value ofunskilled labour plus training grants, summed over a five-year period, should not be more than 50%
of the domestic value added accruing to Botswana citizens over the period.
6  In the tourism sector
such assistance is available to hotels, motels, lodg es, guest houses, tourist apartments, tourist camping
sites, caravans, hunting camps, tented-camp safari and tour operators, urban tourism, horse back
safaris, walk trails safaris and transport of guest travellers and tourists including travel agents.
LESOTHO – WT/TPR/S/36 (1998)
pages 69-70 (pages 71-72 on LAN version), para. 77
Lesotho mainly attracts South African tourists, for which it faces increasing competition from
other African destinations.  The Lesotho Na tional Development Corporation (LNDC) has been
promoting tourism  actively and a number of hotels, mountain lodges and a national park have been
developed.  There were 417,000 visitors in 1992 (more than twice the 1988 figure).  There has been
an overcapacity in Maseru since the construction of the government-financed Lesotho Hilton.  The
occupancy rate was 30% in 1992, compared with 20% in the 1980s.  The LNDC intends to develop a
major ski-resort/casino complex in the Highlands Water Area Scheme.7
NAMIBIA – WT/TPR/S/37 (1998)
[No reference to service-related subsidies.]
SWAZILAND – WT/TPR/S/38 (1998)
[No reference to service-related subsidies.]
NIGERIA - WT/TPR/S/39 (1998)
pages 114-115, paras. 182-84, 187
Tourism in Nigeria does not yet attract large numbers of visitors or receipts (Chart IV.8).  In
order to develop this sector, the authorities have developed a new tourism policy and put in place a
package of incentives to attract private sector investment in tourism  development.
The authorities have also indicated the need to grant preferential credit and fiscal status to
potential investors in tourism.
HUNGARY – WT/TPR/S/40 (1998)
pages 54-55 (pages 54-56 on LAN version), para. 72 and Box III.2 (part of)
A significant aspect of the tax system in this early phase was that foreign investors were
treated more favourably than domestic entrepreneurs.  Such "positive discrimination" was thought
necessary to compensate foreign investors for what they perceived to be the relatively high risk of
                                                     
6"Domestic value added" is defined as sales revenue minus tradeable inputs minus transfers to citizens.
7EIU (1997).S/WPGR/W/25/Add.1
Page 9
investing in an economy in the early stages of transition.  Most of these preferences were abolished at
the end of 1993, however, and any incentives are now largely accorded to domestic and foreign
investors alike.  Two notable exceptions involve the special deduction granted to companies with at
least 30% foreign participation and the tax allowance for fully foreign-owned offshore companies .
Although the last date for qualifying for this special deduction was the end of 1993, existingenterprises continue to enjoy the incentive for which they originally qualified until 2003.  Fully
foreign-owned offshore companies can still qualify for the tax allowance.
Box III.2:  Tax incentives for investment, 1996, excerpts
(Ft million)
Incentive Description Amount
Incentive for offshore companies This incentive, which was introduced on 1 January 1994, is available for offshore trading
or service companies .  A tax credit of 85% of the tax due, granted to offshore companies,
was withdrawn and replaced beginning 1 January 1997 with a low rate of corporate income
tax, i.e. 3%.  Offshore companies are not entitled to any other tax incentives.397
Source: Hungarian authorities.
page 90, para. 71
Conscious that internationalization of the Hungarian economy, the rise in living standards,
and the development of tourism are likely to result in future expansion of air transport  activities, the
Government and the industry have engaged in wide-ranging modernization of the sector.  This
involves, inter alia , the recapitalization of Malév, including the purchase and leasing of new aircraft,
the expansion of the Budapest-Ferihegy airport (t he only airport in Hungary capable of meeting
international transport needs), and the transformation of the former Soviet military air-bases intodomestic and cargo airfields.
8  Recapitalization of Malév is considered to be essential if the national
carrier is to compete internationally and is therefore a prerequisite for the complete opening of  air
transportation to foreign competition.  While no direct subsidies are given to Malév, it does receive
other forms of assistance, including a reduction in customs duties on spare parts and equipment as
well as a tax exemption for fleet renewal.
AUSTRALIA – WT/TPR/S/41 (1998)
page 78, para. 115
Direct financial assistance is provided mainly in the form of sector-specific bounties and
subsidies and also in the form of concessional loans, interest rate subsidies and government
guarantees.9  In 1996/97, the highest percentage of budgetary financial assistance went to the
manufacturing sector, which received almost 60% of total outlays, followed by primary production,
services , and mining and energy, with 22%, 14% and 5%, respectively, of all assistance.10
page 138, para. 114
Despite financial assistance from the Government, the shipping  sector has continued to
decline.  It is estimated that the total value of  assistance through expenditure on capital grants and
accelerated depreciation for the sector has been $A 137 million over a ten-year period up to 1997.  In
addition, voluntary redundancy programmes for the sector cost the Shipping Industry ReformAuthority (SIRA) an additional $A 43 million.
                                                     
8 A second terminal was completed at Budapest-Ferihegy airport in 1993.  Further expansion is under
way, involving the construction of a third terminal, which will be operated by a foreign-owned company.
9 Industry Commission (1997c).
10 Industry Commission (1997c).S/WPGR/W/25/Add.1
Page 10
JAMAICA - WT/TPR/S/42 (1998)
page 66, para. 66 and Table III.12
Some of the existing incentive schemes include measures aimed at encouraging exports, such
as the Export Industry Encouragement Act (EIEA) and the Factory Construction Act, or to save or
earn foreign exchange, such as the Jamaica Export Free Zones Act (Table III.12).
Investment incentives available in Jamaica
Sectors Incentives Requirements/conditions Concessions
…
Information Processing Jamaica Export Free Zone Act All transactions must be
conducted in US$.  Company
cannot sell in domestic market
more than 15% of production.Exemption from import duties on raw
materials and machinery.
Duty relief on raw materials and
capital goods in perpetuity.
Possibility of single-entity free zones.
…
Film Motion Picture Encouragement
ActMust be recognized producer. Income tax relief for nine years.
Duty-free importation of machinery
and equipment.
Tourism Hotel Incentives Act Must contain at least ten
bedrooms and facilities for
mealsIncome tax relief for nine years.
Duty-free importation of building
materials and furnishings.
Resort Cottages Incentives Act Articles must be used for the
construction and equipment of
resort cottages.Income and dividends tax relief for
ten years.
Duty-free importation of articles used
in construction of resort cottages.
All industries
…
International FinanceCompanies (Income Tax
Relief) Act
bTo encourage establishment of
offshore banking  facilities.Income tax relief on profits and
capital gains.
National treatment not applicable.
Shipping  Incentives ActcVessels must be owned by local
companies (state owned).Relief from income tax and import
duties for ten years.
…
a Extension to services to be implemented.
b Currently not in use.
c Under amendment
d Suspended.
Source: National Industrial Policy;  and information provided by the Jamaican authorities.
page 73, para. 89
The National Investment Bank of Jamaica (NIBJ) has a debt restructuring programme to
provide companies registered in Jamaica with financing of up to 50% of the debt to be restructured, to
a maximum of J$50 million per company.  The balance of the debt is expected to be restructured by
the creditor bank, in the form of an interest rate reduction, a write-off, or by rescheduling.  Funds are
provided at a rate based on NIBJ's cost of funds,  for a maximum period of seven years.  The sectors
targeted under this programme include agriculture, manufacturing, mining, tourism, information
technology, entertainment and infrastructure .S/WPGR/W/25/Add.1
Page 11
page 74, para. 97 (see also page 115, paras. 103, 104)
There are also a number of sector-specific incentive programmes that grant tax and import
duty relief, such as the Hotel Incentives Act, the Resort Cottages Incentives Act, the Shipping
Incentives Act, the Motion Picture Encouragement Act11, the Cooperatives Societies Act.  Under
these Acts, tax incentives include investment allowances up to 40% for plant and machinery and a
five-year period to carry forward tax losses (carry forward of losses now applies across the board).  In
the case of free zones, income from qualifying activities is indefinitely exempt from tax.
page 120, para. 119
Among specialized development financial institutions, the National Development Bank,
owned by the Government, provides medium and long-term financing to businesses (particularly
manufacturing and tourism ) through commercial banks. Funding is provided through the National
Industrial Bank of Jamaica (NIBJ) (Chapter III(4)( i)), the European Investment Bank, the Caribbean
Development Bank, and through bond issues of the Bank of Jamaica….. The Trafalgar Development
Bank provides medium and long term financing to productive enterprises in the private sector;  itsactivities are concentrated on the foreign exchange loan market. Around half of the loans disbursed
are directed to manufacturing, with agricultur e, tourism and mining following at a certain
distance…..
12
page 125, para. 136
Shipping  services are provided by over 30 shipping lines. Jamaican shipping companies may
benefit from the incentives included in the Shipping Incentives Act, by which they are exempt from
income tax and from import duties for a period of ten years after their establishment.
MALI - WT/TPR/S/43 (1998)
[No reference to service-related subsidies.]
TURKEY - WT/TPR/S/44 (1998)
pages 68-70, paras. 92-93 and Table III.17
Until 31 December 1993, export income was exempted from the payment of corporate
income tax...  The reduction, which had been progressively reduced, was 20% and limited to the
following activities;  (i) revenue earned abroad  and brought to Turkey from services such as repairs ,
and construction  facilities;  and (ii) producer-exporter companies' revenue from exports of industrial
products above US$250,000 a year.
Exporters can take advantage of a large number of export credit schemes, operated by the
Export Credit Bank of Turkey (Turk Eximbank)…
                                                     
11The Motion Picture Industry (Encouragement) Act provides recognized motion picture producers the
right to import into Jamaica any plant, equipment, machinery and materials for the building of studios or for usein motion picture production free of customs duty, additional stamp duty and general consumption tax, providedthe goods cannot be manufactured domestically [ footnote moved from page 113, para. 97 ].
12Loans by the Trafalgar Development Bank outsta nding in 1996 reached J$1.29 billion, compared to
J$2.64 billion for the National Development Bank, and J$1.19 billion for the Agricultural Credit Bank. See :
BOJ Annual Report 1996, p.p.22-26.S/WPGR/W/25/Add.1
Page 12
Key features of the export credit and guarantee programmes, June 1998,  in part
Scheme Eligibility Conditions Amount of credit
8. Tourism Marketing
Credit ProgrammeeTourism  companies selected
by Ministry of Tourism and
those attracting more than
US$1 million worth ofcurrency to Turkey annuallyInterest rate:  75%
Maturity maximum 180 days
Maximum 40% of project cost and TL
equivalent of US$500,0001997: US$15 million
11. Overseas Chain Stores
Investment Credit
ProgrammeeTurkish entrepreneurs'
overseas investments for the
establishment of shopping
malls and chain storesInterest rates:  determined specifically
for each project
Maturity maximum 7 years
Maximum 75% of investment amount iflocal content is 50% or more, otherwise
60%1997:  US$8 million
14. Project Credits
ProgrammeshForeigners buying Turkish
goods and services , min.
50% domestic contentInterest rate:  depends on the countries'
relative credit risk standing and is
calculated in relation to LIBOR
Maturity 2 years or moreDeferred payments
Maximum 85% of the goods and
services provided from Turkey1977:  US$113 million
e Programme introduced after 1993.
h Buyers Credit and Guarantee Programme was renamed Project Credits Programme;  mostly project financing is provided under
this programme.
Source: Government of Turkey.
page 73, paras. 101-103
With the objective of promoting export-oriented investment and production, the Government
of Turkey has established ten free zones.  The enterprises established in the zones are active in a wide
range of areas, including high-technology investments, leather products, and storage facilities.13  A
new initiative is the Istanbul Stock Exchange International Securities Market Free Zone , which
commenced operation in the first half of 1997.  Its main objective is to create an international finance
centre operating in the field of stock purchases/sales, stock barter, maintenance and other transactions
within the body of the Istanbul Stock Exchange.
A wide range of financial benefits are extended to the free zones.  These include,  inter alia ,
…exemption from corporate, income and value-added taxes.
page 80, para. 122
To qualify for the general investment aid programme, potential investors have to apply for an
investment incentive certificate, which is non-transferable.  Any investment project, whether foreign
or domestic, receives the same treatment…..14 In addition to the geographical location, priority is
given to infrastructure  services, tourism, yacht and shipbuilding sectors.  Where the investment is
not realized as foreseen by the incentive, the funds are returned with interest.
page 139, para. 127
Special tax incentives are provided to Turkish investors in the maritime  sector.  Incentives
include:  an income tax of only 10% on the wages of the seafarers during international voyages;  and
                                                     
13 Those in operation include Aegean, Antalya, Erzu rum Eastern Anatolia, Istanbul Ataturk Airport,
Istanbul International Stock Exchange, Istanbul Leather, Mardin, Menemen Leather, Mersin, and Trabzon.
14 However, the administration differs: foreign investment applications are handled by the General
Directorate of Foreign Investment, while domestic invest or applications are handled by the General Director of
Incentive and Implementation.S/WPGR/W/25/Add.1
Page 13
the book profit resulting from sale or loss of a vessel can be deducted from the purchase price of the
same kind of replacement vessel within three years and after deducting the realized depreciation
amount.
pages 143-44, paras. 153-54
The Turkish Government has played an active role in the tourism  sector.  It grants incentives
for tourism investments (Box IV.4) in accordance with the Tourism Encouragement Law…  Investors
in the tourism sector have priority in incentives granted under the general investment aid programme.
page 145, Box IV.4
Incentives offered only to the tourism industry
Special incentives are offered to national and foreign investors for investment in the construction and management of tourist f acilities
(Law No. 2634 on the Encouragement of Tourism).  Investors with a Tourism Operation Certificate issued by the Ministry of Touri sm
may benefit from the following incentives:
- corporate income tax exemptions (temporary measure):  maximum 20% of the foreign exchange earnings of tourist establishments i s
deducted from the total gross profit subject to taxation;
- the Central Bank of Turkey provides up to 20% of fixed investment costs in cash;
- a property tax exemption for five years (temporary measure);
- the allocation of public land for the construction of tourist facilities on long-term lease;- permission to employ foreign personnel and artists (up to 20% of the total personnel);
- discount rates on water, electricity and gas prices;
- priority in allocation of telephone, fax and telex lines; and- foreign exchange retention quotas: a percentage of foreign exchange earned by tourist establishments may be retained by the in vestors
and used for essential imports required for operation.
Source:  Government of Turkey;  and Yamamoto, K. (1997), "Devel opment of International Tourism in Turkey - its effects and prob lems",
Journal of International Economic Studies, No. 11, p. 80.
SOLOMON ISLANDS – WT/TPR/S/45 (1998)
page 35, para. 73
Tourist development  projects are entitled to special additional incentives.  These include a
set five-year tax holidays; 50% outright deduction in the first year for capital expenditures (excluding
land), and 5% annually thereafter; 50% write-off for the costs of vessels built locally for tourism; and
duty-free import of capital equipment and materials for two years.
page 94, para. 121
Although the Government has no direct interests in tourism resorts following the privatization
of the Mendana Hotel, it encourages private development by offering various tax concessions.  The
Foreign Investment Board may grant income tax incentives permitted under the Income Tax Act.These include a five-year tax holiday on tourist hotels and resorts  (subject to minimum bedroom
number requirements of 300 and 50, respectively), and other tourist-oriented projects.  Approved
projects may also depreciate capital expenditure over two years, and write off overseas promotion at a
rate of 150%.  The same benefits apply to expenditure on expansion and renovation of eligible resorts
incurred from 1 January 1989.S/WPGR/W/25/Add.1
Page 14
page 95, para. 127
An important priority for the Government is to develop inter-island shipping services .  It has
indicated that it would consider either subsidizing non-commercial routes, or licensing by tender
unprofitable routes to private operators.
BURKINA FASO – WT/TPR/S/46 (1998)
[No reference to service-related subsidies.]
ARGENTINA – WT/TPR/S/47 (1998)
page 87, para. 151
Fiscal incentives are available for specific production projects in agriculture, livestock and
industry and for tourism services ;  industrial projects can enjoy benefits until the end of 2005.15  The
authorities indicated that no new projects are being approved.  The benefits consist of tax breaksthrough credit bonds for amounts equivalent to the capital invested in the project, or, from
December 1994, of VAT credit certificates equivalent to the VAT paid to suppliers of raw materials
and semi-manufactures.
page 139, para. 158, 160
Following legislative reforms aimed at promoting the local film industry , in October 1994
the Argentine Film Law was amended to include: a 10% tax on the rental and sale of home video;  a
10% tax on the sales price of all tickets for the screening of films;  the obligatory exhibition and
remuneration of national short subject films (to be implemented);  and an authorization to theArgentina Film Institute to oversee the compulsory local processing, dubbing, and sub-titling of
foreign films.
16  …  Since 1995, 50% of the tax revenue from film-related activities has been used to
subsidize domestic film production.17
page 142, para. 174
To provide some stimulus to the [ construction ] sector, the Government launched a 1995-99
investment programme, but this has not yet been implemented because it contains fiscal and financial
constraints.  Further measures included fiscal incentives (including a reduced VAT rate levied on new
houses), a 1996 credit programme (with securitized mortgages), and credits from the state-owned
National Mortgage Bank, (BHN) with longer maturities and lower interest rates, estimated be worth
US$850 million in 1996 and US$1.1 billion in 1997.1  In 1997, a mortgage insurance mechanism was
under consideration to enable the finance of 95% of the new house value.
TOGO - WT/TPR/S/48 (1998)
[No reference to service-related subsidies.]
                                                     
15 Decree 2054/92, 10 November 1992;  MEOSP Resolution 1280/92, 11 November 1992;
Decree 1125/96, 4 October 1996;  and Decree 69/97, 23 January 1997.
16 Law 17741, 14 May 1968 was amended by Law 24377, 28 October 1994.
17 Decree 815/95, 14 June 1995.S/WPGR/W/25/Add.1
Page 15
TRINIDAD & TOBAGO - WT/TPR/S/49 (1998)
page 53, para. 65
Under the Corporation Tax Act, an export allowance, in the form of a tax credit, is granted to
locally incorporated companies for exports to non-CARICOM countries of locally manufactured or
produced goods, services , and agricultural products.18  Branches of foreign corporations are not
eligible for this allowance.  The tax credit covers the profits on the proportion of exports sales to total
sales so that profits on exports are effectively tax exempt.  In 1996, export-allowance claims
amounted to TT$18 million (US$3 million), implying a forgone revenue of TT$6.3 million
(US$1.1 million) at the 35% corporate tax rate.  In 1997, under the Finance Act, this allowance was
expanded to include services connected with the building industry (architectural, engineering, etc.).The Minister of Finance has declared that this export allowance will be eliminated by 1 January 2000.
page 56, para. 78
With the aim of stimulating job creation and investment in distressed areas of the country, the
Ministry of Trade and Industry has proposed an Enterprise Zones Programme.  The Programme has
not yet been legislated.  To qualify as an Enterprise Zone an area must have an unemployment rate at
least 50% above the national average or a poverty rate exceeding the national average....  Activities
qualifying for the zones are assembly, manufacturing, agricultural and agro-processing, research and
development, information processing , telecommunication  and financial services .…  Investors in
the Enterprises Zones  who invest at least TT$50,000 and employ at least two persons are entitled to
tax incentives.  Such incentives include a tax credit of TT$3,000 for each new employee and
TT$3,000 for each TT$50,000 of investment, altogether not exceeding TT$50,000, provided at least
50% of the new employees are zone residents.19
page 58, paras. 84-85
Sector-specific investment incentives are available under different legislation.  The Hotel
Development  Act provides investment incentives to hotel owners and hotel operators which include a
tax holiday for a period of five to ten years as well as customs and excise duty exemption on building
materials and articles of hotel equipment to be used exclusively in connection with the construction
and equipping of a hotel project.  The Ministry of Tourism has discretion on the granting ofconcessions based on the size and cost of the hotel project.
page 60, paras. 92-93
The Venture Capital Investment Programme, which is governed by the Venture Capital Act of
1994 and the Venture Capital Regulation of 1996, was launched in 1996 to mobilize equity financing
for small and medium-sized enterprises involved in agriculture, tourism , manufacturing and non-
financial services .  Under the programme, investors (individuals or corporations) in registered
venture capital companies20 are eligible for a tax credit of 35% of the amount invested.  By early
1997, three venture capital companies were registered under the programme.21
                                                     
18The export allowance is calculated as follows: Expor t allowance = (Export sales/Total sales) x Total
sales profit.
19Ministry of Trade and Industry, 1996.
20Individuals and companies interested in establishing a venture capital company must become
incorporated under the Companies Act and have at least TT$50,000 in paid up capital and an authorized capitalof  between TT$5 million and TT$20 million.  The venture capital company must raise at least TT$500,000 inpaid up capital and begin making equity investment within 12 months of its registration.
21Forde and Joseph et al. (1997).S/WPGR/W/25/Add.1
Page 16
Concessionary financing is available from development banks to some sectors.  Credits at
preferential rates may be obtained from the Agricultural Development Bank (ADB) for the
agricultural sector and from Development Finance Limited (DFL) for the manufacturing, tourism ,
agro-processing and industrial services sectors...22
page 101, para. 116
With a view to encouraging the development of the hotel industry , the Hotel Development
Act was enacted in 1963 and subsequently amende d to provide incentives to hotel owners and
operators.  These incentives include: a tax holiday for a period of five to ten years; an accelerated
depreciation for equipment owned by the hotelier; a capital allowance in respect of approved capital
expenditure; carry-over of losses incurred by owners and/or operators during the tax holiday period;and tax exemption on dividends accruing to the owner/operator.
URUGUAY – WT/TPR/S/50 (1998)
pages 50-51, paras. 108-109
Law No. 15.921 of 17 December 1987 and Decree No. 455/988 of 8 July 1988, which
regulate the operation of the free-trade zones, allow storage and warehousing, manufacturing,
financial institutions, data processing  and other activities that the Executive deems beneficial to the
country's economy (Article 2).  However, companies established in a free trade zone are not allowed
to undertake manufacturing, commercial or service activities outside the free zones (Article 14), that
is, separate companies have to be established to conduct operations outside the zone.  The free zones
are administered, supervised and controlled by the Ministry of Economy and Finance, through the
Directorate of Free Zones (Article 5).
page 95, para. 111
The [ tourism ] sector is eligible for incentives provided under the Industrial Promotion Law
of 1974.23  The benefits, which include tax and duty exemptions, are granted through the Ministries of
Tourism and of Economy with the approval of the Ministry of Industry, Energy and Mining.24
Incentives are provided mainly for investment in tourism resorts, equipment, renovation and
amelioration of existing facilities.
INDONESIA – WT/TPR/S/51 (1998)
page 118, Box IV:5
Bank restructuring in Indonesia
…
Another aspect of the Government's policy in the sector is to restore the confidence of depositors and creditors in the banking  system.  The
Government has already announced that it would provide a full guarantee  to all depositors and creditors of locally incorporated
commercial banks.  In addition, it has created the Indonesian Bank Restructuring Agency (IBRA), an institution responsible for the
supervision and the restructuring of ailing banks .  The Agency also exercises a preventive role in detecting bank failures.
…
Source: WTO Secretariat, based on information provided by the Government.
                                                     
22These two development banks were established as wholly government-owned institutions in the late
1960s and early 1970s, respectively, to encourage the development of capital markets and of targeted economic
sectors.  Private capital was injected in both banks in the late 1980s, after which their lending has become less
concessional, with interest rates more in line with market rates.
23 Law No. 14.178, 28 March 1974.
24 The Ministry of Tourism was created in 1986 to promote this industry (Law No. 15.851,
24 December 1986).S/WPGR/W/25/Add.1
Page 17
HONG KONG, CHINA - WT/TPR/S/52 (1998)
page 40, para. 60
With the exception of income from certain  international shipping services, which are tax
exempt, profits (total income minus total deductions) derived from trading, professional or business
activities in Hong Kong are subject to statutory tax rates of 16% in the case of corporations and 15%
for unincorporated businesses.
page 75, para. 38
There are no publicly owned banks  in Hong Kong.  However,  in August 1998, in an attempt
to stabilize share prices on the Hong Kong St ock Exchange, the Hong Kong Monetary Authority
(HKMA) purchased shares in several companies, including nearly a 9% stake in the Hong Kong and
Shanghai Banking Corporation (HSBC) Holdings, the Hong Kong-based international banking group,
which accounts for some 30% of the benchmark Hang Seng Index.
page 87, para. 83
According to the authorities, Hong Kong has no market access restrictions or exceptions to
MFN treatment for shipping service.  The only exception to national treatment pertains to the
international operations of ships registered in H ong Kong;  the income for owners of these ships
derived from cargo uplifts or towage operations in  Hong Kong or elsewhere is exempt from Hong
Kong's profits tax.25  Such an exemption constitutes tax relief for the export of shipping  services.
CANADA - WT/TPR/S/53 (1998)
page 59, para. 79
The Export Development Corporation also has equity participation in Exinvest, incorporated
in 1995 to establish or invest in corporations, partnerships, joint ventures or other incorporated bodies
that provide financial support to sales for goods and services .
                                                     
25The Government estimates that HK$28 million in tax revenue were forgone per annum as a result of
this exemption.S/WPGR/W/25/Add.1
Page 18
page 71, Table III.11 and paras. 118, 120
Selected federal subsidy programmes, in part
Can$ million
     Amount of subsidy
Name of subsidy Form of subsidy1995/96 1993/94
Industrial programmes 761.7 903.5
…
Support Program for Tourist Attraction and
Infrastructure Projects
…Repayable or non-repayable contributions
Business Incentive Program and the Cooperative
Tourism Marketing InitiativeContributions or repayable contributions 5.5 n.a.
Communications Technology R&D Incentive
ProgramNon-repayable contributions 3.0 5.9
Western Transportation Industrial Development
ProgramNon-repayable contributions 1.1a0.6
n.a. Not applicable.
Note: Grants are unconditional transfer payments which are not subject to being accounted for or audited but, for eligibility an d
entitlement, may be verified.Contributions are conditional transfer payments for a specified purpose, which are subject to being accounted for and audited t o a
contribution agreement.
Source:  WTO document G/SCM/N/25/CAN, 2 December 1997;  and Government of Canada.
The two largest beneficiaries of budgetary appropriations in 1996/97 were the Canada
Mortgage and Housing Corporation and the Canadian Broadcasting  Corporation, totalling together
nearly Can$3 billion…..26
Cultural industries  are also the focus of several assistance programmes, including book
writing and publishing, film and video production, film distribution, and the "cultural milieu" in
general.
page 73, para. 124
According to a report released in March 1998, current and capital expenditures deemed
eligible for federal SR&ED tax incentives increased from Can$4.5 billion in 1988 to Can$6.9 billionin 1992 and, in the case of smaller CCPCs, from Can$0.7 billion in 1988 to Can$1.4 billion in 1992.
27  
…Manufacturing, communication  services , wholesale trade  and the real estate  finance  sectors
accounted for 91% of the value of SR&ED tax credit claims.
page 105, paras. 85, 87-88
Assistance is provided to the audiovisual  sector through direct subsidies, tax incentives,
copyright remuneration, local-content requirements (mainly in the form of broadcasting quotas) and
foreign-ownership restrictions.28
                                                     
26According to Article 2 of the SCM Agreement, only the subsidies that are specifically provided to an
enterprise or industry or group of enterprises or industries are notifiable.
27Finance Department and Revenue of Canada, Release Evaluation of Federal Income Tax Incentives
for Scientific Research and Experimental Development, http://www.fin.gc.ca/newse98/98-031e.html.
28For details, see WTO (1996a), Chapter IV(5)(v).S/WPGR/W/25/Add.1
Page 19
The Canadian Film or Video Production Tax Credit, introduced in 1995, provides a
refundable tax credit for film producers meeting Canadian-content requirements.…  The Government
introduced in 1997 the Film or Video Production Services Tax Credit, which consists of a refundable
tax credit to film production services corporations of up to 11% of eligible labour expenses.  This tax
credit is intended to allow film producers, both domestic and foreign, employing Canadians forproduction services performed in Canada, to qualify for assistance. The scheme is expected to provide
approximately Can$55 million per year in direct benefits to the film industry.
page 107, Table IV.8
Main federal support measures for audiovisual services, 1997-98
Sector Direct financial
assistance (incl. grants,funds to agencies, etc.)Tax measures Local-content requirements Foreign investment
provisions
Broadcasting Canadian Television Fund
CTF):  Can$200 million
(including Can$50 million
contribution from TelefilmCanada and
Can$50 million
contribution from privatesector).
CBC radio/TV
appropriation:Can$858 million.Income Tax Act
disallows an eligible
business deduction
expenses foradvertising placed on
non-Canadian stations.60% of Canadian content for
conventional TV (private
licensees must show 50%
Canadian content in prime time;public licensees must show 60%
Canadian content in prime time).
Pay, speciality TV and pay-per-
view services have varying
Canadian-content requirements.
30% Canadian content for radio
broadcasts (music)
a;
French-language radio:  65% of
vocal popular music must be in
French.
Cable TV:  majority of channels
received by the subscriber must
be Canadian.Ownership limitations of
20% of the licensee
company and 33.3% of
the holding company.
Film and
videoTelecom budget:
Can$210 million (includes
government appropriation,returns on investment, and
Can$50 million
contribution to CTF).
National Film Board
appropriation:
Can$57.3 million.Canadian Film or
Video Production Tax
Credit;  and Film orVideo Production
Services Tax Credit.Investments must meet
"net benefit to Canada"
requirement of theInvestment Canada Act
both for new business and
acquisition of existingbusinesses.
Sound
RecordingSound Recording
Development Program:
Can$9.45 millionMusic productions must fulfil
specified criteria to qualify as
Canadian works.Investments must meet
"net benefit to Canada"
requirement of the
Investment Canada Act
both for new businessesand acquisition of
existing businesses.
a This requirement will be raised to 35% in 1999.
Source: Heritage Canada.
GUINEA - WT/T PR/S/54 (1999)
[No reference to service-related subsidies.]S/WPGR/W/25/Add.1
Page 20
EGYPT - WT/TPR/S/55 (1999)
Table II.4
Fields of investment under the Law of Investment Guarantees and Incentives (8/1997)
Air transportation and directly related services
Financial leasing
Hospital and medical centres offering 10% of their service capacity free of charge
Hotels, motels, boarding houses, tourist villages, tourist travel and transportation
Housing projects whose units are to be leased unfurnished for non-administrative purposes
Infrastructure relating to drinking water, sewage, electricity, roads and communications services
Overseas maritime transport
Production of computer software and systems
Transport of goods in refrigerated vans;  refrigerators for the preservation of agricultural products, industrial products, and  foodstuffs;
container depots and grain silos
Underwriting subscriptions to securities
Venture capital
Source : General Authority for Investment (GAFI), Law of Investment Guarantees and Incentives and its Executive
Regulations , May 1997.
page 55, para. 109
Tax exemptions are also provided for investments outside the Old Valley and under the New
Communities Law, or for investments made in certain sectors such as tourism .
page 97, para. 110 and Table IV.9
Around 25% of Egypt's international trade is carried by ships  flying the national flag.  Egypt
provides a number of incentives for companies flying the national flag, including up to 75% discount
on supplies and the use of infrastructure owned by the General Authority for Ports;  up to 50%
discount on service charges by the General Authority of Red Sea Ports, for vessels using Safaga Port;
and discounts on agency fees and use of ports for a period over 48 hours.
Investment incentives in the tourism industry
Scheme Exemptions or concessions
Taxes All tourist establishments except restaurants are exempt from paying taxes for 5 years in Cairo;
10 years in remote areas;  and 20 years in El Wady El Gedeed and Toshka areas under the Law of
Investment Guarantees and Incentives (8/1997).
Rebuilding and expansion activities of tourist-related premises are exempt from taxes on 50% of
income.
Law 93 of 1996 allows a reduction up to 75% of fees for tourist and passenger ships entering
Egyptian ports.
Customs duty Under Decree 11 of 1996, there appears to be a 5% rate of customs duty on all imported equipment,
except for restaurants.
Imported limousines by tour operators are exempt from duty.
Motor vehicles for public transport imported by tourist resorts established in remote areas appear toreceive duty reductions of 5%.
Alcoholic beverages may be imported by hotels at a rate of 300% duty.a
Land acquisition/development …
Low interest loans are provided to developers for infrastructure services, by the TourismDevelopment Authority.
Law 72 of 1996 allows the expansion of tourist facilities and exemptions for tourist projects.
The Tourism Development Authority offers land to private developers for a nominal rate of
US$1 per square metre in designated tourist areas.
a MFN rates on alcoholic beverages range from 1,200% for beer to 3,000% for spirits.
Source : Information provided by the Egyptian authorities.S/WPGR/W/25/Add.1
Page 21
UNITED STATES - WT/TPR/S/56 (1999)
page 82, para. 110
Eximbank is responsible for assisting the export financing of U.S. goods and services through
a variety of loan, guarantee, and insurance programmes.29  It guarantees both working capital loans for
U.S. exporters and the repayment of loans by foreign purchasers of U.S. goods and services.  In
addition, the Federal Credit Insurance Agency (FCIA) an affiliate of the Eximbank, the Federal
Government's general trade finance agency, provides credit insurance to cover the risk of
non-payment by foreign buyers for political or commercial reasons.  The bank does not compete with
commercial lenders but rather supplements conventional lending, assuming risks that commercialbanks cannot take on.  Eximbank programmes have minimum acceptance levels and varying coverage
for foreign content included in U.S. manufactured and produced items.  The Eximbank is required to
'set aside' up to 10% of its operations for small businesses.  It must also review the environmental
impact of transactions requesting financing.  Moreover, Eximbank is required to provide financing for
U.S. goods and services shipped on U.S. vessels .
30
page 99, para. 162
…The corporate tax is also used as an instrument of government policy; that is, it embodies
tax relief measures that assist some activities or industries relative to others.  Among the main formsof tax relief accorded to companies are accelerated depreciation, deferral of income from controlled
foreign corporations, reduced corporate tax rates, tax credit for corporations receiving income from
doing business in U.S. possessions, exclusion of inco me of foreign sales corporations, and a credit for
increasing research activities.… Tax expenditures are recognized as an alternative to other
government policy instruments, such as direct expenditures and regulations.  They are estimated tocost the Federal Government billions of dollars in lost tax revenues;  such measures are aimed in
particular at sectors (such as small life insurance company  deduction, deferral of tax on shipping
companies, excess bad debt reserves of financial institutions .)
page 106, para. 180
The Maritime Administration (MARAD) has provided financial assistance to U.S.
shipowners  through the Federal Ship Financing Programme (Title XI) and the Capital Construction
Fund (CCF) programme.31  Title XI provides for federal government guarantees of private sector
financing or refinancing obligations for the construction or reconstruction of U.S. flag vessels in U.S.
shipyards.  These financing guarantees are also available to foreign shipowners.
BOLIVIA – WT/TPR/S/57 (1999)
page 32, para. 22
Under the Temporary Import Regime, the payment of import duties and internal taxes is
suspended for goods entering Bolivia for a limited period and for a defined use.32  Permits for
temporary entry are issued for a 90-day period, which may be extended once, under certain
                                                     
29As notified to the WTO (WTO document G/SCM/N/38/USA, 19 November 1998).
30http://www.exim.gov/mover.html [4 August 1998].
31The United States has not ratified the OECD Shipbuilding Agreement concluded in 1994, which is
meant to eliminate all direct and indirect support and to combat injurious pricing practices.  Provisions are madefor a standstill on existing subsidy levels and on new measures of support during the intervening period, butallow for the continuation of previously committed aid subject to certain conditions.
32 Supreme Decree No. 24440, 13 December 1996.S/WPGR/W/25/Add.1
Page 22
conditions.  Goods benefiting from this regime include … machinery and equipment for repair ;
equipment and apparatus for scientific, sport or cultural events …
ISRAEL – WT/TPR/S/58 (1999)
page 26, para. 33
Israel has a number of laws to encourage foreign investment.  The incentives include, inter
alia, investment grants, tax breaks (rebate on profit tax), research and development support, wage
financing, and training support.33  The incentives offered depend on the location of the company as
well as on the type of industry (preference is given to industrial, tourism and agricultural projects).
page 39, para. 29
Concessional duties on imports are granted within the framework of several schemes….
Performing troupes of artists and entertainers , and petroleum companies are also allowed to
import duty free.
page 115, para. 132
The Government has played an active role in the tourism  sector.  Investors in tourism are
eligible for government incentives under the framework of the Encouragement of Capital InvestmentsLaw of 1959.  An approved investor may choose between a capital incentive package in the form of a
grant equivalent of up to 24% of the investments in fixed assets, tax exemption and tax deduction, or
an enhanced tax-incentive package;  the benefits are contingent on the location and the size of the
investment.  The total cost of the scheme in 1998, excluding forgone revenue, was NIS 243 million.
PHILIPPINES - WT/TPR/S/59 (1999)
page 59, para. 91
The basic system of incentives is defined in and regulated by the Omnibus Investment Code.
The Code provides for investment incentives made under the Philippines Investment Priorities Plan
(IPP), which includes a list of promoted areas of investment eligible for Government incentives, andincentives granted to export-oriented enterprises, re gardless of whether they fall within the IPP….  In
early 1999, the IPP list includes, as priority investment areas, inter alia , industries that are undergoing
industrial adjustments (e.g. chemical product s and engineered products and components)
…infrastructural services, transport carriers , social and housing projects, motor vehicles and
components, tourism , and research and development activities.
ROMANIA - WT/TPR/S/60 (1999)
[No reference to service-related subsidies.]
NICARAGUA - WT/TPR/S/61 (1999)
pages 38-39 , para. 24
Nicaragua's scheme for the concessional entry of imports was revised substantially in 1997
when new tax legislation was introduced;  further adjustments were made in 1999.34  Changes were
both to reduce tax evasion, by specifying those items that are exempt from tax payments, and to
                                                     
33 Government-guaranteed loans were eliminated in January 1997.
34 Law 257, 4 June 1997;  and Law 303, 24 March 1999.S/WPGR/W/25/Add.1
Page 23
abolish administrative discretion in making exceptions to the law or granting tariff exemptions.  At
present, duty-free imports include… imports relating to the construction of hotels and
entertainment centres.
page 93, para. 120
Fiscal incentives available since 1960 to investors in new tourism -related facilities (i.e.
hotels, entertainment centres) were expanded in 1999.35  These incentives now include tax reductions
on capital (100%) and income (from 80% to 100% depending on the location) for a ten-year period
(renewable if new works are undertaken);  duty- and tax-free import or purchase of all
construction-related contracts, related material, machinery, and equipment;  exemption from
municipal taxes;  sale of state-owned land (payment in money or shares), or land concessions from20 to 99 years (as from 1999);  tax breaks on real estate tax for a ten-year period (as from 1999);  and
tax breaks to financial institutions on earnings from loans for tourism projects (as from 1999).  In
recent years, 34 projects benefiting from these incentives are to invest US$128 million, build
1,392 hotel rooms and create 1,940 jobs.
PAPUA NEW GUINEA  - WT/TPR/S/62 (1999)
page 61, para. 37
Imports of aircraft and parts by a PNG registered company with a PNG airline  operator’s
licence are duty free.  Similarly, a PNG registered shipping  company may import all ships duty free,
including boats, ferries, tankers, and fishing vessels but not pleasure craft.  Registered PNG
companies may also import marine engines and outboard motors of up to 40 hp duty free.
page 121, para. 160
Air Niugini is also the only licensed "first level" domestic air carrier  operating regular
flights to major centres.  This monopoly situation, together with price control based on uniform
pricing practices, results in high cost services.  Other airlines may operate but not in direct
competition with the national carrier.  Air Niugini has had difficulties trading profitably and has
accumulated government-guaranteed debts;  it recently received a further injection of government
funds.
THAILAND – WT/TPR/S/63 (1999)
page 54, para. 70
Important increases have taken place in credit commitments under the
Merchant Marine Financing, which is a credit of up to seven years extended to domestic merchant
marine businesses to finance the purchase of new or used ships.  The objective is to help develop the
Thai shipping  sector in order to lessen dependence on foreign vessels and alleviate Thailand's current
account deficit.  Nearly B 4 billion of credit commitments had been made under this programme at theend of 1998, up from B 13 million in 1995.  The scheme is believed to have increased the share of
merchant ships that fly the Thai flag from 0.44% in 1995 to 9.43% in 1998.
page 104, paras. 115-117
Since the 1995 Review, Thailand's banking sector has been hit by a widespread crisis that has
undermined the financial system;  the number of financial companies fell from 91 at the end of 1996
to 36 at the end of August 1998, and is expected to decrease to 24 after the current programme of
                                                     
35 Decree 520, published on 13 August 1960, and its amendments;  and BCN (1998b).S/WPGR/W/25/Add.1
Page 24
consolidation is terminated;  the number of banks will decrease from 15 to 13 at the end of the
consolidation process.  Moreover, four of the remaining banks  have received Government
intervention in the form of large injections of public funds through debt-equity swaps.  These four
banks are currently being privatized without any restriction on foreign ownership.
In 1996, the Bank of Thailand agreed to bail out two major financial institutions , Finance
One Company and Bangkok Bank of Commerce.  In late 1997, the Government, through the Financial
Institutions Development Fund (FIDF), injected a large amount of money into financial institutions to
provide liquidity.36  After the Government accepted the International Monetary Fund's rescue
package, the FIDF was entrusted to provide a (blanket) guarantee of the deposits and liabilities of the
remaining financial institutions in order to restore confidence.
The new prudential requirements have posed an additional burden on financial institutions in
their attempts to find foreign or local partners, raise capital through public offering, and thus achieve
the Government's objective of private-sector-led recapitalization.  On 14 August 1998, in response to
these problems, the Government announced a package of capital support measures to restructure the
financial sector, including the provision of public funds to recapitalize remaining financialinstitutions.
page 106, Box IV:1
International Banking Facilities
Off-shore banking  was launched in Thailand with the establishment of the Bangkok International Banking Facilities (BIBFs) in March
1993… The operations of the International Banking Facilities include:  taking deposits or borrowing in foreign currencies from abroad;
lending in foreign currencies in Thailand (out-in lending) and abroad (out-out lending), non-baht cross-currency foreign exchan ge
transactions;  discounting bills or providing guarantees against any debts denominated in foreign currencies to persons residin g abroad;
undertaking financial transactions that involve international trade in cases where buyers and sellers reside abroad;  seeking l oans from
foreign sources;  and acting as fund managers in arranging loans.  In addition, IBFs can engage in other investment banking ser vices such
as provision of financial information;  undertaking investment feasibility studies;  financial advisory services;  advisory ser vices for
business acquisition and take-over or mergers;  and arranging or underwriting debt instruments for selling abroad.
The authorities granted the following privileges to IBFs:  a reduction in the corporate income tax rate from 30% to 10%;  exemp tion from
special business tax (including municipal tax), which is currently at 3.3% of total turnover;  and exemption from withholding t ax on
interest income from deposits or lending for out-out transactions with non-Thai residents;  exemption from stamp duties;  and r eduction of
withholding tax from 15% to 10% on interest on foreign loans for countries that have a double-taxation agreement with Thailand.Provincial International Banking Facilities (PIBFs) are granted the same tax concessions.
…Source:  Government of Thailand .
KENYA – WT/TPR/S/64 (1999)
pages 45-46, para. 89
Several incentive schemes (e.g. tax holidays, remission and refunds of import duties,
accelerated depreciation, and investment allowance) are in place to encourage investment in Kenya
(Chapter II(3)(ii)).  More specifically, import duti es on inputs used in the manufacture of certain
specified products are fully or partially remitted (section (2)(iii)(e)).  An investment allowance
(deduction of up to 60%) is provided in the manufacturing and hotel  sectors.  VAT paid on inputs
used in business activities of registered companies is refunded.37
                                                     
36 Nidhiprabha (1998), p. 309.  In order to fina nce this expenditure, B 400 billion of bonds had been
issued in January 1999 (in March 1999, one dollar was worth approximately 36 baht).
37 Companies with combined turnover of taxable goods and services exceeding KSh. 2 million per year
must be registered for VAT purposes.S/WPGR/W/25/Add.1
Page 25
page 79, para. 108
With the exception of passenger fares and services  provided in distant parts of the country,
other railway freight services are not subsidized.
ICELAND – WT/TPR/S/65 (2000)
page 99, para. 146
The tourism sector has been one of the fastest growing industries in recent years.… Private
firms play a leading role in the tourist industry, but the State also participates through the Ministry of
Communications, the National Tourist Board, Ferðamálaráð Íslands, and a special loan fund….
TANZANIA – WT/TPR/S/66 (2000)
page 16, paras. 32-33
Businesses that are identified as priority sectors may import capital goods at the rate of 5%.
The 12 priority sectors for the purposes of investment promotion are: … air aviation ; …commercial,
development, and micro-finance banks ;…tourism and tour operators ;  and radio and television
broadcasting .
Both the lead and priority sectors also benefit from deferment of value-added taxes until the
investment commences operations.  Additionally, a tax holiday is granted for the first five years;  and
a capital allowance deduction in the years of income of 100% is also granted.
page 17, para. 39 and Table II.3
Table II.3 contains the minimum investment capit al required by the Government of Zanzibar
for coverage under the Investment Act.  All capital goods brought in during the start-up of an
investment are assessed a zero rate of duty, but a service charge of 5% of the duty payable is levied.
The Minister responsible for investment has the discretion to grant tax holidays of between one and
five years…
Minimum investment levels for Zanzibar
(US$ '000 and T Sh)
Proposed capital
Project sector Foreigners (US$ '000) Citizens (T Sh '000)
Hotel a4,000 300,000
Tour operator & related services 100 14,500
Agriculture 200 29,000
Fisheries 1,000 12,000
Industries 400 50,000
General business ventures & trading 350 50,000
Services 150 22,000
a Quality hotel projects of up to ten bedrooms are also encouraged.  An average investment of US$30,000 per room is required and
will be considered as minimum investment for such projects.
Source : Zanzibar Investment Promotion Agency.
page 19, para. 49
Zanzibar also passed legislation in 1998 establishing a Free Port Authority.  The Authority is
seeking to establish Zanzibar as a regional distribution  centre, with packaging and minimal
processing facilities.  The authority has sheds for lease, as well as land for lease on which to build
such sheds.  Plans call for a "bonded warehouse" operation:  at least 80% would be for the export
market with the remaining 20% permitted onto the lo cal market, subject to local tariffs.  InvestmentS/WPGR/W/25/Add.1
Page 26
incentives for this free port operation are essentially identical as for the EPZs, except that such
operations are eligible for a 20-year tax holiday.
SINGAPORE – WT/TPR/S/67 (2000)
page 72, para. 118
Like several other countries in the region, Singapore makes extensive use of tax incentives to
encourage investment in certain activities and sectors.  Tax incentives, which apply equally to foreign
and local companies, have been an important t ool in implementing the Government's development
policy since independence.  Initially set up to encourage labour-intensive industrial development
under the Pioneer Status award, currently tax incentives are used to encourage foreign directinvestment (FDI) in high-technology sectors, and skills development and training activities.…  Most
other programmes grant tax exemptions or tax concessions for companies investing in high-
technology industries or services , or providing high-skill employment opportunities for
Singaporeans.
page 98, Box IV:1
Offshore banking in Singapore
…Offshore banking became permissible in Singapore in 1973 with the creation of the first ACU, as part of an effort by the Govern ment
to develop Singapore into an international financial centre.  The growth of offshore banking has been aided, in part, by Govern ment
incentives.  These include a concessional tax on profits (10% compared with the standard rate of 27%).  In addition, ACUs are n ot
subject to reserve and liquidity requirements.
…
Source: International Monetary Fund (1995), Singapore:  A Case-study in Rapid Development , Occasional Paper 119;  and
Monetary Authority of Singapore (1999), Annual Report 1998/99 .
pages 100-101, para. 50 and Table IV.4
In addition to regulation, the MAS has an impor tant role in developing Singapore into an
international financial centre by providing incentives for banks and financial institutions  to invest in
certain activities (Table IV.4).  The incentives include concessional corporate tax rates of 10%,
compared with the standard rate of 26%, and tax holidays for a number of activities.  In recent years,
particular emphasis has been placed on developing Singapore as the premier fund management hubover the next decade.
38  In offering these incentives, national treatment is extended to all foreign
investors.
                                                     
38 Republic of Singapore (1998c).S/WPGR/W/25/Add.1
Page 27
Incentives offered by the Monetary Authority of Singapore
Scheme Eligibility Incentive
Operational headquarters
(OHQ) incentivesFinancial institutions providing
management and other approved
headquarters related services tosubsidiary, associated or related
companies in other countriesConcessional corporate tax rate of 10% for five to ten years
(renewable) for income from providing qualifying OHQ services to
approved network.  Tax exemption for dividend income fromapproved network companies and on dividends distributed from the
OHQ for five to ten years (renewable).
Double deduction forR&D expenditureEligible financial institutions
engaged in R&DDouble deduction for qualifying R&D expenses against income.
Tax incentive for Asian
Current Unit (ACU)
incomeBanks and merchant banks Concessional tax rate of 10% on income derived from offshore ACU
activities with non-residents and other qualifying financial
institutions in Singapore.
Tax exemption scheme
for fund managementFund management Investment income of foreign investors exempt from tax;  fund
managers managing at least S$5 billion of foreign investors' funds
given a five to ten year tax holiday (renewable on a case-by-case
basis) on their fee income.  Other fund managers taxed at aconcessional rate of 10% on fee income.
Tax incentive scheme forapproved trusteecompaniesTrustee or custodian services Income from these activities provided to non-resident beneficiaries
taxed at 10%;  investment income from the trusts exempt from tax.
Tax incentive scheme forbond market activitiesBond market players Tax holiday for fee income from arranging, underwriting and
distributing qualifying debt securities; interest income qualifyingfrom debt securities paid to financial institutions and corporations in
Singapore taxed at 10%;  interest from qualifying debt securities
payable to non-residents exempt from withholding tax;  income fromtrading in debt securities taxed at 10%.
Tax exemption schemefor syndicated facilitiesBanks, merchant banks and
approved securities companiesTax exempt for income from arranging, underwriting and
participating in syndicated credit, guarantee and debt facilities whichare arranged in Singapore and for which proceeds are used outside
Singapore.
Tax incentive scheme for
transactions in foreign
securitiesBanks, merchant banks and
securities companiesIncome from transactions in foreign securities and related services
taxed at 10%.  Income from arranging and underwriting initial public
offerings  of foreign currency denominated shares on the Singapore
Stock Exchange and from transactions in foreign securities listed onthe Stock Exchange exempted from tax.
Tax incentive scheme forforeign securities lendingand borrowingBanks, merchant banks and
securities companiesConcessional tax rate of 10% on net income from loans of foreign
securities to eligible parties and to income from arranging such loans.Withholding tax exemption on loan fee or manufactured dividend or
interest paid to non-residents.
Tax incentive for credit
rating agenciesCredit rating agencies Concessional tax rate of 10% for five years on income from
providing credit rating services with respect to the issue of foreign
securities in Singapore.
Tax incentives for
finance and treasury
centres (FTC)Corporate treasury centres Concessional rate of 10% on fee income received from the provision
of financial and treasury services to approved network companies
and income from conducting trading and other treasury activities on
FTC's own account.  Interest paid on foreign currency denominatedloans from network companies and banks outside Singapore and on
foreign currency denominated bonds issued by the FTC may also be
exempt from withholding tax.
Tax incentive for
offshore insurance
businessInsurance companies Concessional tax rate of 10% on income from writing offshore
insurance business.
Incentives in newtechnology schemes for
insurersInsurance companies Grants may be made for training staff in new and specialized lines of
risks, reinsurance or captive insurance business.
Source: Singapore authorities.
page 111, para. 84
Singapore Airlines (SIA) is the national airline and is publicly listed.  The Government holds
a majority share of 53.8% through its holding comp any, Temasek Holdings.  SilkAir, a wholly owned
subsidiary of Singapore Airlines, operates to short-haul, secondary points in the region...  A tax
incentive administered by the TDB is available for aircraft leasing companies  on income derived
from offshore aircraft leasing.  Approved comp anies, which need to ap ply to the TDB for this
incentive, may also depreciate aircraft bought during the incentive period over 20 years, instead of
five years.S/WPGR/W/25/Add.1
Page 28
page 114, para. 98
In an effort to keep Singapore attractive to ships and to keep costs competitive as a premier
hub port, the MPA introduced a concession of 20% on port dues to all container vessels (excluding
long-staying ships) from May 1996.  The concession was extended up to 2000.  In addition, a taxexemption is provided by the Trade Deve lopment Board for approved international shipping
companies (Chapter III(3)(vi)).  A number of steps have also been taken to improve port management
and accommodate efficiently the growing number of ships calling at Singapore.
page 118, para. 110
The IDA actively supports the development of Singapore's communication network and
infrastructure.  Under its Development Grant Scheme, the IDA provides assistance to encourage the
local telecommunications industry to upgrade its network infrastructure;  to encourage research and
development in advanced telecommunications;  and to encourage the development of enhanced
capabilities and innovative services.39  All companies registered in Singapore may apply for the grants
and must meet one of two criteria.40  The IDA has made available over S$250 million for the industry
thus far under this programme.
page 123, para. 128
The Singapore Tourism Board will also develop its role as a one-stop agency for tourism
development, offering updated information on industry development and incentives for investors in
the industry.
BANGLADESH - WT/TPR/S/68 (2000)
page 69, para. 138
Items included in the "Crash Programme" also have access to various facilities, including soft
loans at a concessional interest rate, and assistance for market exploration and securing joint-venture
partners.  The current crash programme includes … engineering consultancy  and services …
PERU - WT/TPR/S/69 (2000)
page 49, para. 124
Incentives to promote port services  take the form of exemptions from import duties and
domestic taxes granted to merchandise entering "centres for export, transformation, industry,commercialization, and services" – CETICOS – th rough the ports of Ilo, Matarani or Paita.
Merchandise imported under the transit regime from any other entry point may also benefit from this
exemption provided it is re-exported or exported after transformation in the CETICOS through one of
the above-mentioned ports.
                                                     
39 Generally up to 50% of the qualifiable direct project costs are provided by the IDA, with
co-financing provided by the recipient.  The proj ects range, on average, between one and three years.
40 The criteria are:  to foster the strategic development of info-communication and postal infrastructure
and services and enhance the competitiveness of Singapore as a global and regional business hub;  and to fosterinnovation and advancement of technology and enhance the capability, efficiency and quality ofinfo-communication services (Telecommunicatio ns Authority of Singapore (undated (a)).S/WPGR/W/25/Add.1
Page 29
page 50, para. 132
Most exonerations affecting the general sales tax (IGV) and the excise tax (ISC) were
consolidated in Supreme Decree No. 055-99-EF of 15 April 1999.  Under this Decree, in addition to
the exonerations affecting imports and those app lied in CETICOS, certain activities are exempted
from the IGV or the ISC.  Activities exempt from the IGV are industrial enterprises located on the
Peruvian border;  financial institutions in the process of winding up;  as well as lodging and food
services rendered by firms established in Peru by foreign-based tourist  operators .  The importation
or sale of residual fuel or diesel to power generating and distributing firms are exempt from the ISC.
page 80, para. 75
A special investment fund (FITEL) has been created to promote universal access [to
telecommunications ] through private investment in regions where demand does not otherwise make
such investment profitable.  The fund, administered by OSIPTEL, is financed through a contribution
from all enterprises in the sector, equivalent to 1% of their sales during the previous month, which at
of end 1999 had reached an accumulated value of US$44 million.  FITEL monies are used to
subsidize concessions granted through public bids to operate services in rural areas;  these
concessions are granted to the enterprise that makes the lowest bid for a subsidy to supply the service
in question.
__________