G/SCM/N/253/CHL  
17 February 2014  
(14-0980)  Page: 1/5  
Committee on Subsidies and Countervailing Measures  Original: Spanish  
 
  SUBSIDIES 
NEW AND FULL NOTIFICATION PURSUA NT TO ARTICLE XVI.1 OF THE 
GATT 1994 AND ARTICLE 25 OF THE SCM AGREEMENT 
CHILE 
The following communication, dated 12 February 2014, is being circulated at the request 
of the delegation of Chile.  
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TABLE OF CONTENTS 
Page 
I. TAX CREDIT FOR INVESTMENT IN THE PROVINCES OF ARICA AND 
PARINACOTA (REGION I) 2 
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) 3 
III. FUND FOR THE PROMOTION AND DEVELOPMENT OF REMOTE AREAS 4 
 G/SCM/N/253/CHL 
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  I. TAX CREDIT FOR INVESTMENT IN TH E PROVINCES OF ARICA AND PARINACOTA 
(REGION I) 
1. Title  
Tax Credit for Investment in the Provinces of Arica and Parinacota (Region I). 2. Period 
To September 2013. 
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 23 October 1995, amended 
by Laws Nos. 19.478 (Official Journal of 24 October 1996) and 19.669 (Official Journal 
of 5 May 2000). Decree having Force of Law (DFL) No. 1 of the Ministry of Finance, published in the Official Journal of 11 September 2001, contains the revised, coordinated and consolidated 
text of Law No. 19.420. The latest amendment to this Law was by means of Law No. 20.655 
of 1 February 2013. 
5. Form of the subsidy Tax credit in the form of a tax allowance. 
6. To whom and how is the subsidy provided 
This incentive is for taxpayers with investment projects in the following amounts for the periods 
below: 
1. In the province of Arica: 
(a) 2008 and 2009: 1,000 UTM ($40,286,000, equivalent to US$84.003)
1; 
(b) 2010: 1,500 UTM ($60,429,000, equivalent to US$126,004); (c) 2011: 2,000 UTM ($80,572,000, equivalent to US$168,005). 
2. In the province of Parinacota, investments must amount to more than 1,000 UTM 
($40,286,000, equivalent to US$84,003). 
The period for eligibility is up to 31 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, includ ing immovable property intended primarily for 
commercial exploitation for tourist purposes, directly tied in with the production of goods or the 
supply of services of the taxpayer's business or activity, purchased new or finished in the financial year. 
                                               
1 UTM at May 2013: $40,286. Source : Central Bank. 
Average exchange rate of the Chilean peso to the US dollar in May 2013: $479.58. Source : Central 
Bank. G/SCM/N/253/CHL 
- 3 - 
  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 the construction of buildings for use 
as offices or dwellings, whether or not they include business premises, car parks or shops, 
consisting of more than five units, in places specified in the Law, with a built area of not less than 1,000m
2 and completed or built during the financial year. 
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 In 2011, the tax credit, estimated in terms of tax revenue forgone, was estimated 
at $1,000 million (equivalent to US$2,137,992).
2 
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 1995. The period for eligibility 
is up to 31 December 2025. 
The benefit will apply only in regard to assets in corporated 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 available. 
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) 
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). 
2. Period 
To September 2013. 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 geographical features, 
are at a disadvantage in relation to the development of the rest of the country. 
                                               
2 Average exchange rate of the Chilean peso to the US dollar between January and July 2009: $580.62. 
Source : Central Bank. G/SCM/N/253/CHL 
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  Authority: The legal authority is contained in Ministry of Finance Decree No. 341, published in the 
Official Journal of 8 June 1977, 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. 
5. Form of the subsidy 
In practice, the subsidy is a temporary financial benefit. It is not equal to the overall amount 
of the tax exemption. 
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 paid (15% on a company's annual profits) from the amount payable 
as second-category tax (a progressive tax that represents a percentage of withdrawn profits).
3 
Since the companies concerned benefit from first-category tax exemption, management 
companies and users in free zones have nothing to discount from their second-category tax and 
must therefore pay the full amount of this tax.  The benefit of the exemption therefore amounts 
strictly to the financial cost not incurred for the period between the time when the first-category tax became payable and the time (or times) wh en profits are withdrawn and the corresponding 
second-category tax becomes payable. 
6. To whom and how is the subsidy 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). They must meet the requirements established by the Ministry of Finance and the Ministry of the Economy, Development and 
Reconstruction, under contracts containing conditio ns freely agreed on with  the interested party. 
These benefits also apply to manufacturing compan ies already established or setting up in Arica 
and manufacturing companies in the Alto Hospicio district in Iquique. 
Beneficiaries are exempt from the first-category tax under the Income Tax Law on fiscal-year 
profits. 
7. Amount of the subsidy There are no official calculations of tax revenue forgone. 8. Duration 
This incentive took effect on 25 June 1975 for Iquique and Punta Arenas and 
on 10 December 1976 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. 
III. FUND FOR THE PROMOTION AND DEVELOPMENT OF REMOTE AREAS 
1. Title Fund for the Promotion and Development of Remote Areas. 2. Period 
To September 2013. 
                                               
3 The level of income considered for the second-category tax includes income other than withdrawn 
profits, such as salaries, etc. G/SCM/N/253/CHL 
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  3. Objectives 
To contribute to the development of the disadvan taged 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 prov iding 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 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 Of ficial Journal of 6 December 1980. Decree No. 15 
of the Ministry of Finance, published in the Offi cial Journal of 20 April 1981, lays down the terms 
and conditions of this fund. 
Decree having Force of Law No. 15 entered into effect pursuant to Law No. 20.655, Second Article. 
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, and producers 
of goods and services in the sectors of construc tion, machinery, equipment, special animal feed 
and small-scale fishing. The annual amount of individual investment or reinvestment must not exceed 50,000 UF ( unidades de fomento  - Chilean inflation-indexed monetary units)
4, equivalent 
to US$2,325,395. 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. 
T h i s  f u n d  m a k e s  a  c o n t r i b u t i o n  o f  2 0 %  o f  t h e  c o s t  o f  i n v e s t m e n t  o r  r e i n v e s t m e n t  m a d e  u p  
to 31 December 2013. The benefit is renewed from year to year under the Budget Law. 
7. Amount of the subsidy 
For 2013, the Budget Law has estimated the maximum amount to be paid out at $2,552.5 million 
(equivalent to US$5,146,169). 
8. Duration This facility is available until 31 December 2013. The benefit is renewed from year to year under 
the Budget Law. 
9. Statistical data No data available. 
 
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4 Average value of the UF at September 2013: (Chilean pesos) $23,067.92 (exchange rate: $496 to the 
dollar).