SUBSIDIES
FINAL
TRANSPARENCY NOTIFICATION (FOR 2015) PURSUANT TO THE PROCEDURES IN THE GENERAL
COUNCIL DECISION IN DOCUMENT WT/L/691 ON THE EXTENSIONS UNDER
SCM ARTICLE 27.4 OF THE TRANSITION PERIOD FOR THE
ELIMINATION OF EXPORT 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
El Salvador
The following
communication, dated and received on 20 June 2024, is being
circulated at the request of the delegation of El Salvador.
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El Salvador
wishes to notify its subsidy programmes, 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 31 July 2007 ("the
Decision").
Programme 1:
Law on INDUSTRIAL AND COMMERCIAL FREE ZONES and amendments thereto
1._
Title of the subsidy programme, if relevant,
or brief description or identification of the subsidy
Programme for firms operating in free zones
or in inward-processing warehouses.
2._
Period covered by the notification
El Salvador
submits this notification for the period 1 January 2021 to
31 December 2022.
3._
Policy objective and/or purpose of the
subsidy
To create
optimal conditions for stimulating sustained economic growth that will
contribute to the creation of more and better jobs, the transfer of technology,
and the country's economic and social development.
4._
Background and authority for the subsidy
(including identification of the legislation under which it is granted)
A. Background
To improve the
welfare of the Salvadoran people by creating opportunities to maintain and
raise levels of employment and investment through government policies promoting
the country's economic and social development.
B. Authority
Law on Industrial
and Commercial Free Zones and amendments thereto.
5._
Form of the subsidy (i.e., grant, loan, tax
concession, etc.)
Tax exemption.
6._
To whom and how the subsidy is provided
(whether to producers, to exporters, or others; through what mechanism; whether
a fixed or fluctuating amount per unit; if the latter, how determined)
The Law on
Industrial and Commercial Free Zones, as amended, grants tax exemptions to
developers and users of free zones or inward-processing warehouses, based on
the criteria set out therein.
7._
Subsidy per unit, or in cases where this is
not possible, the total amount or the annual amount budgeted for that subsidy
(indicating, if possible, the average subsidy per unit in the previous year).
Where provision of per unit subsidy information (for the year covered by the
notification, for the previous year, or both) is not possible, a full
explanation
Given the
nature and scope of these programmes, no disaggregated statistical data
reflecting the amount of incentives per unit are available.
8._
Duration of the subsidy and/or any other time
limits attached to it, including date of inception/commencement
The duration of the benefits under the legislation is dependent on
the type of beneficiary (developer or user of free zones or inward-processing
warehouses) and their location (within or outside the metropolitan area).
9._
Statistical data permitting an assessment of
the trade effects of the subsidy. The specific nature and scope of such
statistics is left to the judgement of the notifying Member. To the extent
possible, relevant and/or determinable, however, it is desirable that such
information include statistics of production, consumption, imports and exports
of the subsidized product(s) or sector(s):
Annex 1
COMPARATIVE
TABLE
(USD million)
|
CONCEPT
|
2021
|
2022
|
|
(a) World exports
|
22,142,507
|
24,611,067
|
|
(b) Salvadoran exports
|
6,394.89
|
7,115.11
|
|
(c) b/a
|
0.03%
|
0.03%
|
Source: TRADEMAP and Central Reserve Bank of El
Salvador.
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Programme 2:
Law on tax incentives for the promotion of renewable energies in electricity
generation and amendments thereto
1._
Title of the subsidy programme, if relevant,
or brief description or identification of the subsidy
Tax incentives programme for the promotion of renewable energies
in electricity generation.
2._
Period covered by the notification
El Salvador
submits this notification for the period 1 January 2021 to
31 December 2022.
3._
Policy objective and/or purpose of the
subsidy
To foster investment
in projects that use renewable energy sources, which harness, inter alia,
hydraulic, geothermal, wind, solar and marine resources, as well as biogas and
biomass, and investment in projects using any other sources that may, in the
future, be identified as renewable for electricity generation purposes, in
order to promote environmental protection, the use of existing renewable
resources in El Salvador and a quality electricity supply.
4._
Background and authority for the subsidy
(including identification of the legislation under which it is granted)
A. Background
The use of
renewable energy sources for electricity generation helps to reduce the
country's environmental pollution, its dependence on fossil fuel purchases and
its greenhouse gas emissions.
B. Authority
The Law on Tax Incentives
for the Promotion of Renewable Energies in Electricity Generation and its
implementing regulations were issued in 2007. In 2015, the Law was amended to
promote renewable energy generation projects.
5._
Form of the subsidy (i.e., grant, loan, tax
concession, etc.)
Tax exemption.
6._
To whom and how the subsidy is provided
(whether to producers, to exporters, or others; through what mechanism; whether
a fixed or fluctuating amount per unit; if the latter, how determined)
Tax exemptions
are granted to natural or legal persons owning new investments in projects for
the installation or expansion of power plants that generate electricity from
renewable energy sources.
7._
Subsidy per unit, or in cases where this is
not possible, the total amount or the annual amount budgeted for that subsidy
(indicating, if possible, the average subsidy per unit in the previous year).
Where provision of per unit subsidy information (for the year covered by the
notification, for the previous year, or both) is not possible, a full
explanation
Given the
nature and scope of these programmes, no disaggregated statistical data
reflecting the amount of incentives per unit are available.
8._
Duration of the subsidy and/or any other time
limits attached to it, including date of inception/commencement
·_
For the incentive of total exemption from
import duties on materials and inputs: 10 years.
·_
In the case of the income tax exemption
incentive:
o_
Ten years from the tax year in which the
revenue was earned for projects with plants generating up to 10 MW.
o_ Five years from
the tax year in which the revenue was earned for projects with plants generating
over 10 MW.
9._
Statistical data permitting an assessment of
the trade effects of the subsidy. The specific nature and scope of such
statistics is left to the judgement of the notifying Member. To the extent
possible, relevant and/or determinable, however, it is desirable that such
information include statistics of production, consumption, imports and exports
of the subsidized product(s) or sector(s):
These incentive schemes create a climate of opportunity
for the development of projects to generate electricity from renewable sources.
Over the 2021-2022 period, 34 generation projects using renewable energy
sources were certified, with 22 of them certified in 2021 (one using biogas and
21 using solar photovoltaic sources) and 12 in 2022 (all using solar
photovoltaic sources).
These projects add approximately 83 MW of capacity
to El Salvador's energy matrix, with project capacities ranging from
0.1150 MW to 10.0000 MW.
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