. /.  WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/CHL/24 
20 April 2012 
 (12-2121) 
Committee on Subsidies and 
Countervailing Measures Original: Spanish 
 
 
 
SUBSIDIES 
 
Replies to the Questions Posed by the EUROPEAN UNION1 
Regarding the New and Full Notification of CHILE2 
   The following communication, dated 19 April 2012, is being circulated at the request of the delegation of Chile.  
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 Under section I "I. TAX CREDIT FOR INVESTMENT IN THE PROVINCES OF 
ARICA AND PARINACOTA (REGION I)", Title of the subsidy programme:  Tax Credit for Investment in the Provinces of Arica and Parinacota (Region I). 
 
Question 1 
  Please provide the criteria on the basis of which these two areas are considered 
disadvantageous. 
 
 Under section 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)", Title of the subsidy pr ogramme:  Exemption from first-category tax 
under the Income Tax Law on fiscal-year profit s of management companies and users in the 
free zones in the cities of Iquique (Region I) and Punta Arenas (Region XII).  
 
Question 2 
  Please provide the criteria on the basis of which these two areas are considered 
disadvantageous.  
 Under section III "FUND FOR THE PROMOTION AND DEVELOPMENT OF 
REMOTE AREAS", Title of the subsidy programme:  Fund for the Promotion and Development of Remote Areas.  
 
Question 3 
  Please provide the criteria on the basis of which these two areas are considered 
disadvantageous. 
                                                      
1 G/SCM/Q2/CHL/23. 
2 G/SCM/N/220/CHL. G/SCM/Q2/CHL/24 
Page 2  
 
  Replies 
 
 The designation of the provinces of Arica and Parinacota as disadvantaged areas is based on a set of criteria set forth in Law 19.420.  These criteri a include geographical isolation, difficulties of 
communication and integration, climatic conditio ns, low population density and relative rise in 
poverty.  No other relevant criteria are used in designating the disadvantaged areas. 
  The criteria on the basis of which both the First Region and the Twelfth Region are considered to have clear and objective disadvantages compared to the rest of the national territory 
include the following: 
 
- Geographical isolation:  they are situated  at each end of the national territory, which 
is 4,270 km long with an average width of 174 km.  This isolation raises the cost of 
living in these regions. 
 
- Difficulties of communication and integration with the rest of the national territory 
and lack of infrastructure, in particular in the southern region that has no land communication route. 
 
- Unfavourable climate conditions:  the most arid desert in the world, on the one hand, 
and glaciers on the other, make it very diffi cult to generate market conditions for the 
development of investment and employment. 
 
- Very low population density, compounded by  the high rate of emigration from the 
frontier regions. 
 
 The purpose of these incentive programmes is to take advantage of conditions in each of these 
areas in order to make full use of their potential and ensure even territorial development.  In Arica the 
aim is to achieve integration with bordering countries;   in the southern region, the goal is to develop 
investment opportunities for emerging sectors, primarily tourism, aquaculture and port services.  
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