. /.   WORLD TRADE  
ORGANIZATION  G/SCM/Q2/THA/21 
22 April 2008 
 (08-1908) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Replies Questions Posed by TURKEY1 Regarding the  
New and Full Notification of THAILAND2 
 
  The following communication, dated 18 April 2008,  is being circulated at the request of the 
Delegation of Thailand.    
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Industrial Estate Authority of Thailand (IEAT) 
 
Question 1 
 
The Industrial Estate Authority of Thailand reports on its web site ( www.ieat.go.th
) that 
the companies located in Export  Processing Zones may claim benefits including "Exemption of 
Export Duty and Value Added Tax (VAT) on exported goods " and "Exemption or refund of 
Duties and Value Added Tax (VAT) for local goods utilized for production " according to 
related provisions of the IEAT Laws.  Could Thailand explain how these incentive programs are 
in line with the Article 3.1 of the SCM Agreement?   
 
Reply  
 Exemption of Export Duty and Value Added Tax (VAT) on exported goods
 
 
 Since the exemption of export duty and VAT provided by the IEAT is only applicable to exported goods, and the value of such exemptions do not exceed the value of taxes levied on such 
products if they were sold locally, we are of th e view that this incentiv e program therefore falls 
outside the scope of Annex I (g) of the SCM Agreem ent which refers to "the exemption or remission, 
in respect of the production and distributi on of exported products, of indirect taxes1 in excess of those 
levied in respect of the production and distribution of like products when sold for domestic 
consumption".  In other words, this program doe s not constitute a prohibited subsidy within the 
meaning of Article 3.1 and is thus in compliance with the SCM Agreement.   
 
                                                      
1 The term "indirect taxes" shall mean sales, excise , turnover, value added, franchise, stamp, transfer, 
inventory and equipment taxes, border taxes and all taxes other than direct taxes and import charges.   
                                                      
1 G/SCM/Q2/THA/20.   
2 G/SCM/N/155/TUR.   
 G/SCM/Q2/THA/21 
Page 2  
 
  Exemption or refund of Duties and Value Added Ta x (VAT) for local goods utilized for production
 
  Manufacturers in the IEAT Free Zone are able to apply for the exemption or refund of the above-mentioned indirect taxes for local and impor ted goods utilized in the production of goods for 
export.  Such incentive is therefore provided not only to local goods, but also to imported goods 
through the exemption of import duties.  Conseque ntly, this incentive program does not constitute a 
prohibited subsidy and is thus consistent w ith Article 3.1 of the SCM Agreement.   
 
Merchant Marine Financing 
 
Question 2 
 
Thailand stated in its New and Full Notifica tion that EXIM Bank of Thailand provided 
financing with "more relaxed conditions" fo r merchant marine business.  Could Thailand 
provide information on these conditions, crite ria and methods used by the EXIM Bank for 
extending credits to merchant marine busin esses and other businesses/industries?   
 
Reply
 
  The phase "more relaxed conditions" which ap pears in the notification by Thailand 
(G/SCM/N/155/THA) is used in the context of comp aring the conditions for granting financing by the 
Export-Import Bank of Thailand (EXIM Bank)  and the Bank of Thailand (BOT).   
 
 In the above-mentioned notification, the "mor e relaxed conditions" by the EXIM Bank refers 
to the fact that financing from the EXIM Bank could be used to finance invest ment in ships with an 
operating period over 20 years, while loans from the BOT is limited to new ships or existing ones 
aged not exceeding 20 years.  Furthermore, the term of financing from the BOT's fund is up to 
5 years, while that from the EXIM Bank is up to  7 years, depending on business conditions.   
   
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