G/SCM/N/372/CHL  
8 October  2021 
(21-7609) Page: 1/10 
Committee on Subsidies and  
Countervailing Measures  Original:  Spanish  
 
  
SUBSIDIES  
NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVI:1  
OF THE G ATT 1994  AND ARTICLE 25  OF THE AGREEMENT  
ON SUBSIDIES AND COUNTERVAILING MEASURES  
CHILE 
The following communication, dated  and received  6 October 2 021, is being circulated at the request 
of the delegation of Chile . 
 
_______________  
 
 
  G/SCM/N/372/CHL  
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  TABLE OF CONTENTS  
I. TAX CREDIT FOR INVESTMENT IN THE PROVINCES OF ARICA AND 
PARINACOTA  ................................ ................................ ................................ ...................  3 
II. TAX CREDIT FOR INVESTMENT IN THE REGIONS OF AYSÉN AND 
MAGALLANES AND IN THE PROVINCE OF PALENA IN THE LOS LAGOS REGION  ................  4 
III. EXEMPTION FROM FIRST -CATEGORY TAX UNDER THE INCOME TAX LAW ON 
FISCAL YEAR PROFITS OF MANAGEMENT COMPANIES AND USERS IN THE FR EE 
ZONES IN THE CITIES OF IQUIQUE AND PUNTA ARENAS AND A CREDIT FOR THE 
TAX-PAYING OWNERS, CO -OWNERS, PARTNERS OR SHAREHOLDERS OF A 
COMPANY OR USER BENEFITING FROM THE EXEMPTION IN AN AMOUNT EQUAL 
TO 50% OF THE TAX THE COMPANY OR USER WOULD HAVE BEEN REQUI RED TO 
PAY HAD THERE BEEN NO EXEMPTION  ................................ ................................ .............  5 
IV. FUND FOR THE PROMOTION AND DEVELOPMENT OF REMOTE AREAS  .........................  7 
V. NATIONAL INSTITUTE FOR THE SUSTAINABLE DEVELOPMENT OF SMALL -
SCALE FISHERIES AND AQUACULTURE  ................................ ................................ .............  8 
 
 G/SCM/N/372/CHL  
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  I. TAX CREDIT FOR INVESTMENT IN THE PROVINCES OF ARICA AND PARINACOTA  
1. Title 
Tax Credit for Investment in the Provinces of Arica and Parinacota  
2. Period  
June 2 020-June 2 021 
3. Objectives  
To reverse the declining economy of the provinces of Arica and Parinacota  by making use of their 
advantageous geographical position for trade purposes and their tourist attractions, by 
strengthening entrepreneurship and by consolidating Arica as an inter -ocean corridor  
4. Background and authority  
Background : Arica and Parinacota, as remote provinces, are at a disadvantage in relation to the 
development of the rest of the country.  
Authority : Law No. 19.420, published in the Official Journal of 2 3 October 1 995, amended by Laws 
No. 19.478 (Official Journal of 2 4 October 1 996), No. 19.669 (Official Journal of 5 May 2000) and 
No. 20.780 (Official Journal of 2 9 September 2 014). Decree having Force of Law (DFL) No. 1 of the 
Ministry of Finance, published  in the Official Journal of 1 1 September 2 001, contains the revised, 
coordinated and consolidated text of Law No. 19.420 . The latest amendment to this Law was by 
means of Law No. 21.210 of 2 4 February 2 020. 
5. Form of the subsidy  
Tax credit in the form of a tax allowance  
6. To whom and how the subsidy is provided  
The subsidy is for taxpayers who invest in the Arica and Parinacota region for the production of 
goods or the provision of services in the region . Such investments must be made during the indica ted 
periods and amount to more than 500 UTM ( CLP 26 ,002,500 , equivalent to USD 36,093)1, under the 
conditions established by the Law.  
 
The period of eligibility is up to 3 1 December  of each year.  
 
The beneficiaries are entitled to a tax credit of 30 % of the value of certain non -convertible assets, 
namely buildings, machinery and equipment, including immovable property that is intended 
primarily for commercial exploitation for tourist purposes, directly related to the production of goods 
or the supply of services of the taxpayer's business or activity, and purchased new or finished in the 
financial year.  
 
For investment operations carried out in Parinacota, the tax credit is 40 %. The same percentage is 
applied to investments made in Arica in immovable p roperty intended primarily for commercial 
exploitation for tourist purposes and identified as being of particular interest by the Director of the 
National Tourism Service.  
Taxpayers are also eligible for this credit if they have invest ed in the constructio n of buildings 
completed or built during the financial year for use as offices or dwellings  - whether or not they 
include business premises, car parks or warehouses  - located in areas that currently make up the 
perimeter of the city of Arica and areas clas sed as sites of interest for tourists by the 
National  Tourism Service.  
 
1 Unidad Tributaria Mensual , UTM (monthly tax unit), June 2021: CLP  52,005. Source: Central Bank. 
Value of US dollar observed on 3 June 2021: CLP  720.44. Source: Central Bank.  G/SCM/N/372/CHL  
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  The taxes are forgiven by deducting the credit from the first -category tax payable as from the trading 
year of the purchase or construction of the property.  
7. Amount of the subsidy  
There is no current update of the estimated impact of this tax credit on tax revenue.  
8. Duration  
This incentive became effective, retroactively, as from 1 January 1 995. The period of eligibility is up 
to 31 December 2 035. 
The benefit will apply on ly in regard to assets incorporated in the investment project on any of the 
above -mentioned dates on which the benefit is still effective, although the credit may be recovered 
up to the year 2055.  
9. Statistical data  
No data available  
II. TAX CREDIT FOR IN VESTMENT IN THE REGIONS OF AYSÉN AND MAGALLANES AND IN 
THE PROVINCE OF PALENA IN THE LOS LAGOS REGION  
1. Title 
Tax credit for investment in the regions of Aysén and Magallanes and in the province of Palena in 
the Los Lagos region  
2. Period  
June 2 020-June 2 021 
3. Objectives  
To boost economic development and the full physical integration of the Aysén and Magallanes regions 
and the province of Palena in the Los Lagos region, given that they are geographically isolated and 
poorly connected and integrated  with the rest of Chile  
4. Background and authority  
Background : As remote areas, the regions of Aysén and Magallanes and the province of Palena  are 
at a disadvantage in relation to the development of the rest of the country.  
Authority : Law No. 19.606, published in the Official Journal of 1 4 April 1 999, amended by Laws 
No. 19.946 (Official Journal of 1 1 May 2 004) and No. 20.655 (Official Journal of 1 February 2 013). 
The latest amendment to this Law was by means of Law No. 21.210 of 2 4 February 2 020. 
5. Form of the subsidy  
Tax credit in the form of a tax allowance  
6. To whom and how the subsidy is provided  
The subsidy is fo r taxpayers who invest in the regions of Aysén and Magallanes and the province of 
Palena in the Los Lagos region for the production of goods or the provision of services in those areas . 
Such investments must be made during the indicated periods and amount to more than 500  UTM 
(CLP 26,002,500 , equivalent to USD 36 ,093)2, under the conditions established by the Law.  
 
 
2 Unidad Tributaria Mensual , UTM (monthly tax unit), June 2021: CLP 52,005. Source: Central Bank. 
Value of US dollar observed on 3 June 2021: CLP 720.44. So urce: Central Bank.  G/SCM/N/372/CHL  
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  The period of eligibility is up to 3 1 December  of each year.  
 
The beneficiaries are entitled to a tax credit of between 10 % and 32 % of the value of certain 
non-convertible assets, namely buildings, machinery and equipment, including immovable property 
that is intended primarily for commercial exploitation for tourist purposes, directly related to the 
production of goods or the supply of services of the taxpayer's business or activity, and purchased 
new or finished in the financial year . However, the maximum credit per taxpayer is 80,000 UTM.  
 
Taxpayers are also eligible for a tax credit if they invest in the following physical assets : (a) new 
vessels and aircraft, and in some cases reconditioned vessels and aircraft imported from abroad and 
not previously registered in Chile, destined exclusively for scheduled or tourist services carrying 
freight, passengers or tourists in legally desig nated areas that include the province of Palena, the 
Aysén region or the Magallanes region ; and (b) tugs and launches, whether new or reconditioned, 
where they comply with legal requirements and are destined to provide services to vessels in the 
aforementi oned areas.  
 
Taxpayers are also eligible for this credit if they invest in the construction of buildings to be 
used for productive activities, educational services, health services, storage services, offices, 
dwellings  - whether or not  they include business premises  - car parks or warehouses.  
The taxes are forgiven by deducting the credit from the first -category tax payable as from the trading 
year of the purchase or construction of the property.  
7. Amount of the subsidy  
There is no cur rent update of the estimated impact of this tax credit on tax revenue.  
8. Duration  
This incentive became effective, retroactively, as from 1 January 1 999. The period of eligibility is up 
to 31 December 2 035. 
The benefit will apply only in regard to assets incorporated in the investment project on any of the 
above -mentioned dates on which the benefit is still effective, although the credit may be recovered 
up to the year 2055.  
9. Statistical data  
No data available . 
III. EXEMPTION FROM FIRST -CATEGORY TAX UNDER THE INCOME TAX LAW ON FISCAL 
YEAR PROFITS OF MANAGEMENT COMPANIES AND USERS IN THE FREE ZONES IN THE 
CITIES OF IQUIQUE AND PUNTA ARENAS AND A CREDIT FOR THE TAX -PAYING OWNERS, 
CO-OWNERS, PARTNERS OR SHAREHOLDERS OF A COMPANY OR USER BENEFITING FROM 
THE EXEMPTION IN AN AMOUNT EQUAL TO 50 % OF THE TAX THE COMPANY OR USER 
WOULD HAVE BEEN REQUIRED TO PAY HAD THERE BEEN NO EXEMPTION  
1. Title 
Exemption from First -Category Tax under the Income Tax Law on Fiscal -Year Profits of Management 
Companies and Users i n the Free Zones in the Cities of Iquique and Punta  Arenas . A benefit is also 
considered for owners of the aforementioned enterprises under the optional tax transparency system 
for micro, small and medium -sized enterprises contained in Article 14(D), subpa ragraph 8 , of the 
Income Tax Law consisting of a credit against its final taxes equivalent to 50 % of the credit to which 
the enterprise would have been eligible on its First Category Tax.  
2. Period  
June 2 020-June 2 021 G/SCM/N/372/CHL  
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  3. Objectives  
To stimulate the economic development of the Arica and Parinacota region and the Magallanes region 
so as to form an attra ctive area for investment, economic activity, settlement, growth and 
sovereignty.  
4. Background and authority  
Background : These areas, because of their location and geographical features, are at a disadvantage 
in relation to the development of the rest of the country.  
Authority : The legal authority is contained in Ministry of Finance Decree No. 341, published in the 
Official Journal of 8 June 1 977, the revised, coordinated  and consolidated text of which is set forth 
in Decree having Force of Law No. 2 of the Ministry of Finance, published in the Official Journal 
of 10 August  2001. This legislation was last amended by Laws No. 20.780, No. 20.899, No. 20.997 
and No. 21.210.  
5. Form of the subsidy  
Enterprises in eligible free zones are exempted from First Category Tax.  
 
Owners of benefiting enterprises operating under the optional tax transparency system for micro, 
small and medium -sized companies, as set out in Article 14(D), subparagraph 8 , of the Income Tax 
Law, receive a tax credit on their final taxes that is equal to 50 % of the tax credit to which the 
enterprise would have been entitled for First Category Tax.  
 
The Income Tax Law establishes an integrated system for First Category Tax (for companies) and 
final taxes paid by owners (Complementary Global Tax3 or Additional  Tax4, depending on where the 
enterprise owners are resident or domiciled) . Accordingly, the owners are entitled to a total or partial 
discount on the enterprise's First Category Tax, which they can apply to their personal taxes.  
Law No. 21.210 incorporat ed Article 14(D) , subparagraph 8 , into the Income Tax Law, thus 
introducing an optional tax transparency system for small and medium -sized enterprises owned by 
persons who pay final tax . Enterprises registering for the system are released from the obligati on to 
pay First Category Tax and the owners directly pay final taxes on the enterprise's profits.  
In line with the above, the 50 % tax credit benefits persons who own an enterprise that is exempt 
from First Category Tax under Decree -Law No. 341 of 1977 and who have registered under the tax 
transparency system . For these purposes alone, the aforementioned enterprises shall be understood 
to be subject to the First Category Tax.  
6. To whom and how the subsidy is provided  
Management companies and users (all legal persons) in the Iquique and Punta Arenas free zones 
are exempt from First Category Tax . They must meet the requirements established by the Ministry  
of Finance and the Ministry of the Economy, Development and Reconstruction under contracts 
containing conditions freely agreed on with the interested party . The exemption also applies to 
manufacturing companies already established or being established  in Arica and manufacturing 
companies in the Alto Hospicio district in Iquique.  
The credit indicated in the  previous sections is granted to the owners of benefiting enterprises 
operating under the optional tax transparency system for micro, small and medium -sized 
enterprises, as set out in Article 14(D), subparagraph 8 , of the Income Tax Law.  
7. Amount of the s ubsidy  
There are no official calculations of tax revenue forgone.  
 
3 Applicable to natural persons domiciled or residing in Chile.  
4 Applicable to persons not domiciled or residing in Chile.  G/SCM/N/372/CHL  
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  8. Duration  
This incentive took effect on 2 5 June 1 975 for Iquique and Punta Arenas and on 1 0 December 1 976 
for Arica . In both cases it is of indefinite duration.  
9. Statistical data  
No statistical calculation has been made to assess the trade effects of the subsidy.  
IV. FUND FOR THE PROMOTION AND DEVELOPMENT OF REMOTE AREAS  
1. Title 
Fund for the Promotion and Development of Remote Areas  
2. Period  
June 2 020-June 2 021 
3. Objectives  
To contribute to the development of the disadvantaged regions of Arica and Parinacota, Tarapacá, 
Aysén  del General  Carlos Ibáñez del Campo and Magallanes and Chilean Antarctica and the provinces 
of Chiloé and Palena in the Los Lagos region, by p roviding assistance to small and medium -sized 
investors wishing to invest or reinvest in production in these remote regions.  
4. Background and authority  
Background : Being remote regions and provinces, these areas are at a disadvantage in relation to 
the de velopment of the rest of the country.  
Authority : This fund was created by virtue of Articles 38 and 39 of Decree -Law No. 3.529 of the 
Ministry of Finance, published in the Official Journal of 6 December 1 980. Decree having Force of 
Law No. 15 of the Ministry of Finance, published in the Official Journal of 2 0 April 1 981, lays down 
the terms and conditions of this fund.  
5. Form of the subsidy  
Direct transfer  
6. To whom and how the subsidy is provided  
Funds may be granted only to investments by small and medium -sized investors producing goods 
and services in the construction, machinery, equipment, special animal feed and small -scale fishing 
sectors . The annual amount of individual investment or reinvestment must not exceed 50,000 UF 
(inflation -indexed monetary units), equivalent to USD 2,041,583 .5 Funds granted under this 
programme may not be accepted together with any other benefit granted by the Government of 
Chile for the same goods or services.  
This fund contributes 20 % of the cost of the investment or reinvestment, from 2012 to 2035 
inclusive . The benefit is renewed from year to year under the Budget Law.  
7. Amount of the subsidy  
For 2020, the Budget Law estimated the maximum amount to be paid out at CLP 3 ,074,546,000, 
equivalent to USD 3,883,923 . 
 
5 Unidades de Fomento , UF (Chilean inflation -indexed monetary units), for June 2021: CLP 29,665.83. 
Source: Cent ral Bank. Value of US dollar observed in June 2021: CLP 726.54. Source: Central Bank.  G/SCM/N/372/CHL  
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  8. Duration  
The benefit is renewed from year to year under the Budget Law.  
9. Statistical data  
No data available  
V. NATIONAL INSTITUTE FOR THE SUSTAINABLE DEVELOPMENT OF SMALL -SCALE 
FISHERIES AND AQUACULTURE  
1. Title 
 
National Institute for the Sustainable Development of Small -Scale Fishing and Aquaculture  
(INDESPA)  
 
2. Period  
 
January 2 020-December 2 020 
 
3. Objectives  
 
To encourage and promote the develop ment of  the small -scale fishing and aquaculture sector by 
coordinating forms of inter -agency cooperation and by providing technical support to the sector and 
to those who benefit from the sector in order to strengthen productive capacities in a way that helps 
small -scale fishing ports and related sectors to develop their natural, cultural a nd economic heritage 
in a harmonious and comprehensive manner.  
 
4. Background and authority  
 
INDESPA is  a public service created through Law No. 21.069 of 1 5 February 2 018 and operating 
since 1 2 August 2 018, under the auspices of the Ministry of the Economy, Development and Tourism.  
 
The organization's strategic objectives are to:  
(1) Boost commercial and productive skills in small -scale fishing and aquaculture and 
support the sector's diversification.  
(2) Support the sector's comprehensive development in a w ay that takes into account the 
sustainability of hydrobiological resources and the natural, cultural and economic 
heritage of small -scale fishing ports and related sectors.  
(3) Develop physical infrastructure for small -scale fishing and aquaculture, preferably  in 
agreement with state bodies.  
(4) Provide small -scale fishers and fish farmers with technical assistance and training 
related to areas such as production and marketing, in line with their objectives.  
(5) Finance non -repayable grants to deal with disasters in the sector . A supreme decree 
must rule that such grants are compliant with Law No. 16.282.  
Authority : 
https://www.leychile.cl/Navegar?idNorma=1115065  G/SCM/N/372/CHL  
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  5. Form of the subsidy  
INDESP A, under the auspices of the Ministry of the Economy, Development and Tourism, is a new 
institute that supports the sustainable development of small -scale fishing and aquaculture and those 
who benefit from the sector . It does so by facilitating funding for  development and innovation 
initiatives that improve the quality of life of people who work daily in fisheries, diving, shore 
harvesting, and the cultivation and production of fresh, healthy and nutritious small -scale 
hydrobiological resources.  
For its lau nch, the new institution brought together the experience and commitment of two former 
state support funds for the sector : the Small -Scale Fishing Promotion Fund  (former FFPA) , which 
belonged to the National Fisheries and Aquaculture Service, and the Fisheries Administration Fund  
(former FAP), which belonged to the Undersecretariat of Fisheries and Aquaculture.  
INDESPA  finances initiatives to promote, develop and diversify sustainable productive activity in 
small -scale fisheries through a public tender  system in which, as appropriate for each call for tenders, 
small -scale fishers and fish farmers and organizations representing them are invited to submit 
proposals.  
 
It is also working with regional governments to implement a series of projects to strengthen 
small -scale fishing in each region.  
 
Since August 2 019, INDESPA  has been responsible for managing the resources  previously disbursed 
through the FFPA and FAP and subsequently implementing  programmes developed and approved by 
the presiding Execut ive Board.6 
 
6. To whom and how the subsidy is provided  
 
Small -scale fishers and fish farmers and organizations that represent them that are legally 
established in Chile and submit proposals  
 
7. Amount of the subsidy by funding area  (annual nominal amount in CLP)  
Table 1 : Distribution of INDESPA expenditure  by programme  
 
Expenditure 2020  % 
Former FAP/ FFPA trawling programmes7 3,696,988,691 39 
Artisanal and small -scale fishing production boosting programme s8 5,107,753,729 53 
Seaweed  farming  subsidy  programme9 765,912,152 8 
Total expenditure under  the 2020 Budget Law 9,570,654,572 100 
 
Table 2: Distribution of INDESPA expenditure  by strategic investment  area 
 
Strategic investment area Expenditure  2020  % expend.  No. of projects  
Modernization , efficiency  and fleet safety  2,921,124,884 31 178 
Small -scale aquaculture and management  2,645,601,403 28 263 
Marketing and channels of distribution  1,215,733,315 13 99 
Individual and associative ventures  391,075,450 4 31 
Health management and value added  810,117,457 8 27 
Uptake of renewable energy  360,110,706 4 26 
Development of processes in coves  1,226,891,357 13 126 
Total expenditure under the 2020 Budget Law  9,570,654,572 100 750 
 
 
6 INDESPA has an Executive Board chaired by the Undersecretariat for Fisheries and comprising the 
Economy and Small Business Undersecretary, the Social Welfare Undersecre tary, the National Director of Ports' 
Works and the National Director of the National Fisheries and Aquaculture Service.  
7 Corresponds to all competitions and allocations that were pending previous funds due to 
implementation timelines  
8 Programmes fully c reated by INDESPA, approved by its Executive Board and evaluated ex ante  by the 
Directorate of Budget  
9 While an INDESPA programme, it is governed by a special law (Law No. 20.925) and is therefore 
assigned a separate budget.  G/SCM/N/372/CHL  
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  Table  3: Distribution of INDESPA expenditure by  strategic investment area  
 
Strategic investment area  Total 
beneficiaries  % Total 
men Total 
women  No. of 
projects  
Modernization, efficiency and fleet safety  4,753  16 3,893  860 178 
Small -scale aquaculture and management  6,286  21 5,240  1,046  263 
Marketing and channels of distribution  4,371  14 4,036  335 99 
Individual and associative ventures  1,264  4 173 1,091  31 
Health management and value added  1,135  4 958 177 27 
Uptake of renewable energy  394 1 343 51 26 
Development of processes in coves  12,240 40 10,473 1,767 126 
Total expenditure under the 2020 Budget 
Law 30,443 100 25,116 5,327 750 
 
100%    83%  17%   
 
Table  4: Distribution of INDESPA expenditure by region  
 
Region  Expenditure  
2020  % Total 
beneficiaries  % 
benef.  Total 
men Total 
women  Total 
projects  
ARICA  36,479,629 0.4 75 0.2 71 4 3 
TARAPACA  744,541,266 7.8 1,349 4.4 1,274 75 33 
ANTOFAGASTA  459,847,699 4.8 1,340 4.4 1,248 92 28 
ATACAMA  434,117,429 4.5 1,954 6.4 1,804 150 49 
COQUIMBO  1,776,868,058 18.6 5,660 18.6 5,220 440 115 
VALPARAÍSO  1,041,964,447 10.9 2,818 9.3 2,704 114 52 
OHIGGINS  259,620,991 2.7 667 2.2 494 173 21 
MAULE  535,429,522 5.6 2,865 9.4 2,360 505 38 
ÑUBLE  26,592,127 0.3 33 0.1 21 12 4 
BIOBIO  823,089,208 8.6 5,070 16.7 4,133 937 71 
ARAUCANÍA  135,749,645 1.4 722 2.4 677 45 18 
LOS RÍOS  199,353,682 2.1 585 1.9 506 79 26 
LOS LAGOS  2,591,849,871 27.1 6,548 21.5 3,921 2,627 263 
AYSÉN  21,529,742 0.2 18 0.1 15 3 4 
MAGALLANES  483,621,255 5.1 739 2.4 668 71 25 
Total 
expenditure 
under the 2020 
Budget Law  9,570,654,572 100.0 30,443 100 25,116 5,327 750 
   
100%    83%  17%   
 
8. Duration  
Indefinite . The subsidy is determined and provided on a fiscal year basis.  
9. Statistical data  
No data available . 
__________