G/SCM/N/315/GTM  
28 June 2017 
(17-3493) Page: 1/6 
Committee on Subsidies and Countervailing Measures  Original:  Spanish  
 
  SUBSIDIES  
NEW AND FULL NOTIFIC ATION PURSUANT  TO ARTICLE XVI:1  
OF THE GATT 1994 AND  ARTICLE 25 OF THE AG REEMENT  
ON SUBSIDIES AND COU NTERVAILING MEASURES  
GUATEMALA  
The following communication, dated 27 June 2 017, is being circulated at the request of the 
delegation of Guatemala.  
 
_______________  
 
 
Pursuant to Article XVI:1 of the General Agreement on Tariffs and Trade (GATT) 1994 and 
Articles  25 and 27.4 of the Agreement on Subsidies and Countervailing Measures ("the  SCM 
Agreement") and in accordance with the  procedures laid down in the General Council Decision in 
document WT/L/691 of 3 1 July 2 007 ("the Decision"), Guatemala hereby submits this notification 
for the period 1 July 2 015 to 3 0 June 2 016. 
 
Furthermore, with regard to the notified programmes, Guatem ala hereby notifies  the Committee 
on Subsidies and Countervailing Measures ( "the Committee ") of the following:  
 
Pursuant to paragraph 1(f) of the Decision, on 3 0 June 2 010 Guatemala notified its action plan for 
the elimination of the export subsidies conta ined in the three programmes which come under 
Article  27.4 of the SCM Agreement . Guatemala has notified  the Committee every year of the 
measures implemented  under the action plan.  
 
On 25 February 2 016, the Congress  of the Republic  of Guatemala approved the  Emergent Law on 
Job Protection (Decree No. 19-2016), publi shed in the  Official Gazette Diario de Centro América  on 
30 March 2 016. The Decree entered into force on the day following its publication and amended 
the Law on the Promotion and Development of Ex porting and Maquila Activities (Decre e No. 29-89) 
and the Free Zones Law (Decre e No. 65-89). Through these amendments, Guatemala is aiming to 
bring its subsidy programmes into line with the WTO Agreements . Attention is drawn in particular 
to the realignmen t of the programmes in question : all production  sectors have been excluded from 
the scope of these programmes , with the exception of the textiles and clothing sector  and 
enterprises providing services in the field of information and communication s technolo gy. Another 
change worth noting is the endeavour to encourage production rather than exports.  
 
With these amendments, Guatemala is of the view that it has met its obligations under the 
Agreement on Subsidies and Countervailing Measures . G/SCM/N/315/GT M 
- 2 - 
  TABLE OF CONTENTS  
  Page 
 
I Incentiv es for companies under special customs regimes    2 
 
II Incentive s for managers and users  of free zones   4 
 
III Incentive s for commercial and industrial enterprises operating in the Industrial and 
Trade Free Zone  (ZOLIC)    5 
 
PROGRAMME  
1. Descrip tion 
 
(a) Temporary relief from  the payment of customs duties and import taxes, including value 
added tax (VAT), on raw materials, semi -processed  products, intermediate products, 
materials, containers, packaging and labels, on the basis of the autho rized lists contained in 
the decision on eligibility issued by the Ministry of the Economy, up to a maximum of one  
year from the date of acceptance of the relevant customs import declaration or the Central  
American single customs form . 
 
(b) Temporary relief from  the payment of customs duties and import taxes, including VAT, on 
sample books, engineering samples, instructional material, patterns and models needed for 
the production process or for demonstration, research and educational purposes, up to a 
maxim um of one year from the date of acceptance of the relevant customs import 
declaration or the Central American Single Customs Form . 
 
(c) Total exemption from customs duties and import taxes, including VAT, on the import of 
machinery, equipment, parts, compo nents and accessories required for the production 
process, and duly identified in the decision on eligibility by the Ministry of the Economy.  
 
(d) Total exemption from tax on income obtained or derived exclusively from the activity 
authorized in the decisi on on eligibility . Such exemption shall be granted for a period of 
ten years, from the date of notification of the decision on eligibility by the Ministry of the 
Economy . For the purposes of the application of the exemption, the taxpayers concerned 
shall maintain a cost accounting  and perpetual inventory system or, failing that, a system of 
unit operating costs . Natural or legal persons domiciled abroad which have permanent 
subsidiaries, agencies or establishments operating in Guatemala and classified as pr oducers 
under the temporary admission procedure  or as service providers shall not be eligible for  
this exemption if their country of origin grants a tax credit for income  tax paid in Guatemala.  
 
(e) Temporary relief from  customs duties and import taxes, in cluding VAT, on machinery, 
equipment, parts, components and accessories required for the production process and duly 
identified in the decision on eligibility by the Ministry of the Economy, up to a maximum of 
one year from the date of acceptance of the re levant customs import declaration or the 
Central American single customs form. 
 
(f) Full exemption from taxes, customs duties and other charges applicable to the import and 
consumption of fuel oil, butane gas, propane and bunker oil that are strictly neces sary for 
the generation of electricity . 
 
(g) VAT shall not be applied to loca lly produced inputs acquired for incorporation in the final  
product or to services used solely in the activities of producer s under the temporary  
admission procedure  or those of service provider s. 
 
2. Period of notification  
 
1 July 2 015 to 30 June 2 016. 
 G/SCM/N/315/GT M 
- 3 - 
  3. Obje ctive 
 
To promote, encourage and develop activities in the national customs territory carried out by  
natural or legal persons domiciled in Guatemala and operating under its customs regimes, in 
compliance with Decre e 29-89 of the Congress  of the Repu blic. 
 
4. Background and authority  
 
Background : 
 
Through the entry into force of this new legal framework, t he Government of Guatemala is 
promoting, encouraging and developing job creation, investment and technology transfer in the 
national customs territory . 
 
Authority : 
 
Decre e No. 29-89 of 23 May 1 989 and its amendments, inclu ding Decre e No. 19-2016.  
 
5. Form  of the subsidy  
 
The subsidy takes the form of a tax exemption and is ear marked for domestic production activities 
in the textiles and clothing sector  and for service providers in the field of information and 
communications technology . 
 
6. To whom and how the subsidy is provided  
 
To natural or legal persons domiciled in Guatema la and operating under its special customs 
regimes, in compliance with the law.  
 
7. Subsidy per unit or, in cases where this is not possible, the total or annual amount 
budgeted for this subsidy  
 
Subsidies are granted in accordance with the producers' or s ervice providers' income ; they cannot 
therefore be quantified given that they vary each fiscal year.  
 
8. Duration of th e subsidy and/or any other time -limits attached to it, including date 
of inception/commencement  
 
Unlimited, during the period that the decision on eligibility remains in effect , except in the case of 
exemption from income tax ; exemption from import taxes  on machinery, equipment, parts, 
components and accessories ; and exemption from taxes on the import  for consumption of fuel oi l, 
butane  gas, propane and bunker oil strictly necessary for the generation of electricity , which is 
granted for a period of ten years from the date of notification of the decision on eligibility and may 
not be renewed.  
 
The ten-year period may be cancelled at any time  for failure to comply with the social security 
obligations and other obligations pursuant upon the eligibility decision.  
 
9. Statistical data  
 
No such statistical information is available.  
 G/SCM/N/315/GT M 
- 4 - 
  PROGRAMME  
1. Descrip tion 
 
(a) Exemption from tax, customs duties and charges that apply to the import into the free zone 
of machinery, equipment, tools, raw materials, inputs, semi -processed products, containers, 
packaging, components and any merchandise used for the production of goods and the 
provision of services.  
 
(b) Total exemption from tax on income derived exclusively from the activities of users 
producing  industrial goods or users of services for a period of ten years from the date of 
notification of the decision on their eligibility by the Ministry of the Econo my. Users 
producing  industrial goods or service users domiciled abroad which operate in Guatemala 
shall not be eligible for this exemption if their country of origin grants a tax credit for income  
tax payable in Guatemala.  
 
This exemption shall not apply t o service users which sell or provide  services to the national 
customs territory . 
 
(c) Transfers of goods within and between free zones shall not be subject to VAT. 
 
(d) Revenue stamps and special stamped paper for protocols shall be fully exempt from tax 
when employed  for the purchase, exchange or transfer of real estate used exclusively in the 
activities of users producing  industrial goods or users of service s. 
 
(e) VAT shall not be applied to locally produced inputs acquired for incorporation in the fina l 
product or to services used solely in the activities of users producing  industrial goods or 
those of  users of services.  
 
2. Period of notifica tion 
 
1 July 2 015 to 30 June 2 016. 
 
3. Obje ctive 
 
To encourage the establishment of free zones in Guatemala in o rder to boost  the country's 
development through the activities carried out in such zones , with the aim of creating employment 
and promoting technology transfer . 
 
4. Background and authority  
 
Background : 
 
Through the entry into force of this new legal frame work, the Government of Guatemala is seeking 
to promote appropriate conditions for encouraging investment of national and foreign capital, 
thereby creating jobs and promoting technology transfer . 
 
Authority : 
 
Decre e No. 65-89 of 14 November 1 989 and its am endments , inclu ding Decre e No. 19-2016.  
5. Form  of the subsidy  
 
The subsidy takes the form of a tax exemption . 
 
6. To whom and how the subsidy is provided  
 
The beneficiaries are the managers and users of free zones . The term "user" means a natural or 
legal person authorized by the Ministry of the Economy to operate in the free zone subject to 
satisfaction of the requirements of the Commercial Code  and the Free Zones Law and its 
implementing regulations . Users may be : (i) produc ers of industrial goods , when engaged in the 
produc tion, transformation , assembly , mounting and processing of goods , with the aim of vesting G/SCM/N/315/GT M 
- 5 - 
  them with characteristics , uses or functions other than those of their original materials or 
components or the materials or components consumed , or in technological research and 
development ; or (ii) service providers, when engaged in the provision of services which include 
commercial activities relat ing to international trade . 
 
7. Subsidy per unit or, in cases where this is not possible, the total or annual amount 
budgeted for this subsidy  
 
Subsidies are granted in accordance with the producers' or service providers' income ; they cannot 
therefore be quantified given that they vary each fiscal year.  
 
8. Duration of th e subsidy and/or any other time -limits attached to it, including date 
of inception/commencement  
 
Unlimited, during the period that the decision on eligibility remains in effect, except in the case of 
exemption from income tax and exemption from import taxes on machinery, equipment and too ls, 
which is granted  for a period of ten years from the date of notification of the decision on eligibility 
and may not be renewed . 
 
The ten-year period may be cancelled at any time for failure to comply with the social security 
obligations and other oblig ations pursuant upon the eligibility decision.  
 
9. Statistical data  
 
No such statistical information is available.  
 
PROGRAMME  
 
1. Description  
 
(a) The Industrial and Trade Free Zone (ZOLIC) operates in an area located within the perimeter 
established in th e plan regulating  the port of Santo Tomás de Castilla in the Department of  
Izabal . 
 
(b) Users w hich are established and operating  in the ZOLIC enjoy exemption from the following : 
(i) full exemption from  incom e tax for ten years, calculated as of the date o n which the 
enterprise starts up operations in the ZOLIC ; (ii) VAT, customs duties and other charges 
applicable to merchandise  imports entering the ZOLIC ; (iii) VAT on taxable actions and 
procedures carried out in the ZOLIC ; and (iv) stamp duty on document s containing deeds or 
contracts relating to goods or business in the ZOLIC.  
 
(c) Users are also exempt from the payment of import duties, VAT, taxes and other fiscal  
charges levied in relation to the entry into and stay in the ZOLIC of all goods and other 
articles or negotiable instruments, raw materials, inputs, materials, semi -processed 
products , intermediate products , packaging and containers, and also machinery, equipment, 
spare parts, accessories and other goods intended for industrial or commercial pr oduction 
activities or the provision of services.  
 
2. Period of notification  
 
1 July 2 015 to 3 0 June 2 016. 
 
3. Objective  
 
The objective of the ZOLIC is to promote the economic and social development of the Department 
of Izabal, the only department in Guate mala with access to the Atlantic Ocean.  
 G/SCM/N/315/GT M 
- 6 - 
  4. Background and authority  
 
Background : 
 
To encourage investment as a means of promoting the country's economic development.  
 
Authority : 
 
Decre e No. 22-73 of the Congress  of the Republic of 21 March 1 973 and its am endments . 
 
5. Form  of the subsidy  
 
The subsidy takes the form of a tax exemption . Beneficiaries  must be established and operating in 
the Santo Tomás de Castilla Free Zone, situated in the D epartment of Izabal.  
 
6. To whom and how the subsidy is provided  
 
The beneficiaries of these incentives are commercial and/or industrial enterprises operating under 
this special regime.  
 
7. Subsidy per unit or, in cases where this is not possible, the total or annual amount 
budgeted for this subsidy  
 
Subsidies are granted  in accordance with the beneficiaries' income ; they cannot therefore be 
quantified given that they vary each fiscal year.  
 
8. Duration of th e subsidy and/or any other time -limits attached to i t, including date 
of inception/ commencement  
 
Unlimited, except i n the case of exemption from income tax, which shall be granted for a 
maximum of ten years . 
 
9. Statistical data  
 
No such statistical information is available.  
__________