WORLD TRADE G/SCM/N/3/VEN/Suppl.1
20November 1996
ORGANIZATION(96-4931)
Original: Spanish Committee onSubsidies andCountervailing Measures
SUBSIDIES
Notification Pursuant toArticle XVI:1 oftheGATT 1994
andArticle 25oftheAgreement onSubsidies and
Countervailing Measures
VENEZUELA
Thefollowing communication, dated 30October 1996, hasbeenreceived fromthePermanent
Mission ofVenezuela.
________________
TAX CREDIT FOR EXPORTS OFGOODS AND SERVICES
PRODUCED INTHE COUNTRY
1. Description andidentification ofthesubsidy
ThisProgramme constitutes credit assistance under theLawestablishing theExport Finance
Fund (FINEXPO). Itisacredit intended basically forexporters ofVenezuelan-produced goods
incorporating adomestic value added of30percentormore. Article 8ofDecree 1,597, dated
13June1991, establishes twogroups ofadded value. One,covering products with30to98percent
domestic value added, involves a1percentcredit onthenetf.o.b. export value. Theother group,
with99to100percentdomestic value added, involves a10percentcredit onthenetf.o.b. export
value. Chapter IVoftheregulations totheExport Incentives Law, dated 16May1991, includes the
provisions specifically applicable totheagricultural sector andArticle 22defines agricultural products
as"agricultural, forestry andfisheries products which havenotundergone anyindustrial processing,
orthecharacteristics ofwhich arenotsubstantially altered iftheyhaveundergone some processing".
Again, Article 23rulesoutanytaxcredit for10groups ofproducts, moreparticularly: (a)liveanimals;
(b)products oftheseafalling inChapter 3ofthecustoms tariff; (c)slaughtered animals, plantproducts
andby-products onwhich somelimitation isestablished bytheExecutive; (d)wood covered byheadings
Nos. 44.01 and44.03 to44.05 ofthecustoms tariff; (e)cigarettes ofdarkorlighttobacco; and
(f)products covered byArticle 14oftheAgricultural Marketing Law. Exported agricultural products
aredeemed tofallwithin thegroup withthehighest domestic value added.
2. Period covered bythenotification
Thenotification covers aperiod oftwoyears (1995-1996).G/SCM/N/3/VEN/Suppl.1
Page2
3. Policy objective
Tohelp, bymeans ofataxcredit, exporters ofVenezuelan-produced goods incorporating a
domestic value added of30percentormore.
4. Background andauthority
Thetaxcredit foragricultural exports isbased onDecree No.1,597, published intheOfficial
Gazette oftheRepublic ofVenezuela of13June1991. Itisalsobased onthePartial Amendment
oftheRegulations totheExport Incentives Law, published inOfficial Gazette No.34,735 of
13June1991. AsVenezuela reported intheinitial notification ofthisprogramme, theAmendment
wasconfined toagricultural products. TheMinistry ofFinance isresponsible forimplementation and
supervision oftheexport incentives scheme.
5. Form ofthesubsidy
Thetaxcredit isgranted byfreely negotiable bearer bonds orcertificates issued bytheMinistry
ofFinance thatwillbeunconditionally accepted bytaxcollection offices provided theyaresubmitted
forsuchpurposes within aperiod oftwoyears fromthedateofissue. Onexpiry ofthisperiod, unused
export bonds willbenullandvoid.
6. Beneficiaries andmechanism
Thiscredit isintended essentially forexporters ofgoods produced inthecountry when the
domestic value added is30percentormore. Itoperates bythepayment of1percentonthenetf.o.b.
export value. Under thecurrent rulesandasexplained earlier, therearetwogroups ofdomestic value
added and,since agricultural products havethehighest percentage ofadded value, inother words,
from 99to100percent, theyareeligible fora10percenttaxcredit onthenetf.o.b. export value.
7. Estimated amount ofthesubsidy. 1995
Theoverallvalueofagriculturalexportseligiblefortaxcredit,asreportedbytheExportFinance
Fund (FINEXPO) is1,539 million bolívares fortheyear1995.
Outofthistotal, anamount of148.2 million bolívares hasbeenpaid, onthebasis of9.6per
centofthef.o.b. export value.
TheMinistry ofAgriculture andStock Breeding isintheprocess ofdetermining thedetails
ofthese amounts, according tothetariff headings for1995. Thisinformation willbesupplied later.
Alistoftheproducts concerned isattached.1
8. Duration ofthesubsidy
Themeasure lastsindefinitely andmayormaynotbeapplied, inaccordance withadecision
oftheExecutive, asfrom thedateindicated intherelevant decree or,intheabsence thereof, from
thedateofpublication intheOfficial Gazette oftheRepublic ofVenezuela.
1Interested delegations arerequested tocontact Ms.S.Aspinall, Office 1028, Tel.7395109.G/SCM/N/3/VEN/Suppl.1
Page3
9. Trade effects ofthesubsidy
F.o.b. export value Incentive paid Percentage off.o.b. value
1,539.8 148.2 9.6percent
10. Trade effects ofthesubsidy
Theeffects ofthetaxcredit oninternational trade arenegligible inviewoftheamount ofthe
subsidized exports compared withthetotalforproducts entering Venezuela from abroad, aswillbe
seenbelow:
(Millions ofbolívares andpercentages)
Year Non-petroleum
exportsExports
eligible fortax
creditPercentage
shareIncentive paid Incentive
percentage
1991 162,622 67,471 53.8 10,271 11.7
1992 264,483 39,941 19.6 8,416 6.5
1993 395,142 12,486 3.7 1,179 9.5
1994 889,213 11,562 1.7 1,179 9.6
1995 825,872 1,540 6.2 148 9.6
Source: OCEI andBCV.