G/SCM/N/315/CHL  
10 October  2017 
(17-5446) Page: 1/9 
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  9 October 2 017, 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 T AX UNDER THE INCOME TAX LAW ON 
FISCAL -YEAR PROFITS OF MANA GEMENT COMPANIES AND  USERS IN THE FREE 
ZONES IN THE CITIES OF IQUIQUE (REGION I ) AND PUNTA ARENAS ( REGION 
XII) AND A CREDIT FO R THE TAX -PAYING OWNERS, CO -OWNERS, PARTNERS OR 
SHAREHOLDERS OF A CO MPAN Y OR USER BENEFITING  FROM THE EXEMPTION 
IN AN AMOUNT EQUAL T O 50% OF THE TAX THE  COMPANY OR USER WOUL D 
HAVE BEEN REQUIRED T O PAY HAD THERE BEEN  NO EXEMPTION  ................................ ... 3 
III. FUND FOR THE PR OMOTION AND D EVELOPMENT OF REMOTE  AREAS  ........................  5 
IV. SMALL -SCALE FISHING PROMOT ION FUND  ................................ ................................  6 
V. FISHERIES ADMINIS TRATION FUND  ................................ ................................ ............  7 
 G/SCM/N/315/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  
To June 2 017. 
3. Objective s 
To reverse the declining economy of t he 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 authori ty 
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 (Offici al 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 revised, coordinated and consolidated te xt 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  
This incentive is for taxpayers with in vestment 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$93,480,000, 
equivalent to US$140,540 )1 
2. In the province of Parinacota : investments must amount to more than 1,000 UTM 
(Ch$46,740,000, equivalent to US$70,270).  
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 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 being o f particular interest by the Director of the 
National Tourism Service.  
                                                
1 Unidad Tributaria Mensual,  UTM (monthly tax unit), June 2017: Ch$46,740. Source: Central Bank. 
Average exchange rate of the Chilean peso to the US dollar in June 2017: Ch$665.15. Source: Central Bank.  G/SCM/N/315/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  
1,000m2 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 1 995. The period of eligibility is 
up to 3 1 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 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 A RENAS (REGION XII) AND A 
CREDIT FOR THE TAX-PAYING OWNERS, CO -OWNERS, PARTNERS OR SHAREHOLDE RS OF 
A COMPANY OR USER BENEFIT ING FROM TH E EXEMPTION IN AN AMOUNT EQUAL TO  
50% OF THE TAX THE COMPANY OR USER WOULD HAVE BEEN REQUIRED TO PAY HAD 
THERE BEEN NO EXE MPTION  
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 benefiting from th e 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  
To June 2 017. 
3. Objective s 
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 fea tures, 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 consol idated 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 Law s No. 20.780, No. 20.899 and 
No. 20.997. G/SCM/N/315/CHL  
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  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 the enterprise  would have been 
required 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 
to 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 paid  (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 additional tax3, depending on the plac e 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 ha ving 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 t o pay tax on inc ome 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 firs t-category tax exemption, and their owners, 
co-owners, partners or shareholders benefit from a credit equal to 50 % of the first -category tax 
the enterprises  would have had to pay had there been no exemption , with respect to  allocations of 
a company's own i ncome 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 benefit, the taxpayer with first -category tax liabilit y must adopt  the 
income allocation system or the provisions of Article 14 ter 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 Finance and the Ministry of the Economy, Development and 
Reconstr uction, 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 manufacturing companies in the Alto Hospicio district in Iquique.  
Benefi ciary 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 eligible 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 
10 December  1976 for Arica . In both cases it is of indefinite duration.  
                                                
2 Applicable to natural persons domiciled or residing in Chile.  
3 Applicable to p ersons not domiciled or residing in Chile.  
4 The exemption will enter into force on 1 January 2017.  G/SCM/N/315/CHL  
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  9. Statist ical 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 June 2 017. 
3. Objective s 
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 t o 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 Official Journal of 6 December 1 980. Decree having Force of 
Law No. 15 of the Ministry of Finance, p ublished in the Official Journal of 2 0 April 1 981, 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 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 monetary units), equivalent to US$2,004,441. 86.5 
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 % of the cost of investment or reinvestment made up to 
31 December 2 015. The benefit is renewed from year to year under the Budget Law.  
7. Amount  of the subsidy  
For 2017, the Bud get Law estimated the maximum amount to be paid out at Ch$2,753,036,000, 
equivalent to US$4,138,970.  
                                                
5 Unidades de Fomento, UF (Chilean inflation -indexed monetary units), June 2017: Ch$26,665.09. 
Source: Central Bank. Average exchange rate of the Chilean pe so to the US dollar in June 2017: Ch$665.15. 
Source: Central Bank.  G/SCM/N/315/CHL  
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  8. Duration  
This facility is available until 3 1 December 2 017. The benefit is renewed from year to year under 
the Budget Law.  
9. Statistical data  
No data a vailable.  
IV. SMALL -SCALE FISHING PROMOTION FUND  
1. Title 
Small -Scale Fishing Promotion Fund  (FFPA) . 
2. Period  
2009-2016.  
3. Objective s 
To foster the sustainable development of the Chilean small -scale fisheries sector and support 
small -scale fishermen's or ganizations 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 
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 orga nizations through a 
national public tender system . G/SCM/N/315/CHL  
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  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  (annual nominal amount in Ch$ million ) 
Funding area  2010  2011  2012  2013  2014  2015 (2)  2016  Total  
Development of 
port 
infrastructure  1,014. 4 479.3 2,417. 3 316.3 187.8 2,210.3 3,792. 3 10,417. 6 
Training 
(strengthening 
of human 
resources)  146.2 354.7 51.5 72.1 86.2 26.9 607.5 1,345. 0 
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. 4 187.7 988.0 1,103. 8 293.0 488.7 5,152. 5 
Aquaculture       619.7 541.6 1,161. 4 
Other (1)  * * * 1,383. 4 2,800. 1 2,662. 1 608.1 7,453. 7 
Total: 1,822. 4 2,680. 1 3,015. 1 3,298. 3 4,622. 0 5,812. 0 6,038. 1 27,288. 0 
(1) In the area entitled "Other", the figures provid ed for 2013 and  2014 correspond mainly to funding 
granted for technical assistance and equipment . For 2015 and 2016, the figures in this area correspond to  
"emergencies " (understood as  situations  where  a state of emergency has been declared by the 
appropri ate Minister ; mainly related  to the replacement of materials and  equipment damaged in natural 
disaster s). 
(2) It should be noted that from 2015 to the present, the FFPA has modified its f inanc ing structure and 
moved  from demand -side to supply -side f inancin g, which generally limits the typology  of investment s 
offered by the institution . 
(*) No support was provided in the specific areas covered by (1) in these years.  
8. Duration  
The programme is of indefinite duration . The subsidy is determined and provided o n a fiscal year 
basis.  
9. Statistical data  
No data available.  
V. FISHERIES ADMINISTRATION FUND  
1. Title 
Fisheries Administration Fund (FAP)  
2. Period  
2010-2016.  
3. Objective s 
The promotion and sustainable development of fisheries activities, by means of so cial development 
and intervention instruments that serve to strengthen and improve the socio -economic and G/SCM/N/315/CHL  
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  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, t he 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 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 st udy 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;  
(i) programmes and projects promoting the consumption of hydrobiological resources ; and 
(j) fisheries recovery programmes for sm all-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 pr ojects, 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 th e 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 . G/SCM/N/315/CHL  
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  7. Amount  of the  subsidy  (annual nominal amount in Ch$  million ) 
Area  2010  2011  2012  2013  2014  2015  2016  Total  
Aquaculture  - 20.0 259.9 379.3 208.7 39.1 23.9 930.9 
Marketing  209.0 134.2 1,161. 4 1,081. 3 1,094. 8 704.9 915.4 5,301. 0 
Equipment  226.8 166.0 1,695. 1 4,255. 1 1,396.2 1,896. 9 1,936. 8 11,572. 9 
Promotion  2,125.2 1,310. 0 614.4 2,575. 6 924.7 752.0 2,319. 6 10,621. 5 
Restocking  107.0 226.5 386.4 33.9 133.4 111.7 332.5 1,331. 4 
Training and/or 
technical 
assistance  257.7 220 678.6 540 783.1 3,328. 8 1,026. 5 6,834. 7 
Infrastructure  64.0 - 178.0 456.6 506.5 1,201. 2 1,583.1 3,989. 4 
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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