WORLD TRADE  
ORGANIZATION  G/SCM/N/186/GTM 
G/SCM/N/192/GTM 9 July 2009 
 
(09-3369) 
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 S ubsidies and Countervailing Measures  
 
Continuation of Extension under SCM Article 27.4 of the Transition Period for the  
Elimination of Export Subsidies Pursuant to the Procedures Contained in the  
General Council Decision in Document WT/L/691  
 
GUATEMALA 
   The following communication, dated 6 July 2009, is being circulated at the request of the delegation of Guatemala.  
_______________ 
 
  Pursuant to Article XVI.1 of the General Ag reement 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 pro cedures laid down in the General Council Decision 
in document WT/L/691 of 31 July 2007 ("the Deci sion"), Guatemala hereby presents this updating 
notification for the period 1 July 2008 to 30 June 2009.   Furthermore, with regard to the notified programmes, Guatemala hereby advises the Committee on Subsidies and Countervailing Measures of the following: 
 
(a) Pursuant to paragraph 1(e) of the Decision, " … A Member receiving a continuation 
of an extension under these procedures shall take, from 1 January 2008, the 
necessary internal steps with a view to eliminating export subsidies under the 
programme before the end of the final two-year phase-out period provided for … ". 
 
In that respect, Decree No. 22-73 of the Congress of the Republic of Guatemala, which contains the Organic Law of the Sa nto Tomás de Castilla Industrial and Trade 
Free Zone ("ZOLIC"), has been amended pursuant to Decree No. 30-2008 of the 
Congress of the Republic of Guatemala, in eff ect as of 1 July 2008.  The changes are 
described below in the section on Programme III. 
 
Generally speaking, the amendments concer n management of the ZOLIC and seek to 
eliminate de facto  and de jure  export contingency in respect of subsidies.  
Accordingly, the amended Law does not im pose any quantitative restrictions on the 
sale on the domestic market of goods produced in the ZOLIC, provided that the 
corresponding taxes and charges are paid at the time of importation.  Neither does the 
amended Law make a distinction between  export sales and sales on the domestic G/SCM/N/186/GTM 
G/SCM/N/192/GTM Page 2 
 
 
  market for the purposes of exemption from company tax or any other tax.  In other 
words, enterprises established in the ZO LIC are entitled to 100 per cent exemption 
from company tax for ten years, as well as to exemption from the other applicable 
taxes, irrespective of whether their production is intended for export sale or sale on 
the domestic market. 
 
(b) Furthermore, pursuant to paragraph 1( g) of the Decision, Guatemala requested 
technical assistance from the WTO Secretar iat for eliminating the export subsidies 
under the notified programmes.  As a result, a Regional Workshop, followed by a 
National Workshop, were held in Guatemala City from 25 to 29 May 2009 on 
extensions under Article 27.4 of the Ag reement on Subsidies and Countervailing 
Measures.  The Regional Workshop was attended by officials from Costa Rica, 
Guatemala, Panama and the Dominican Republic.  For a day and a half, these officials received comprehensive and de tailed explanations concerning their 
countries' obligations under the SCM Agreement.  They also had the opportunity to 
analyse the elements to be taken into consideration when developing trade and 
incentive policies.  Each delegation sub sequently met WTO Secretariat officials 
individually to express doubts specific to their own country. 
 
The contributions by WTO Secretariat officials in this regard have been of invaluable 
assistance.  The National Workshop for Guatem ala consisted of two parts.  The first 
part was geared towards high-level offici als from the various interested public- and 
private-sector bodies involved with each of the programmes;  the second part was for technical-level officials who are to be involved in the analysis and presentation of concrete proposals on this issue. 
 
Both activities at national level were extrem ely useful.  Of particular note among the 
main conclusions of the first part of the national-level activity is the creation of an 
inter-agency group to analyse and discuss trade and incentive policy, convened by Guatemala's Ministry of the Economy.  This  group will prepare the action plan to be 
presented next year. 
 
 Guatemala remains at the disposal of WTO Members to clarify or expand on the information contained in this notification.  G/SCM/N/186/GTM 
 G/SCM/N/192/GTM 
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  TABLE OF CONTENTS 
 
Page 
 
I. Exemption from company tax;  exemption from customs duties and other import taxes, 
including value-added tax (VAT), on impor ts of machinery, equipment, parts, 
components and accessories required for the production process of companies under special customs regimes........................ ........................ .............................. ..…………... 3 
 
II. Exemption from company tax;  exemption from customs duties and other import taxes, 
including value-added tax (VAT), on impor ts of machinery, equipment, parts, 
components and accessories required for the production process relating to activities of managers and users of Free Zones………................................................................... 4 
 
III. Exemption from company tax;  exemption from customs duties and other import taxes, 
including value-added tax (VAT), on impor ts of machinery, equipment, parts, 
components and accessories required for the production process of commercial and industrial enterprises operating in the Industrial and Trade Free Zone (ZOLIC)............................................................……........................................................ 5  
 
 
PROGRAMME I
 
 
1. Description 
 
(a) Exemption from company tax on income from the export of goods produced or 
assembled in Guatemala and exported under special customs regimes to non-Central 
American countries. 
 
(b) Exemption from customs duties and othe r import taxes, including value-added 
tax (VAT), on imports of machinery, equi pment, parts, components and accessories 
required for the production process. 
 
2. Period of notification 
 
 1 July 2008 to 30 June 2009. 
 
3. Objective 
 
 To promote, encourage and develop the produc tion in the national customs territory of goods 
for export to non-Central American countries.  4. Background and authority 
 
 Background
: 
  The Government of Guatemala considers th at appropriate conditions for encouraging 
investment of national and foreign capital need to  be promoted in order to reduce the high poverty 
levels stemming, inter alia , from the internal armed conflict as we ll as to raise employment levels and 
improve the distribution of income.  G/SCM/N/186/GTM 
G/SCM/N/192/GTM Page 4 
 
 
   Authority
: 
  Legislative Decree No. 29-89 of 23 May 1989 and amendments thereto. 
 5. Form of the subsidy 
 
 The subsidy takes the form of a tax exemption, but its effect is greatly reduced given the other 
national taxes payable.  6. To whom and how the subsidy is provided 
 
 The subsidy is granted to companies by way of an exemption from company tax on income from the export of goods produced or assembled in  Guatemala and exported under special customs 
regimes to non-Central American countries. 
 
 To be eligible for the programme, companies must be recognized by the Ministry of the 
Economy.  
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 acco rdance with the exporters' inco me;  they cannot therefore be 
quantified given that they vary each fiscal year.  
8. Duration of the subsidy and/or any other time-limit which could affect it, including the 
date of inception/commencement 
 
 This subsidy programme is applicable for up to ten years.  
9. Statistical data 
  No such statistical information is available. 
 
PROGRAMME II
 
 
1. Description 
 
(a) Exemption from company tax on income ex clusively from the activities of managers 
and users of the Free Zone. 
 
(b) Exemption from customs duties and othe r import taxes, including value-added 
tax (VAT), on imports of machinery, equi pment, parts, components and accessories 
required for the production process. 
 
2. Period of notification 
 
 1 July 2008 to 30 June 2009. 
  G/SCM/N/186/GTM 
 G/SCM/N/192/GTM 
 Page 5 
 
 
  3. Objective 
 
 To promote and regulate the establishment in  Guatemala of Free Zones, the activities of 
which, in particular measures to boost foreign tr ade, create employment and stimulate technology 
transfer, serve to encourage national development. 
 
4. Background and authority 
 
 Background : 
 
 In an endeavour to encourage the development of regions which have been marginalized as a 
result of the internal armed conflict and to re duce poverty levels, a Free Zone system has been 
established as an instrument to create employme nt, attract investment and encourage technology 
transfer. 
 
 Authority : 
  Legislative Decree No. 65-89 of 14 November 1989.  
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 of this incentive are the managers and users of Free Zones. 
  To enjoy these fiscal benefits, companies must be fully authorized by the Ministry of the 
Economy.  
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 acco rdance with the exporters' inco me;  they cannot therefore be 
quantified given that they vary each fiscal year.  8. Duration of the subsidy and/or any other time-limit which could affect it, including the 
date of inception/commencement 
 
 This subsidy programme is applicable for up to ten years.  
9. Statistical data 
 
 No such statistical information is available.  
PROGRAMME III
 
 
1. Description 
 
(a) The Industrial and Trade Free Zone (ZOL IC) operates in a non-customs area located 
within the perimeter established in the regulatory plan of the Santo Tomás de Castilla Port in the Department of Izabal, and in non-customs areas which can be fitted out for G/SCM/N/186/GTM 
G/SCM/N/192/GTM Page 6 
 
 
  its public special economic development areas,  which may be located in any part of 
national territory. 
 
(b) Users which are established and operate  in the ZOLIC enjoy exemption from the 
following:  (1) 100 per cent of company tax for 10 years, calculated as of the date on 
which the enterprise starts up operations in the ZOLIC;  (2) value-added tax, customs 
duties and other charges applicable to impor ts entering the ZOLIC;  (3) value-added 
tax on taxable actions and procedures carried  out in the ZOLIC;  and (4) stamp tax on 
documents containing deeds or contracts relating to goods or business in the ZOLIC. 
 
(c) Users are also exempt from the payment of import duties, value-added tax, taxes and 
other fiscal charges levied in relation to th e entry into and stay in the ZOLIC of all 
goods and other articles or negotiable instrume nts, raw materials, inputs, materials, 
semi-processed goods, intermediate goods , packaging and containers, as well as 
machinery, equipment, spare parts, accessories and other goods intended for 
industrial or commercial production activities or the provision of services. 
 
2. Period of Notification 
 
 1 July 2008 to 30 June 2009. 
 
3. Objective 
 
 To promote industrial and commercial developm ent in Guatemala in order to create further 
sources of employment. 
 
4. Background and authority 
 
 Background
: 
  Measure to encourage investment as a mechanism for promoting development. 
 
 Authority
: 
  Decree No. 22-73 of the Congress of the Repub lic of Guatemala of 21 March 1973 and the 
amendment thereto introduced by Decree No. 30-20 08 of the Congress of the Republic of Guatemala, 
in effect as of 1 July 2008. 
 
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 of these incentives are comme rcial 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 bene ficiaries' income;  they cannot therefore be 
quantified given that they vary each fiscal year.  G/SCM/N/186/GTM 
 G/SCM/N/192/GTM 
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8. Duration of the subsidy and/or any other time-limit which could affect it, including the 
date of inception/commencement 
  Exemption from company tax is applicable fo r up to ten years.  ZOLIC operations, however, 
are unlimited in duration.  
9. Statistical data 
  No such statistical information is available. 
 
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