WORLD TRADE  
ORGANIZATION  G/SCM/N/123/GTM 
G/SCM/N/128/GTM 6 July 2005 
 
 
(05-2960) 
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 Subsidies  
and Countervailing Measures  
 
Extension Under SCM Article 27.4 of the Transition Period for the  
Elimination of Export Subsidies Pursuant to the Procedures  
in Document G/SCM/39  
 
Updating Notification  
 
GUATEMALA 
   The following communication, dated 30 June 2005, has been received from the Permanent 
Mission of Guatemala. 
 
_______________ 
 
 
 Pursuant to Article 27.4 of the SCM Agreem ent, I hereby submit the Updating Notification 
concerning the transition period for the eliminati on of export subsides, in accordance with the 
procedures established in the Doha Ministerial Declaration (WT/MIN(01) and document G/SCM/39. 
  I also wish to inform you that the programmes notified were not modified  in any way in 2004, 
with the exception of Decree 29-89 of the Congress of the Republic. 
  The purpose of the modifications, introduced by  means of Decree 38-2004 of the Congress of 
the Republic, is essentially to facilitate administrati ve formalities, such as the requirement that the 
authorities should grant the relevant authorizations within six hours
 of the arrival of a shipment or of 
the submission of the corresponding documents in the case of imports of perishable goods;  the 
obligation to notify  the Industrial Policy Directorate of the Ministry of the Economy of any 
subcontracting of productive services of other compan ies;  the procedures for the transfer of goods 
among companies recognized  under the various regimes;  the obligation for the Ministry of Labour 
and Social Planning to automatically grant three-month work permits  so that recognized enterprises 
are able to contract specialized technical services abroad;  the requirement that the owners or legal 
representatives of companies applying for rec ognition should sign the requested economic and 
technical report ;  the imposition of fines  on companies that fail to submit documentation within the 
time-limits prescribed by law;  the procedures for the dispatch or reception of goods  between 
recognized companies and users of free zones;  and the streamlining of procedures for approval  of the 
disposal of, inter alia , machinery, equipment, parts, components and accessories imported under the 
law in question. 
 G/SCM/N/123/GTM 
G/SCM/N/128/GTM Page 2 
 
 
  The attached updating notification is bei ng submitted in order to comply with the 
transparency requirements and allow standstill, as pe r paragraph 4(a) of document G/SCM/39, to be 
verified on the basis of the notified information, purs uant to paragraphs 1(d) and 3(b) of that same 
document.  G/SCM/N/123/GTM 
 G/SCM/N/128/GTM 
 Page 3 
 
 
 CONTENTS 
 
 
Page   
PROGRAMME 
 
I. Exemption from Company Tax;  exemption from customs duties and other  
import taxes, including Value-Added Ta x (VAT), on machinery, equipment,  
parts, components and accessories required for the production process of  
companies under special customs regimes......................................................................... 4 
 II. Exemption from Company Tax;  exemption from customs duties and other  
import taxes, including Value-Added Ta x (VAT), on machinery, equipment,  
parts, components and accessories required for the production process relating  
to activities of managers and users of Free Zones ......................................................... 5 
 III. Exemption from Company Tax;  exemption from customs duties and other  
import taxes, including Value-Added Ta x (VAT), on machinery, equipment, 
parts, components and accessories required for the production process of  
commercial and industrial enterprises ope rating in the Industrial and Trade 
Free Zone (ZOLIC) ......................................................................................................... 6 
 G/SCM/N/123/GTM 
G/SCM/N/128/GTM Page 4 
 
 
 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. 
  (b) Exemption from customs duties and other import taxes, including Value-Added Tax 
(VAT), on machinery, equipment, parts,  components and accessories required for the 
production process. 
 2. Period of notification
 
  June 2005 
 
3. Objective
 
  To promote, encourage and develop the producti on in national customs territory of goods for 
export outside the national territory.  
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 in income.  Authority
 
 
 Legislative Decree No. 29-89 of 23 May 1989. 
 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 (whether to producers,  exporters or others, through 
what mechanisms, whether it is a fixed sum or fluctuating amount per unit and, if the latter, 
how the amount is determined ) 
 
 The subsidy is granted to companies by wa y of an exemption from Company Tax on income 
from the export of goods produced or assembled in Guatemala and exporte d outside the national 
territory under special customs regimes.   To be eligible for the programme, companies must be recognized by the Ministry of the 
Economy. 
  G/SCM/N/123/GTM 
 G/SCM/N/128/GTM 
 Page 5 
 
 
 7. Subsidy per unit, or, in cases where this is not possible, the total or annual amount budgeted  
for this subsidy (indicating, if possible, the average subsidy per unit for the year covered by  
the notification, the previous year or bo th).  A full explanation will be provided . 
 
 Subsidies are granted in accordance with the ex porters' income;  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 permitting an assessment of th e effects of the subsidy on trade.  The specific 
nature and scope of such statistics is left to the judgement of the notifying Member.  It is, 
however, desirable – to the extent possible, relevant and/or determ inable – that such 
information include statistics relating to the pr oduction, consumption, im ports and exports of 
the subsidized product(s) . 
  No such statistical information is available.  PROGRAMME II 
 
1. Description
 
  (a) Exemption from Company Tax on income exclusively from the activities of managers 
and users of the Free Zone. 
  (b) Exemption from customs duties and other import taxes, including Value-Added 
Tax (VAT), on machinery, equipment, parts, components and accessories required for the production process. 
 
2. Period of notification
 
  June 2005  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.  G/SCM/N/123/GTM 
G/SCM/N/128/GTM Page 6 
 
 
 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 (wheth er to producers, exporters or others, through
 
that mechanisms, whether it is a fixed sum or fluctuating amount per unit and, if the latter , 
how the amount is determined ) 
  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 (indicating, if possible, the average subsidy per unit for the year covered by  
the notification, the previous year or bo th).  A full explanation will be provided . 
 
 Subsidies are granted in accordance with the ex porters' income;  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 permitting an assessment of the effects of the subsidy on trade.  The specific
 
nature and scope of such statistics is left to  the judgement of the notifying Member.  It is,  
however, desirable – to the extent possible, relevant and/or determinable – that such  
information include statistics relating to the production, consumption, imports and exports of  
the subsidized product(s) . 
  No such statistical information is available. 
 
PROGRAMME III 
 
1. Description
 
  (a) Exemption from Company Tax on income from the activities of managers and users 
of the Industrial and Trade Free Zone (ZOLIC). 
  (b) Exemption from customs duties and other import taxes, including Value-Added 
Tax (VAT), on machinery, equipment, parts, components and accessories required for the production process. 
 
2. Period of notification
 
  June 2005   G/SCM/N/123/GTM 
 G/SCM/N/128/GTM 
 Page 7 
 
 
 3. Objective  
  To promote the economic development of the province of Izabal, where the population – mostly Garífuna – is the most backward in the c ountry in terms of social and economic development, 
and capitalize on its geographical location as the sole  access point to Guatemala from the Atlantic 
Ocean.  4. Background and authority
 
 
Background  
  Measure to encourage investment as a m echanism for promoting the development of 
Guatemala's Garífuna population.  
Authority
 
  Decree No. 22-73 of 21 March 1973.  5. Form of the subsidy
 
 
 The subsidy takes the form of a tax exemption. 
 6. To whom and how the subsidy is provided (wheth er to producers, exporters or others, through
 
what mechanisms, whether it is a fixed sum or fluctuating amount per unit and, if the latter,  
how the amount is determined ) 
 
 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 (indicating, if possible, the average subsidy per unit for the year covered by  
the notifications, the previous year or both).  A full explanation will be provided . 
  Subsidies are granted in accordance with the bene ficiaries' income;  they cannot therefore be 
quantified given that they vary each fiscal year.  
8. Duration of the subsidy and/or any other time-l imit which could affect it, including the date of 
inception/commencement  
  This subsidy programme is applicable for up to ten years.  9. Statistical data permitting an assessment of the effects of the subsidy on trade.  The specific
 
nature and scope of such statistics is left to  the judgement of the notifying Member.  It is,  
however, desirable – to the extent possible, relevant and/or determinable – that such  
information include statistics relating to the production, consumption, imports and exports of  
the subsidized product(s) . 
 
 No such statistical information is available. 
 
__________