WORLD TRADE  
ORGANIZATION  G/SCM/N/114/JOR 
5 July 2004 
 (04-2874) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
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  
 
JORDAN 
 
 The following communication, dated 29 June 2004, is being circulated at the request  of the Hashemite Kingdom of Jordan.  
_______________ 
  
 In accordance to Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on 
Subsidies and Countervailing Measures, the Govern ment of Jordan is pleased to provide the WTO 
Committee on Subsidies and Countervailing Measures  with its notification, pursuant to the above-
mentioned Articles and in compliance with the WTO decision circulated in document (G/SCM/79) to 
grant Jordan an extension until 31 December 2007, of the transition period under Article 27.2(b) of 
the SCM Agreement, for the elimination of export s ubsidies which take the form of full or partial 
exemptions from import duties and internal taxes and which were in existence under the programme 
on 1 September 2001.   The decision was made in recognition that Jo rdan is a developing country Member, whose 
share of world merchandise export trade was not greater than 0.10 per cent and whose total Gross 
National Income for the year 2000 as published by the World Bank was at or below US$20 billion, and who is otherwise eligible to request an exte nsion pursuant to Article 27.4 of the Agreement on 
Subsidies and Countervailing Measures ("SCM Agreement"). G/SCM/N/114/JOR 
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 1. Title of the Subsidy Programme 
 Jordan's Income Tax Law No. 57 of 1994 (amending Law No. 57 for the year 1985) and its 
amendments, which authorize partial or total ex emption from income tax for profits on certain 
exports, and Decision No. 3394 of 1994 pursuant to this Law, which exempted from income tax 
profits on all exports (except ph osphate and potash) to non-protocol countries and territories. 
 
2. Period Covered by the Notification 
The period covered is the year 2003. 
 
3. Policy Objective and/or Purpose of the Subsidy 
 In light of the prevailing political situation in  the Middle East, and its significant effects on 
the economic conditions of region, subsidies were  necessary in 2003 to ensure the wellbeing and 
sustainability of national industry.   The Jordanian market, still suffering from th e repercussions of the 1991 gulf war, as 
population grew by 500,000 in one year and Jordan lo st its main trading partner Iraq, was faced with 
new challenges in 2002 and 2003, as political instabilit y prevailing in the region due to the current 
Gulf War.   Jordanian exporters, faced with heavy restric tions on trade with Iraq and stagnant conditions 
in the vital Arab markets, struggled to adjust.  Jordan's entry to the global market, while opening new 
horizons for industry, created tougher competition in  the domestic market and a significant portion of 
local manufactures.  
4. Background and Authority for the Subsidy 
(a) Background 
 The programme was established back in 1995 exempting profits gained from exporting 
activities trying to compensate the harmful effects of the economical and social factors that affected 
Jordan by opening up the economy.  Ninety-eight per cent of the Jordanian exporting industrial companies that are mostly of small nature suffer from lack of market acce ssibility caused by their 
small size, which obstructs them from reaching ec onomies of scale, leaving their costs higher, and 
deprives them of the opportunity to compete in world markets. 
 
(b) The Authority Responsible 
− The Income Tax Department 
 (c) Legislation 
 The implementing legislation is "Income Tax La w No. 25 for the year 2001 amending Income 
Tax Law No. 57 for the Year 1985". 
  The only related provision in the Law menti oned above in connection with the Exemption 
from Income Tax is Article 3(c) and its full translation is as follows:  
 "(c) Income earned from exports or re-exports shall be deemed to have been generated in 
the Kingdom, and the Council of Ministers, may upon the recommendation of the Minister,  G/SCM/N/114/JOR 
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 exempts from the tax wholly or partially the net income earned from certain types of local 
production for exportation." 
  The other matter related to the subject is the decision of the Council of Ministers No. 3394 for 
the year 1994, which excludes some exports from be nefitting from this Law.  The translation of the 
Decision is as follows: 
  "Based on Article 3(c) of the Income Tax Law No. 57 the following exports are not entitled to 
the exemption mentioned therein: 
 
• Potash exports; 
• Phosphate exports;  and 
• Exports subject to Protocol Trade." 
 
5. Form of the subsidy (i.e. gran t, loan, tax concession, etc.) 
• Total and partial exemption from income ta x from the profits on certain products. 
 
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). 
(a) To whom and how the subsidy is provided 
 The exemption is granted to companies that present official documents to the income tax 
department verifying the amount of profit resulting of  exports activities.  In addition, the high council 
for investment has agreed to est ablish Jordanian exporting compani es specialized in exporting local 
goods and products and these companies are exempted  from the income tax.  By the Ministerial 
Council Decision No. 12/11/4 on 30 December 1997, a ny company with its paid capital not less than 
JD 2 million, and registered according to the comp any laws, specialized in marketing, exporting and 
advertising local goods and products , would be qualified to be cons idered as a Jordanian exporting 
company. 
 
(b) Amount 
 The amount of exemption is determined accordi ng to the imputed percentage of net profits 
resulting from export activities.  Large enterprises exporting phosphate, potash and fertilizers that 
account for about 70 per cent of the country's exports  are not entitled to be beneficiaries from this 
programme.  The normal income tax, which will be  paid in the absence of the programme, is on 
average 15 per cent or less on the profits generated from all their operations irrespective of the nature 
of their sales.  
7. Subsidy per unit or in cases where this not po ssible, the total amount or the annual 
amount budgeted for that subsidy (indicating, if possible, the average subsidy per unit for the preceding year).  Where provision of per unit subsidy information (for the year 
covered by the notification, the previous year, or both) is not possible, a full explanation. 
 The normal income tax, which will be paid in the absence of the programme, is on average 
15 per cent or less on the profits ge nerated from all their operations irrespective of the nature of their 
sales and so per unit it is 1.5 per cent or less for each Jordanian JD.  G/SCM/N/114/JOR 
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 8. Duration of the subsidy and/or any other time limits attached to it, including date of 
inception/commencement 
 This programme has been in existence since the year 1994, according to the Law No. 57, for 
the year 1994 and its amendments.  9. Statistical data permitting an assessment of the trade effects of the subsidy.  The specific 
nature and scope of such data 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): 
 Trade effects 
  In the year 2002, data of exports shows that  the value of exports entitled for exemption was 
US$522,237,246.79 million while the approximate  calculated value of exemption was 
US$7,833,558.70 million.  As for the year 2003, the value of exports entitled for exemption was 
US$552,370,342 million, while the approximate cal culated value of exemption amounted to 
US$8,285,555 million.   The above figures conclude that only 5.8 per cen t in the growth rate of the exports value 
entitled for exemption was recorded in the year 2003, a nd when compared to the year 2002, this slight 
percentage indicates that the Jordanian subsidy progr amme is still important and Jordan needs to have 
it continued in order to achieve its menti oned objectives.  The programme undoubtedly serves 
exporting enterprises to enable it to  adjust to the current capacity constraints, through opening a way 
to new untraditional markets after the historical c oncentration of the Jordanian exports toward limited 
number of markets. 
 
 The figures also show how the trading sector in Jordan, is strictly affected by the hazardous 
economical and political situations in the region wh ich hindered the utilization of the Jordanian 
resources and obstructed exporters  from reaching economies of scale, leaving costs higher, and 
depriving them from having opportunities to compet e in world markets.  However, exporters are 
trying hard to take pioneering steps towards creating more trade opportunities, in the efforts to fulfill 
the Jordanian plans to enhance th e share of private sector in the Jordanian economical activity, in 
addition to enabling Jordanian labour forces to  pass up a very high number of unemployment 
problems.   It is concluded that the shallow amount of  subsidy granted for the exporting companies 
through the current programme still represents a necessary support to help exporting enterprises to 
overcome the economic disadvantages ca used by the small size of the local market and the difficulties 
raised by regional developments.   As a matter of fact the total amount of exemption of US$8,285,555 million constitutes only 
0.276 per cent of Jordan's national exports.  This implies that the income ta x relief still has a slight 
effect on Jordan's international trade due to its meagre  value;  this meagre value is attributed to the 
fact that the exemption is applied only to abou t one third of the country's exports, US$552,370,342 
million.   Realizing that Jordan is a developing country with a share not greater than 0.10 per cent of 
world export trade, it is clear that no harmful eff ects have been introduced on the international trade 
as a result of the subsidy programme.   G/SCM/N/114/JOR 
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 (a) For the three most recent years fo r which statistics are available; 
(b) For a previous representative  year, which, where possible and meaningful, should be the latest 
year preceding the introduction of the subsidy or preceding the last major change in the 
subsidy. 
 
Income tax relief in 
US$ Total exports value 
in US$ Total exports value 
benefiting from this 
programme in US$ Income tax relieve in 
US$ 
2001 US$1.7 billion US$593,564,589 million US$8,903,469 million 
2002 US$ 2.2 billion US$522,237,246.79 
million US$7,833,558.70 
million 
2003 US$3 billion US$552,370,342 million US$8,285,555 million 
 
Table 1 – Income Tax Relief under Law No. 57 of 1985, as amended  
classified by HS Chapter in US$ for the year 2003  
 
Chapters Export Value Income Tax Relief 
13 20,445 307 
17-24 35,775,020 536,625 
27 7,376,396 110,646 
28-38 68,733,876 1,031,008 
39-40 25,768,576 386,529 
41-42 12,585 189 
44-46 1,715,195 25,728 
48-49 30,658,247 459,874 
50-63 242,744,867 3,641,173 
64 29,528 443 
68-70 20,754,221 311,313 
71 3,702,607 55,539 
72-83 44,215,036 663,226 
84-85 55,725,727 835,886 
86-87 498,757 7,481 
90-92 903,455 13,552 
94-96 11,909,394 178,641 
97 14,168 213 
98 1,808,923 27,134 
99 3,319 50 
Total 552,370,342 8,285,555 
 
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