G/SCM/N/284/CHL  
 
4 April 2016  
(16-1865)  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 SCM AGREEMENT 
CHILE 
The following communication, dated 1 April 2016, 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 TH E PROVINCES OF ARICA AND PARINACOTA 
(REGION I) .................................................................................................................... .. 2 
II. EXEMPTION FROM FIRS T-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 DE VELOPMENT OF REMOTE AREAS ........................ 4  
IV. SMALL-SCALE FISHIN G PROMOTION FUND ................................................................ 5  
V. FISHERIES ADMINISTRATION FUND ............................................................................ 7  
 G/SCM/N/284/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 December 2015. 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 provin ces, are at a disadvantage in relation to the 
development of the rest of the country. 
Authority: Law No. 19.420, published in the Offici al Journal of 23 October 1995, amended by Laws 
No. 19.478 (Official Journal of 24 October 1996) and No. 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. 20.780 of 29 September 2014. 
5. Form of the subsidy Tax credit in the form of a tax allowance. 6. To whom and how the subsidy is provided 
This incentive is for taxpayers with investment projects in the following amounts for the 
periods below: 
1. In the province of Arica: investments must  amount to more than 2,000 UTM (Ch$89,910,000, 
equivalent to US$127,670).
1 
2. In the province of Parinacota: investments must amount to more than 1,000 UTM 
(Ch$44,955,000, equivalent to US$63,835).  
The period of 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, in cluding 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. 
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 be ing of particular interest by the Director of the 
National Tourism Service. 
                                               
1 Unidad Tributaria Mensual , UTM (monthly tax unit), December 2015 average: Ch$44,955. 
Source: Central Bank. Average exchange rate of the Ch ilean peso to the US dollar in December 2015: Ch$704. 
Source: Central Bank. G/SCM/N/284/CHL 
 
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  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 warehouses, 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 
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 of 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 December 2015. 
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 deve lopment 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 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. G/SCM/N/284/CHL 
 
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  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 (21% on a company's annual profits) from the amount payable as second-category tax (a progre ssive tax that represents a percentage of withdrawn profits).
2 
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 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) . They must meet the requirements established 
by the Ministry of Finance and the Ministry of  the Economy, Development and Reconstruction, 
under contracts containing conditions freel y 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 December 2015. 
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 providing assistance to small and medium-sized investors 
wishing to invest or reinvest in production in these remote regions. 
                                               
2 The level of income considered for the second-c ategory tax includes income other than withdrawn 
profits, such as salaries, etc. G/SCM/N/284/CHL 
 
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  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 Official Jo urnal of 6 December 1980. Decree having Force of 
Law No. 15 of the Ministry of Finance, published in  the Official 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 the subsidy is provided 
Funds may only be granted 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 UF 50,000 (Chilean inflation-indexed monetary units), equivalent to US$1,819,352.
3 
Funds granted under this programme may not be a ccepted together with any other benefit granted 
by the Government of Chile for the same goods or services. 
This fund makes a contribution of 20% of the cost of investment or reinvestment made up to 
31 December 2015. The benefit is renewed from year to year under the Budget Law.  
7. Amount of the subsidy For 2015, the Budget Law estimated the maximum amount to be paid out at Ch$2,652,250,000, 
equivalent to US$3,766,127. 
8. Duration This facility is available until 31 December 2015. The benefit is renewed from year to year under 
the Budget Law. 
9. Statistical data No data available. 
IV. SMALL-SCALE FISHING PROMOTION FUND 
1. Title Small-Scale Fishing Promotion Fund (FFPA). 2. Notification period  
2009-2014. 
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: 
                                               
3 Unidades de Fomento , UF (Chilean inflation-indexed monetary units), December 2015 average: 
Ch$25,625. Source: Central Bank. Average exchange rate of the Chilean peso to the US dollar in September 2015: Ch$704. Source: Central Bank. G/SCM/N/284/CHL 
 
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  (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 resp onsibility of the Ministry of the Economy, 
Development and Reconstruction and is managed by the Council for the Promotion of Small-Scale Fishing, 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.  
Authority: 
Article 56 et seq. of the General Law on Fisheries and Aquaculture 
(http://www.subpesca.cl/normativa /605/articles-516_documento.pdf ) 
Regulations governing the Small-Scale Fishing Promotion Fund 
(http://www.subpesca.cl/normativa/ 605/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.  
7. Amount of the subsidy (Ch$ million) 
Funding area 2010 2011 2012 2013 2014 Total  
Development of port support 
infrastructure 1,014.40  479.3  2,417.30  316.3 187.80 4,415.10  
Training (strengthening of human 
resources) 146.2  354.7  51.5 72.1 86.2 710.70  
Restocking of fishery resources  91.9  324.8  358.6  538.5 444.1 1,757.9  
Improvements to the domestic 
marketing chain (Chile) 569.9  1,521.40  187.7  988 1,103.80 4,370.8  
Other (1) *  * * 1,383.40 2,800.09 4,183.49  
Total  1,822.40  2,680.10  3,015.10  3,298.30 4,621.99 15,437.89  
(1) The area entitled "Other", for which figures are provided for 2013 and 2014, corresponds to funding 
granted for the following in particular: technical as sistance, fishing tackle, weighing scales, trailers, 
vessels, diving equipment,  a geo-positioning system, growing media, and motors for vessels, lorries and 
net hauling equipment.  
(*) No support was provided in the specif ic areas covered by (1) in these years. G/SCM/N/284/CHL 
 
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  8. Duration 
The programme is of indefinite duration. The subs idy is determined and provided on a fiscal year 
basis.  
9. Statistical data 
There are no data available to assess the impact of the subsidies; these subsidies are, however, 
primarily intended for micro, small and medium-sized enterprises (MSMEs) engaged in commercial activities on the domestic market. 
 
V. FISHERIES ADMINISTRATION FUND 
1. Title Fisheries Administration Fund (FAP).  
2. Notification period  
2010-2014. 3. Objectives 
The promotion and sustainable development of fisher ies activities, by means of social development 
and intervention instruments that serve to st rengthen 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 Fisheries 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 body 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 an d development of small-scale fisheries; 
d. workforce reintegration programme for former industry workers;  
e. training activities for both current an d former fishing industry workers;  
f. high-level technical study programmes for both current and former fishing industry 
workers;  
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;  G/SCM/N/284/CHL 
 
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  i. programmes and projects promoting the consum ption 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/normativa /605/articles-516_documento.pdf ) 
5. Form of the subsidy 
Full or partial funding of projects, on the ba sis 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 (Ch$ million) 
Area 2010 2011 2012 2013 2014 Total  
Aquaculture -  20.0 259.9  379.3 208.7 867.9  
Marketing 209.0  134.2  1,161.4  1,081.3 1,094.8 3,680.7  
Equipment 226.8  166.0  1,695.1  4,255.1 1,396.2 7,739.2  
Promotion 2,125.2  1,310.0  614.4  2,575.6 924.7 7,549.9  
Restocking 107.0  226.5  386.4  33.9 133.4 887.1  
Training and/or technical assistance 257.7  220.0  678.6  540.0 783.1 2,479.4  
Infrastructure 64.0  - 178.0  456.6 506.5 1,205.0  
Total  2,989.7  2,076.7  4,973.7  9,321.8 5,047.4 24,409.2  
8. Duration 
The programme is of indefinite duration. The subs idy is determined and provided on a fiscal year 
basis. 
9. Statistical data 
There are no data available to assess the impact of the subsidies; these subsidies are, however, 
primarily intended for micro, small and medium-sized enterprises (MSMEs) engaged in commercial activities on the domestic market. 
 
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