. /.  WORLD TRADE  
ORGANIZATION  G/SCM/Q2/CHL/19 
3 November 2004 
 
 (04-4676) 
Committee on Subsidies 
and Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Replies to the Questions Posed by the EUROPEAN COMMUNITIES1  
Regarding the New and Full Notifications of CHILE2 
 
 
 The following communication, dated 1 November 2004, is being circulated at the request of the delegation of Chile.  
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1.  Simplified System of Refunds for Minor Exports 
 
 Item V states that: 
 
• Law No. 19,589 progressively reduced the per centage of the refund from several rates 
to a single rate of 3 per cent, valid as of 1 January 2003.   
• Additionally, as of that same date, th e 3 per cent simplified refund is granted 
exclusively for exports that include at least 50 per cent of imported inputs (Article 5(e), 2(i), of Law No. 19,589).   
• Finally, the refund on inputs was eliminated on 1 January 1999.   
 
 Can Chile please explain if the refund system was effectively eliminated in 1999 or if the 
reduced rate of 3 per cent is still in place?  
Reply 
 
 There were originally two types of simplified refund: a refund for the non-traditional end 
product  and a refund for the non-traditional  input .  For example, if mineral water (non-traditional) 
was exported, a refund could be requested for the f. o.b. value of the mineral water, or, for the net 
value of the bottle in which the water was exported.  In such a case, the refund would clearly be for 
the end product.  The refund on inputs applied wh en the end product was excluded from the refund 
because of its traditional nature.  In those circumstan ces, it was at least possible to request a refund for 
the net value of the inputs. 
  Consequently, the law on simplified refunds prov ided for two types of refund:  one for the 
end product (which since 2003 has stood at 3 per cent and is applicable only to  non-traditional exports 
that include at least 50 per cent of imported inputs  and is therefore not a subsidy) and a refund for 
non-traditional inputs, which was eliminated on 1 January 1999. 
 
                                                     
 
1 G/SCM/Q2/CHL/17. 
2 G/SCM/N/95/CHL. G/SCM/Q2/CHL/19 
Page 2  
 
 2.  Motor Vehicle Statute 
 
 Item VIII states that the incentive came into  effect on 28 December 1985 and lasted until 
31 December 1998 in the case of tax credits, there being no time-limit in the case of exemption from 
payment of  ad valorem  duty.  The tax credits have been a bolished, and the exemption from payment 
of ad valorem  duty was abolished by Law No. 19,912. 
  Can Chile please explain if the exemption from payment of ad valorem  duty was effectively 
abolished as stated or if it is still in place without time-limit?  Reply  
 Mechanisms that are not subsidies (e.g. deferment of the payment of duties on imports of 
capital goods and the payment of interest rates for the deferred amount) were not abolished.  What 
was abolished was the subsidy component of tho se mechanisms, that is to say, when the tax 
authorities forgave amounts due for deferred payments of import duties on capital goods. 
  Exemption from payment of ad valorem  duty was abolished by Law No. 19,912.  In the case 
of tax credits, the Motor Vehicle Statute itself set th e time-limit for those subsidies.  In the case of 
exemption from payment of duties, a special law had to  be issued to repeal that subsidy (Article 24.3 
of Law No. 19,912), since no time-limit had been  set for it in the Motor Vehicle Statute.  
 
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