RESTRICTED
WORLD TRADE G/SCM/Q2/SVN/2
21November 1996
ORGANIZATION(96-4954)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Response from SLOVENIA toa
Request from theEUROPEAN COMMUNITY1
Pursuant toArticle 25.10 oftheAgreement
Thefollowing communication, dated 14November 1996, hasbeenreceived fromthePermanent
Mission ofSlovenia.
_______________
Sloveniaisherewithprovidingadditionalinformationtoitsnotificationofsubsidiesinaccordance
withArticle 25.2oftheSubsidies Agreement (document G/SCM/N/3/SVN, of22October 1996).
1. Subsidization ofsocial security contributions forexporters
Budget expenses under thisbudget itemwere paidonlyin1995. The1995 measure wasa
compromise stemming from coalition agreements.
Theactual expenses in1995 were SIT4,994.5 million (US$1 =SIT130).
Themeasure wasintended asextraordinary support toindustrial enterprises inwhich theshare
ofexported production exceeded 50percent(netexporting industrial companies). Itwasintended
asacorrective measure toboost lagging competitiveness andliquidity problems. Themeasure was
notproduct specific. Themain objective wastheretention ofexisting levels ofemployment. The
measure wasgenerally available tocompanies meeting thebasic criteria. Itwasapplied intheform
ofpartial reimbursement ofpaidsocial fundcontributions foralimited period.
2. Interest payments onbankrehabilitation
Total budgetary expenses in1995 were SIT14,394.3 million.
After thebreakup oftheformer federal state, major commercial banks inSlovenia wereexposed
toaveryspecific andunprecedented situation characterized byconsiderable financial difficulties which
threatened acollapse ofthebanking andfinancial system inthecountry. Thisextraordinary situation
prompted theGovernment toprovide thebanks withassistance through anagency fortherehabilitation
ofbanks untilsuchatimethattheymayoperate independently inthefinancial markets andbegin to
turnaprofit from theirnormal commercial operations.
1G/SCM/Q2/SVN/1.G/SCM/Q2/SVN/2
Page2
Therelief wasprovided through issues ofgovernment securities forwhich theGovernment
undertook topayinterest upon maturity ofthese "rehabilitation" bonds.
3. Subsidization oftherestructuring oftheenterprise sector onthebasisofissues ofgovernment
bonds
Support measures fortherestructuring ofenterprises arealready covered bySlovenia 'ssubsidy
notification.
Government securities issued fortherestructuring ofenterprises were aform offinancing
programmes inspecific areas ofassistance:
- restructuring ofcoalmines;
- restructuring ofsteelmills;
- start-up costs andtraining forsmall andmedium businesses;
- financing oftechnology centres andparks.
Theaggregate amount under thistitleofassistance wasSIT10,305 million in1995. Thebroken
down values areindicated inSlovenia 'ssubsidy notification related tospecified programmes.
4. Government guarantees forenterprises fordomestic andforeign loans
Amount ofbudgetary expenses under thistitle: SIT904.9 million.
Governmental policies andcriteria fortheemployment ofthisformofassistance toenterprises
arerestrictive. Themeasure wasavailable tolarge industrial enterprises withliquidity problems that
needed government loanguarantees inorder toobtain commercial loans needed forrestructuring
purposes.
5. Capital transfers from thestatebudget toenterprises
Amount oftransfers in1995: SIT3,284.2 million.
Thiswasonespecific formofaidtolabour-intensive companies andcompanies ineconomically
lessdeveloped regions ortocompanies ofparticular economic importance forthenational economy.
Asaform ofsubsidy itismentioned inthesubsidies notification ofSlovenia. Such support would
beprovided onacasebycasebasisandtherefore itwasnotagenerally available support programme.
Thistypeofmeasure isusedtooffset taxandsocial contribution liabilities byconversion ofthese
liabilities intostate-owned equity.
6. Deferrals oftaxesandsocial security contributions granted toparticular categories ofenterprises
TheSlovenian Government hadsignificant recourse tothisform ofstateaidintheperiod of
1991 to1994, when alarge number ofenterprises needed assistance toadapt tothecircumstances of
thebreak-up oftheformer federal stateandthesignificantly reduced domestic market. However, this
measure hasdecreased inimportance inthepasttwoyears. In1994therewasaseries oflawstargeting
specific groups ofcompanies fordeferral oftaxandsocial contributions payments. These werelabour-
intensive andhadliquidity problems. Incaseacompany came intoreceivership theliabilities were
written off.
Thetotalamount ofpostponed taxandsocial security contributions in1994 wasestimated at
SIT4,900 million.G/SCM/Q2/SVN/2
Page3
7. ExportpromotionprogrammeoperatedbytheMinistryofEconomicRelationsandDevelopment
andtheSlovene Export Corporation
Theactivities oftheSECarecovered bythesubsidies notification.
Theexport promotion programme isoperated bytheExport Promotion andForeign Investment
Agency. Itspent SIT127million in1995forcofinancing ofparticipation ofcompanies intrade fairs
abroad andforprinting promotional materials andadvertising. In1996 acost-sharing scheme for
marketing activities (expenses: SIT60million) wasintroduced.
8. Corporate income taxdeductions forforeign investors under theForeign Investment Law
Profit taxdeductions areregulated bytheLawonTaxation ofProfits (RSNo.72/93). Inthe
Lawthere isnodifferentiation between foreign investment companies anddomestic companies. All
companies, regardless oftheorigin ofcapital, benefit, under equal conditions, onthebasisoftheLaw.
Theprofit taxdeductions are:
- 20percentreduction oftaxoninvestment intotangible andlong-term intangible assets
(with theexception ofmotor vehicles), provided thattheownership ofintangibles does
notchange inthree years;
- 10percentreduction ontheprofit taxbasevalue forinvestments intobusiness reserves
ifmaintained foraminimum offouryears;
- 30percenttaxreduction onsalaries for12months fornewemployment, ifsuch
employment ismaintained foratleasttwoyears.
There arenoother taxincentives. Thecurrent rateofprofit taxis25percentonnetincome.