WORLD TRADE
ORGANIZATIONG/SCM/N/95/JOR/Suppl.1
G/SCM/N/99/JOR
30 July 2003
(03-4057)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
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 under Article 27.2(b)
for the Elimination of Export Subsidies
JORDAN
The following communication, dated 15 July 2003, has been received from the Permanent
Mission 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 Government of Jordan is pleased to provide the
SCM Committee 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 theelimination of export subsidies 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 Jordan is a developing country Member, whose
share of world merchandise export trade was not greater than 0.10 per cent and whose total GrossNational 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 extension pursuant to Article 27.4 of the Agreement on
Subsidies and Countervailing Measures ("SCM Agreement").G/SCM/N/95/JOR/Suppl.1
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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 exemption from income tax for profits on certain
exports, and Decision No. 3394 of 1994 pursuant to this Law, which exempted from income taxprofits on all exports (except phosphate and potash) to non-protocol countries and territories.
2. Period Covered by the Notification
The period covered is the year 2002.
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 2002 to ensure the wellbeing and
sustainability of national industry.
The Jordanian market, still suffering from the repercussions of the 1991 gulf war, as
population grew by 500,000 in one year and Jordan lost its main trading partner Iraq, was faced withnew challenges in 2002 as political instability prevailed.  Jordan exporters, faced with heavy
restrictions 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 industrialcompanies that are mostly of small nature suffer from lack of market accessibility caused by their
small size, which obstructs them from reaching economies 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 Law 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,
exempt from the tax wholly or partially the ne t income earned from certain types of local
production for exportation."G/SCM/N/95/JOR/Suppl.1
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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 benefitting 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. grant, loan, tax concession, etc.)
• Total and partial exemption from income tax 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 councilfor investment has agreed to establish Jordanian exporting companies specia lized 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, an y 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 considered as a Jordanian exportingcompany.
(b) Amount
The amount of exemption is determined according to the imputed percentage of net profits
resulting from export activities.  Large enterprises exporting phosphate, potash and fertilizers thataccount 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 possible, 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 generated 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/95/JOR/Suppl.1
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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.
Trade effects
In the year 2001, data of exports shows that the value of exports entitled for exemption was
US$593,564,589 million while the approximate calculated value of exemption was
US$8,903,469 million.  As for the year 2002, data shows that the value of exports entitled for
exemption was US$522,237,246.79 million, while the approximate calculated value of exemptionamounted to US$7,833,558.70 million.
The above figures conclude that a decrease of (-12 per cent) in the growth rate of the exports
value entitled for exemption was recorded in the year 2002, and when compared to the year 2001, this
indicates that the Jordanian subsidy programme is still important and Jordan needs to have itcontinued in order to achieve its mentioned 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 concentration 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 which hindered the utilization of the Jordanian
resources.  However, exporters are trying hard to take pioneering steps towards creating more trade
opportunities, in the efforts to fulfill the Jordanian pl ans to enhance the share of private sector in the
Jordanian economical activity, in addition to enabling Jordan labour forces to pass up a very highnumber 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 caused 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$7,833,558.70 million constitutes
only 0.356 per cent of Jordan's national exports.  This implies that the income tax relief still has a
slight effect on Jordan's international trade due to it s meagre value;  this meagre value is attributed to
the fact that the exemption is applied only to about one third of the country's exports,
US$522,237,246.79 million.
Realizing that Jordan is a developing country with a share not greater than 0.10 per cent of
world export trade, it is clear that no harmful eff ects have been introduced on the international trade
as a result of the subsidy programme.G/SCM/N/95/JOR/Suppl.1
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9. Statistical data permitting an assessment of the trade effects of the subsidy.  The specific
nature and scope of such data is left to th e judgement of the notifying Member.  To the
extent possible, relevant and/or determinable, however, it is desirable that suchinformation include statistics of production, consumption, imports and exports of the
subsidized product(s) or sector(s)
(a) For the three most recent years for which statistics are available;
Income Tax Relief in
US$ for Jordan in 2001
Total Exports Value: US$1.7 billion
Total Exports Value benefitting from this programme: US$593,564,589 million
Income Tax Relief: US$8,903,469 million
(b) For the previous representative year, which, where possible and meaningful, should be the
latest year preceding the introduction of the subs idy or preceding the last major change in the
subsidy.
Income Tax Relief in
US$ for Jordan in 2002
Total Exports Value: US$2.2 billion
Total Exports Value benefitting from this programme: US$522,237,246.79 million
Income Tax Relief: US$7,833,558.70 million
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