RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q3/THA/7
18 March 2002
(02-1409)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement
on Subsidies and Countervailing Measures
Replies to Questions Posed by the European Communities1,
Mexico2 and the United States3
The following communication, dated 13 March 2002, has been received from the Permanent
Mission of Thailand.
_______________
QUESTIONS FROM THE EUROPEAN COMMUNITIES
Q.1 Please elaborate on when and how Thailand intends to phase out these programmes for
which an extension is requested.
Reply
1. Investment Promotion Incentives [BoI]
At present, there are 1,443 projects under the Board of Investment's subsidy programme.  The
longest grace period approved before August 2001 is ten years.  Therefore, considering the number of
projects under the programme and the original grace periods endorsed, the BoI expects to completely
eliminate this subsidy programme within ten years.
2. Export Market Diversification Promotion Programme [EXIM]
The Export and Import Bank of Thailand (EXIM) expects the phase-out process to be
completed by 31 December 2003.  The Ministry of Commerce who finance this subsidy programmethrough the EXIM Bank has decreased the annual fund from B 150 million to B 50 million in 2000
and 2001 as a step towards the termination of the programme.
3. Industrial Estate Authority of Thailand [IEAT]
The Industrial Estate Authority of Thailand (IEAT) expects to finish the amendment of the
IEAT Act within approximately ten years, taking into account the lengthy and time-consuming law
amendment process.
                                                     
1 G/SCM/Q3/THA/3
2 G/SCM/Q3/THA/5
3 G/SCM/Q3/THA/6G/SCM/Q3/THA/7
Page 2
Q.2 In footnote 1 of document G/SCM/N/74/THA it is stated that the "Machinery Upgrading
Financing" programme is not to be considered to be a prohibited subsidy and therefore not
relevant to the request.  However, information on this scheme as contained in document
G/SCM/N/71/THA would indicate that this scheme  constitutes an export subsidy. (e.g. "Policy
objective:  To strengthen the competitive edge of  Thai exporters").  Please elaborate on why this
programme would not constitute a prohibited export subsidy.
Reply
[EXIM]
Since the focus of the Export and Import Bank of Thailand (EXIM) is principally to facilitate
export and import activities, the distribution of this fund, 50 per cent financed by the Bank of
Thailand (BoT), thus aims at Thai exporters.  Other Thai producers who share the same characteristics
as those eligible exporters but do not export can obtain similar preferential treatment from Industrial
Finance Corporation of Thailand (IFCT) which gains financial support from the BoT.  Given thisevidence, most Thai operators who meet the same set of requirements will obtain a similar kind of
loan.
QUESTIONS FROM MEXICO
Q1. What is the corporate income tax in Thaila nd, and what is the amount of the reduction
in corporate income tax currently applied to th ose firms located in each of the three zones
covered by the programme?
Reply
[BoI]
In general, incorporated firms operating in Thailand pay income tax at a rate of 30 per cent of
net profits.  The 50 per cent reduction of corporate income tax for a period of five years is given only
for the companies, which have operated in zone 3 (least-developed provinces) for at least eight years.
Q2. Under what circumstances is there an  exemption from corporate income tax?
Reply
[BoI]
Should a company meet all the requirements set by the Board of Investment (BoI), it will be
granted a tax exemption of three to eight years, depending on the zone in which it is located.  Indeed,
the firm, which meets all requirements, will obtain a three-year, five-year and 8-year tax exemption ifit is located in zone 1, zone 2 and zone 3 respectively.
Q3. Do agro-industrial activities (e.g. pineapple canneries) also benefit from this
programme?G/SCM/Q3/THA/7
Page 3
Reply
[BoI]
Some agro-industrial activities have benefited from the subsidy programme, provided that
they meet the BoI's requirements such as location, size of investment and standard requirements.
Q4. Could Thailand provide data on what perc entages of beneficiary firms operate in the
textile and apparel sector, the footwear sector, and the toy sector?
Reply
[BoI]
Answers will be provided as soon as possible.
Q5. What is the amount exported by firms benefiting from this programme? Is an itemized
breakdown in accordance with the Harmonized System available?
Reply
[BoI]
Answers will be provided as soon as possible.
QUESTIONS FROM THE UNITED STATES
Investment Promotion Incentives
Q1. How many projects were approved prior to August 2001 for which benefits will continue
beyond 2002?  What is the nature of these projects?  What is the expiry dates of these projects?
Reply
[BoI]
There are 1,443 projects approved prior to August 2001 for which benefits will continue
beyond 2002.  The expiry dates of these projects are various depending on their specificcharacteristics and the government's policy at the time the preferences were given.  The longest grace
period approved before August 2001 is ten years.  The benefits were given on a non-discriminatory
basis to any Thai operator who meets the programme requirements.
Industrial Estate Authority of Thailand
Q2. How long of an extension of the transition  period is needed for this programme?  Is
there a plan for the phase-out of benefits?G/SCM/Q3/THA/7
Page 4
Reply
[IEAT]
The Industrial Estate Authority of Thailand [IEAT] expects the phase-out process to take
approximately ten years, taking into consideration the lengthy and time-consuming process of the law
amendment.  In addition, there is a plan for the phase-out of benefits.
__________