WORLD TRADE
ORGANIZATIONG/SCM/N/71/GTM
5 July 2001
(01-3344)
Committee on Subsidies and
Countervailing MeasuresOriginal:  Spanish
SUBSIDIES
New and Full Notification Pursuant to Article XVI.1 of the
GATT 1994 and Article 25 of the SCM Agreement
GUATEMALA
The following communication, dated 29 June 2001, has been received from the Permanent
Mission of Guatemala.
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Pursuant to Article XVI.1 of the General Agreement on Tariffs and Trade (GATT) 1994 and
Article 25 of the Agreement on Subsidies and Countervailing Measures (hereinafter referred to as the
"Agreement on Subsidies"), Guatemala hereby presents a new and full notification, in accordance
with Secretariat document G/SCM/N/38.
Guatemala wishes to reiterate that, in keeping with Article 25.7 of the Agreement on
Subsidies, this notification does not prejudge its legal status under the  GATT 1994 or said
Agreement, its effects under the Agreement or the nature of the programme or measure;  furthermore,notification of a programme or measure does not prejudge its actionable or non-actionable nature.G/SCM/N/71/GTM
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CONTENTS
Page
Programme
I Exemption from Company Tax;  exemption from customs duties and other import taxes,
including Value Added Tax (VAT), on machinery, equipment, parts, components
and accessories required for the production process of companies under special
customs regimes…………………………...................................................................... . 3
II Exemption from Company Tax;  exemption from customs duties and other import taxes,
including Value Added Tax (VAT), on machinery, equipment, parts, components
and accessories required for the production process relating to activities of managers
and users of Free Zones………………. .......................................................................... 4
III Exemption from Company Tax;  exemption from customs duties and other import taxes,
including Value Added Tax (VAT), on machinery, equipment, parts, components
and accessories required for the production process of commercial and industrialenterprises operating in the Industrial and Trade Free Zone (ZOLIC)…………… ........ 5G/SCM/N/71/GTM
Page 3
PROGRAMME I
Description
(a) Exemption from Company Tax on income from the export of goods produced or assembled in
Guatemala and exported under special customs regimes to non-Central American countries.
(b) Exemption from customs duties and other import taxes, including Value Added Tax (VAT),
on machinery, equipment, parts, components and accessories required for the production
process.
2. Period of notification
June 2001
3. Objective
To promote, encourage and develop the production in the national customs territory of goods
for export to non-Central American countries.
4. Background and authority
Background
The Government of Guatemala considers that appropriate conditions for encouraging
investment of national and foreign capital needs to be promoted in order to reduce the existing highpoverty levels stemming, inter alia , from the internal armed conflict as well as to raise employment
levels and improve the distribution of income.
Authority
Legislative Decree No. 29-89 of 23 May 1989.
5. Form of the subsidy
The subsidy takes the form of a tax exemption, but its effect is greatly reduced given the other
national taxes payable.
6. To whom and how the subsidy is provided (whether to producers, exporters or others),
through what mechanisms, whether it is a fixed sum or fluctuating amount per unit and, if the
latter, how the amount is determined).
The subsidy is granted to companies by way of an exemption from Company Tax on income
from the export of goods produced or assembled in Guatemala and exported under special customs
regimes to non-Central American countries.
To be eligible for the programme, companies must be recognized by the Ministry of
Economy.G/SCM/N/71/GTM
Page 4
7. Subsidy per unit or, in cases where this is not possible, the total or annual amount budgeted
for this subsidy (indicating, if possible, the average subsidy per unit for the year covered by
the notification, the previous year or both).  A full explanation will be provided.
Subsidies are granted in accordance with th e exporters’ income; they cannot therefore be
quantified given that they vary each fiscal year.
8. Duration of the subsidy and/or any other time-limit which could affect it, including the date of
inception/commencement.
This subsidy programme is applicable for up to ten years.
9. Statistical data permitting an assessment of the effects of the subsidy on trade. The specific
nature and scope of such statistics is left to the judgement of the notifying Member. It is,
however, desirable - to the extent possible, relevant and/or determinable - that such
information include statistics relating to the production, consumption, imports and exports of
the subsidized product(s).
No such statistical information is available.
PROGRAMME II
1. Description
(a) Exemption from Company Tax on income exclusively from the activities of managers and
users of the Free Zone.
(b) Exemption from customs duties and other import taxes, including Value Added Tax (VAT),
on machinery, equipment, parts, components and accessories required for the production
process.
2. Period of notification
June 2001
3. Objective
To promote and regulate the establishment in Guatemala of Free Zones, the activities of
which, in particular measures to boost foreign trade, create employment and stimulate technology
transfer, serve to encourage national development.
4. Background and authority
Background
In an endeavour to encourage the development of regions which have been marginalized as a
result of the internal armed conflict and to reduce poverty levels, a Free Zone system has been
established as an instrument to create employ ment, attract investment and encourage technology
transfer.G/SCM/N/71/GTM
Page 5
Authority
Legislative Decree 65-89 of 14 November 1989.
5. Form of the subsidy
The subsidy takes the form of a tax exemption.
6. To whom and how the subsidy is provided (whether to producers, exporters or others),
through what mechanisms, whether it is a fixed sum or fluctuating amount per unit and, if the
latter, how the amount is determined).
The beneficiaries of this incentive are the managers and users of Free Zones.
To enjoy these fiscal benefits, companies must be fully authorized by the Ministry of
Economy.
7. Subsidy per unit or, in cases where this is not possible, the total or annual amount budgeted
for this subsidy (indicating, if possible, the average subsidy per unit for the year covered by
the notification, the previous year or both).  A full explanation will be provided.
Subsidies are granted in accordance with th e exporters’ income; they cannot therefore be
quantified given that they vary each fiscal year.
8. Duration of the subsidy and/or any other time-limit which could affect it, including the date of
inception/commencement.
This subsidy programme is applicable for up to ten years.
9. Statistical data permitting an assessment of the effects of the subsidy on trade. The specific
nature and scope of such statistics is left to the judgement of the notifying Member. It is,
however, desirable - to the extent possible, relevant and/or determinable - that such
information include statistics relating to the production, consumption, imports and exports of
the subsidized product(s).
No such statistical information is available.
PROGRAMME III
1. Description
(a) Exemption from Company Tax on income from the activities of managers and users of the
Industrial and Trade Free Zone (ZOLIC).
(b) Exemption from customs duties and other import taxes, including Value Added Tax (VAT),
on machinery, equipment, parts, components and accessories required for the production
process.
2. Period of Notification
June 2001G/SCM/N/71/GTM
Page 6
3. Objective
Promote the economic development of the province of Izabal, where the population - mostly
Garifuna - is the most backward in the country in terms of social and economic development, and
capitalize on its geographical location as the sole access point to Guatemala from the Atlantic Ocean.
4. Background and authority
Background
Measure to encourage investment as a m echanism for promoting the development of
Guatemala's Garifuna population.
Authority
Decree No. 22-73 of 21 March 1973.
5. Form of the subsidy
The subsidy takes the form of a tax exemption.
6. To whom and how the subsidy is provided (whether to producers, exporters or others),
through what mechanisms, whether it is a fixed sum or fluctuating amount per unit and, if the
latter, how the amount is determined).
The beneficiaries of these incentives are commercial and/or industrial enterprises operating
under this special regime.
7. Subsidy per unit or, in cases where this is not possible, the total or annual amount budgeted
for this subsidy (indicating, if possible, the average subsidy per unit for the year covered by
the notification, the previous year or both).  A full explanation will be provided.
Subsidies are granted in accordance with the beneficiaries' income; they cannot therefore be
quantified given that they vary each fiscal year.
8. Duration of the subsidy and/or any other time-limit which could affect it, including the date of
inception/commencement.
This subsidy programme is applicable for up to ten years.
9. Statistical data permitting an assessment of the effects of the subsidy on trade. The specific
nature and scope of such statistics is left to the judgement of the notifying Member. It is,
however, desirable - to the extent possible, relevant and/or determinable - that such
information include statistics relating to the production, consumption, imports and exports of
the subsidized product(s).
No such statistical information is available.
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