G/SCM/N/343/CHL  
12 July 2019 
(19-4632) Page: 1/8 
Committee on Subsidies and Countervailing Measures  Original:  Spanish  
 
  
SUBSIDIES  
NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVI:1 OF THE GATT 1994 AND  
ARTICLE 25 OF THE AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES  
CHILE 
The following communication, dated 1 July 2 019, is being circulated at the request of the delegation 
of Chile.  
 
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TABLE OF CONTENTS  
I. TAX CREDIT FOR IN VESTMENT IN THE PROV INCES OF ARICA AND  
PARINACOTA (REGION I ) ................................ ................................ ................................  2 
II. EXEMPTION FROM F IRST -CATEGORY TAX UN DER THE INCOME TAX L AW ON FISCAL -
YEAR PROFITS OF MANA GEMENT COMPANIES AND  USERS IN THE FREE Z ONES IN THE 
CITIES OF IQUIQUE (R EGION I) AND PUNTA A RENAS ( REGION XII) AND A CR EDIT FOR 
THE TAX -PAYING OWNER S, CO -OWNERS, PARTNE RS OR SHAREHOLDERS O F A  
COMPANY OR USER BENE FITING FROM THE EXEM PTION IN AN AMOUNT E QUAL  
TO 50% OF THE TAX TH E COMPANY OR USER WO ULD HAVE BEEN REQUIR ED TO PAY  
HAD THERE BEEN NO EX EMPTI ON ................................ ................................ ....................  3 
III. FUND FOR THE PR OMOTION AND DEVELOPM ENT OF REMOTE AREAS  ........................  5 
IV. SM ALL-SCALE FISHING PR OMOTION FUND  ................................ ................................  6 
V. FISHERIES ADMINIS TRATION FUND  ................................ ................................ ............  7 
 G/SCM/N/343/CHL  
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  I. TAX CREDIT FOR INVESTMENT IN THE PROVINCES OF ARICA AND PARINACOTA 
(REGION I)  
1. Title 
Tax Credit for Investment in the Provinces of Arica and Parinacota (Region I).  
2.  Period  
June 2 017-June 2 018 and June 2 018-June 2 019. 
3. Objectives  
To reverse the declining economy of the provinces of Arica and Parinacota, making use of both their 
advantageous geographical position for trade purposes and their tourist attractions, strengthening 
entrepreneurship and consolidating Arica as an inter -ocean corridor.  
4. Background and authority  
Background : Arica and Parinacota, as outlying 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) and No. 19.669 (Official Journal of 5 May 2 000). 
Decree having Force of Law (DFL) No. 1 of the Ministry of Finance, published in the Official Journal 
of 11 September 2 001, contains the rev ised, coordinated and consolidated text of Law No. 19.420 . 
The latest amendment to this Law was by means of Law No. 20.780 of 2 9 September 2 014. 
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 region  of Arica and Parinacota for the production of 
goods or  the provision of services in th e region . Such investment s must be made during the indicated 
periods and amount to more than 500 UTM (CLP  24,370,500, equivalent to USD 34,334)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 intended primarily for 
commercial exploitation for tourist purposes, directly tied in with the productio n of goods or the 
supply of services of the taxpayer's business or activity, 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 property 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 invest in th e construction of buildings 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  classed  as sites of 
interest for touri sts by the National Tourism Service , which were completed or built during the 
financial year.  
                                                
1 Unidad Tributaria Mensual , UTM  (monthly tax unit), June 2019: CLP 48,741. Source: Central Bank. 
Value of US dollar observed at 3 June 2019: CLP 709.8. Source: Central Bank.  G/SCM/N/343/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 2 025. 
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 2045.  
9. Statistical data  
No data availa ble. 
II. 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 (REGION I) AND PUNTA ARENAS (REGION XII) 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 in the Free Zones in the Cities of Iquique (Region I) and Punta Arenas 
(Region  XII) and a credit for the tax -paying owners, co -owners, partners or shareholders of a 
company or user ben efiting 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.  
2. Period  
June 2 017-June 2 018 and June 2 018-June 2 019. 
3. Objectives  
To stimulate the economic development of Region I and Region XII, so as to form an attractive area 
for investment, economic activity, settlement, growth and sovereignty.  
4. Background and authority  
Background : These areas, because of their location and geo graphical 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, coordinat ed 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 2 001. This legislation was last amended by Laws No. 20.780, No. 20.899 and No. 20.997.  
5. Form of the subsidy  
In practice, this subsidy consists of a first -category tax exemption for enterprises and a credit for 
the tax -paying owners, co -owners, partners or shareholders of enterprises covered by the exemption 
in an amount equal to 50 % of the first -category tax that the enterprise would have been required G/SCM/N/343/CHL  
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  to pay had there been no exemption . However, the subsidy is not equal to the overall amount of the 
tax exemption, as the owners will have to pay personal tax on the profits allocated t o them, with 
the appropriate credit.  
Indeed, the 1984 Income Tax Law provided for a first -category tax (on companies) and a second 
category tax (on natural persons) . Accordingly, the owners of an enterprise may discount the amount 
of first -category tax pai d (25 % on a company's annual profits under the income allocation system 
and 25.5 % on profits under the semi -integrated system) from the amount payable as supplementary 
overall tax2 (a progressive tax that represents a percentage of withdrawn profits) or ad ditional tax3, 
depending on the place of residence or domicile of the company's owners.  
However, by means of Laws No. 20.780 and No. 20.899, a benefit was included in the exemption in 
question4 for the tax -paying owners, co -owners, partners or shareholders of enterprises covered by 
Decree having Force of Law (DFL) No. 341 who pay final taxes (that is, the supplementary overall 
or additional tax) . Even though the enterprises do not pay first -category tax because of their 
exemption, their partners  and shareholders are required to pay tax on income allocated to them . 
The benefit consists of a credit for these partners and shareholders that is equal to 50 % of the tax 
the enterprises would have had to pay had there been no first -category tax exemption . 
In this way, enterprises benefit from the first -category tax exemption, and their owners, co -owners, 
partners or shareholders benefit from a credit equal to 50 % of the first -category tax that the 
enterprises would have had to pay had there been no exempt ion, with respect to allocations of a 
company's own income to its owners as well as income allocated to the company by third parties 
also receiving the same tax benefit, which the company must, in turn, allocate to its owners.  
To be eligible for this new b enefit, the taxpayer with first -category tax liability must adopt the income 
allocation system or the provisions of Article 14ter of the Income Tax Law.  
6. To whom and how the subsidy is provided  
This incentive is for management companies and users (all legal persons) in the free zones of Iquique 
(Region I) and Punta Arenas (Region XII) , as well as the owners, co -owners, partners or 
shareholders of enterprises covered by DFL No. 341. They must meet the requirements established 
by the Ministry of Fina nce and the Ministry of the Economy, Development and Reconstruction, under 
contracts containing conditions freely agreed on with the interested party.  
These benefits also apply to manufacturing companies already established or setting up in Arica and 
manuf acturing companies in the Alto Hospicio district in Iquique.  
Beneficiary enterprises are exempt from the first -category tax under the Income Tax Law on fiscal -
year profits, and the owners, co -owners, partners or shareholders of those enterprises will be el igible 
for a credit equal to 50 % of the first -category tax.  
7. Amount of the subsidy  
There are no official calculations of tax revenue forgone.  
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.  
                                                
2 Applicable to natural persons domiciled or residing in Chile.  
3 Applicable to persons not domiciled or residing  in Chile.  
4 The exemption entered into force on 1 January 2017.  G/SCM/N/343/CHL  
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  III. FUND FOR THE PROMOTION AND DEVELOPMENT OF REMOTE AREAS  
1. Title 
Fund for the Promotion and Development of Remote Areas.  
2. Period  
June 2 017-June 2 018 and June 2 018-June 2 019. 
3. Objectives  
To contribute to the development of the disadvantaged regions of Arica and Parinacota, Tarapacá, 
Aysén, Presidente Carlos Ibáñez del Campo, Magallanes and the Chilean Antarctic territories and the 
provinces of Chiloé and Palena, by providing assistance to small and medium -sized investors wishing 
to invest or reinvest in production in these remote regions.  
4. Background and authority  
Background : Being in outlying regions and provinces, these areas are at a disadvantage in relation 
to the development of the r est 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, pub lished 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 is the subsidy provided  
Funds may only be accorded for investments by small and medium -sized investors, producers of 
goods and services in the sectors of construction, machinery, equipment, special animal feed and 
small -scale fishing . The annual amount of individual investment or reinvestment must not exceed 
UF 50,000 (Chilean inflation -indexed mo netary units) , equivalent to USD 1,956,227.5 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 makes a contribution of 20 %, from 2012 to 2025 inclusive, of the cost of the investment 
or reinvestment made . The benefit is renewed from year to year under the Budget Law.  
7. Amount of the subsidy  
For 2017, the Budget Law estimated the maximum amount to be paid out at CLP 2,835,627,000, 
equivalent to USD 3,994,966. For 2018, a maximum  amount of 2,909,353,000 was allocated, which 
was equivalent  to USD 4,098,835. For 2019, the maximum  amount was CLP 2,996,634,000, 
equivalent to USD 4,221,800. 
8. Duration  
The benefit is renewed from year to year under the Budget Law.  
                                                
5 Unidades de Fomento , UF (Chilean inflation -indexed monetary units), at 3 June 2019: CLP 27,770.60. 
Source: Central Bank. Value of US dollar observed at 3 June 2019: CLP 709.8. Source: Centr al Bank.  G/SCM/N/343/CHL  
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  9. Statistical data  
No data available.  
IV. SMALL -SCALE FISHING PROMOTION FUND  
1. Title 
Small -Scale Fishing Promotion Fund (FFPA).  
2. Period  
2017-2018. 
3. Objectives  
To foster the sustainable development of the Chilean small -scale fisheries sector and support small -
scale fishermen's organizations legally established in Chile:  
(a) by developing infrastructure for small -scale fishing;  
(b) by providing training and technical assistance for small -scale fishermen and organizations 
thereof;  
(c) by restocking the hydrobiological resources mainly exploited by small -scale fishermen ; and 
(d) by marketing fisheries products and managing production centres.  
4. Background and authority  
The Small -Scale Fishing Promotion Fund (FFPA), created in 1992 pursuant to the General Law on 
Fisheries and Aquaculture, falls under the responsibility of the Ministry of the Economy, Development 
and Reconstruction and is managed by the Council for the Promotion of Small -Scale Fi shing, which 
is headed by the National Director of the National Fisheries Service.  
The mission of the Small -Scale Fishing Promotion Fund is to foster the sustainable development of 
the Chilean small -scale fisheries sector and support the efforts of small -scale fishermen's 
organizations legally established in Chile to improve the living and working conditions of their 
members, in a resource - and environment -friendly manner, through the co -financing of projects 
managed by the organizations themselves.  
Authori ty: 
Article 56 et seq. of the General Law on Fisheries and Aquaculture  
(http://www.subpesca.cl/portal/615/articles -88020_documento.pdf ) 
 
Regulations governing the Small -Scale Fishing Promotion Fund  
(http://www.subpesca.cl/portal/615/articles -80834_documento.pdf ) 
5. Form of the subsidy  
Full or partial funding of projects managed by small -scale fishermen's organizations through  a 
national public tender system.  
6. To whom and how the subsidy is provided  
Small -scale fishermen's organizations legally established in Chile that submit projects seeking to 
improve the living and working conditions of their members in a sustainable and resource - and 
environment -friendly manner.  G/SCM/N/343/CHL  
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  7. Amount of the subsidy  (annual nominal amount in CLP  million ) 
Funding area  2017  2018  
Infrastructure and equipment    3,308 2,234.2 
Training and technical assistance  175.7   357.7 
Domestic marketing  (Chile)        536   623.1 
Resource management and aquaculture    702.6       728 
Overall total  4,722.3     3,943 
8. Duration  
The programme is of indefinite duration . The subsidy is determined and provided on a fiscal year 
basis.  
9. Statistical data  
No data available.  
V. FISHERIES ADMINISTRATION FUND  
1. Title 
Fisheries Administration Fund (FAP)  
2. Period  
2011-2018. 
3. Objectives  
The promotion and sustainable development of fisheries activities, by means of social development 
and intervention instruments that serve to strengthen and improve the socio -economic and 
productive situation of the small -scale fisheries sector on the basis of a territorial economic 
development approach.  
4. Background and authority  
The Fishe ries Administration Fund (FAP), created in 1992 pursuant to the General Law on Fisheries 
and Aquaculture, falls under the responsibility of the Ministry of the Economy, Development and 
Reconstruction and is managed by the Fishery Management Council, the bo dy that decides on the 
projects to be approved, as well as the guidelines to be followed, by the FAP.  
As a general rule, the FAP finances:  
(a) fisheries and aquaculture research projects;  
(b) programmes for the monitoring, control and management of fisheries activities;  
(c) programmes and projects for the promotion and development of small -scale fisheries;  
(d) workforce reintegration programme for former industry workers;  
(e) training activities for both current and former fishing industry workers;  
(f) high-level technical study programmes for both current and former fishing industry workers;  G/SCM/N/343/CHL  
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  (g) social support programmes for former workers of the extractive or processing fishing industry;  
(h) projects for research into and restoration of the habitat of hydrobiological species of 
significance to recreational fishing, and programmes for the promotion, dissemination, 
management, monitoring and control of this activity;  
(i) programmes and projects promoting the consumption of hydrobiological resources ; and 
(j) fisheries recovery programmes for small -scale fishermen, crews of special vessels and factory 
workers.  
Authority:  
Article 173 of the General Law on Fisheries and Aquaculture 
(http://www.subpesca.cl/portal/615/articles -88020_documento.pdf ) 
5. Form of the subsidy  
Full or partial funding of projects, on the basis of competitive bidding aimed at small -scale 
fishermen's organizations and allocated directly to the beneficiaries, in the following four areas:  
• promotion and development of small -scale fisheries, and implementation of programmes for 
the monitoring, control and management of associated activities;  
• training, social support and occupational re -training for both displaced and non -displaced 
fishing industry workers;  
• research in relation to, and promotion, development, management, monitoring and control of, 
recreational fishing activities ; and 
• promotion of the human consumption of marine products.  
6. To whom and how the subsidy is provided  
Small -scale fishermen's organizations legally established in Chile that submit projects.  
7. Amount of the subsidy  (annual nominal amount in CLP  million ) 
Area  2017  2018  
Aquaculture  50.5 223.4 
Marketing  252.6  266 
Equipment  3,464.4 2,397.6 
Promotion  262.8 1,009.3 
Restocking  624.2 37.6 
Training and/or technical assistance        1,136 1,447.8 
Infrastructure  1,413.7 2,417.2 
Total  7,204.2 7,798.9 
8. Duration 
The programme is of indefinite duration . The subsidy is determined and provided on a fiscal year 
basis.  
9. Statistical data  
No data available.  
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