WORLD TRADE
ORGANIZATIONG/SCM/N/2/JOR
11 May 2000
(00-1931)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
NOTIFICATION PURSUANT TO ARTICLE 28.1(A)
OF SUBSIDIES INCONSISTENT WITH THE AGREEMENT
JORDAN
The following communication, dated 27 April 2000, has been received from the Permanent
Mission of Jordan.
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In reference to the Working Party Report on the accession of Jordan where Jordan stated that
in accordance with Article 28 of the WTO Agreement on Subsidies and Countervailing Measures, it
would notify upon accession the two export subsidies stated in the Report, the following comprises
these programmes, which meet the definition of a prohibited subsidy within the meaning of Article 3
of the Agreement on Subsidies and Countervailing Measures:
(i) The Income Tax Law No. 57 of 1985 and its amendments which authorized partial or total
exemptions 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
phosphate and potash) to non-protocol countries and territories.  The latter Decision came as aresult of the negative effects of the Gulf War on Jordan's economy and exports and hence the
Government's attempt to encourage Jordanian producers to diversify production and focus on
non-traditional markets, and
(ii) The discount facility below the going interest  rate for commercial documents operated by the
Central Bank of Jordan.  The objective of this arrangement was to encourage banks to meet
exporters' demand for credit.
As was mentioned in the Report of the Working Party, it is confirmed that Jordan would
eliminate these export subsidies by 31 December 2002.
Please find enclosed the legal text that governs (i) and (ii).  For (i) Article (3) of the Income
Tax Law No. 57 of 1985 and for (ii) Articles 39 and 40 of The Law of the Central Bank of Jordan
Law No. 23 of 1971.G/SCM/N/2/JOR
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SOURCES OF INCOME
Article (3)
A. Income accrued or earned in the Kingdom from the following sources by any person shall be
subject to tax:
(1) Profits or gains from any work, craft, business, profession or vocation regardless of the period
during which such work, business, profession, craft or vocation may have been carried out or
exercized and from any separate transaction or deal which is considered as trade or business.
(2) Salaries, wages, allowances and bonuses received from any employment including the
estimated annual value of housing or lodging or board or any other allowance with the
exception of the hosting and representation allowances or part thereof as well as cost of living
and travel allowances provided that the said allowances have been used for employment
purposes and that the provisions of this paragraph are organized by instructions issued by the
Director.
(3) Interests, commissions, discounts, and exchange differences.  Interests and commissions, on
doubted debts of banks, financial companies and specialized lending companies which are
described as pending interests and commissions shall be taxed in the year it is received in
accordance with the instructions issued by the Director for this purpose and  approved by theMinister.
(4) Earnings accrued from any contract concluded in the Kingdom such as profits of contractings,
undertakings, tenders, agencies, commissions, representation, commercial mediation and the
like whether their sources are from inside or outside the Kingdom.
(5) Earnings accrued from any obligation (undertaking) or annuity as well as income gained from
wages and fees of consultation expertise, arbitration and the like.
(6) Rents from any real estate and others accrued from immovable properties, dues, instalments
and other profits accruing from them.  Also incomes and earnings derived from any property
other than real estates and immovable properties.
(7) Key-money or vacating money.  The person who has paid this money is permitted to amortize
the amount as part of his permissible production costs or operation expenses for the purposes
of this law and over an equally-divided period of 5 years.
The beneficiary likewise, is permitted to distribute the amount equally over a period of
5 years.
(8) Amounts received in lieu of selling, hiring or concession granted for using any trade mark,
design, patent or copyright and printing or any other compensation.  Taxable income underthis item is distributed over a period of 3 years.
(9) Income gained from insurance business in all its forms, land transportation, shipping and air
freight for both residents and non-residents.
(10) Sale of assets governed by the rules of depreciation provided for in this law or transfer of its
ownership through means other than inheritance.  Taxable income from this source shall be
determined to be equal to lower of the depreciation which has been deducted under this law or
to the profit realized from sale or transfer of ownership.G/SCM/N/2/JOR
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(11) Profits or gains derived from any other source not included in items (1 to 10) of this
subsection which have not been explicitly exempted under this law or any other law.
B.(1) All incomes, including interests, commissi ons, investment returns, profits of trading in
currencies, valuable metals and securities which are realized outside the Kingdom by any
Jordanian or resident and which are arising from his funds and deposits inside the Kingdom
shall be taxable.  Branches of Jordanian companies operating abroad shall not be subject to
this clause.
The income of the non-Jordanian which is realized abroad from the investment of his foreign
capital, returns, profits and yields of liquidation of his investment or sale of his project orshare or stocks after moving them out of the Kingdom according to the provisions of the
Encouragement of Investment Law or any othe r effective legislation in the Kingdom, shall
not also be subject to taxation under this clause.
(2) (20 per cent) of the net income, after deducting the foreign income tax, of the Jordanian
companies branches operating outside the Kingdom as declared in their final accounts which
are certified by an external auditor shall be taxable.
In all cases the net amount resulting from applying that percentage shall be considered a
taxable income to the company and shall be taxe d at the rate for companies as stipulated in
clause (2) of paragraph (B) of Article (17) of this law and no amount or portion of it may be
deducted for any reason.
(3) If the taxpayer is a company, income provided for in clause (1) of this paragraph, shall not be
taxed again under clause (2).
(4) The provisions of Article (7) of this law shall not apply to the taxable income under this
paragraph.
(5) If a loss is incurred at any one year and to  any person who is subject to the provisions of
clauses (1 & 2) of this paragraph, it will be deducted from the income in each clause
separately, up to the limits of such income.  The balance, if any, shall be carried forward tothe next year and so on up to six years after the year in which it has incurred and shall be
deducted from the taxable income of  that inco me, provided that the taxpayer maintains due
and proper accounts.
(6) The provisions of paragraph (B) shall be applicable to any Jordanian, even if he holds another
nationality in addition to his Jordanian one.
C. Profits earned from exportation shall be deemed to have been derived in the Kingdom, and
the Council of Ministers, may upon the recommendation of the Minister, exempt the profits of some
exports from tax wholly or partially.
D. The income of the Jordanian partnership, the share of partners in a partnership by shares and a
Jordanian limited partnership shall be distributed among these partners and each partner's share from
that income shall be added to his income from other sources.
E. Despite any other law, the Council of Ministers can, upon a recommendation of the Minister,
impose tax on the profits of any investment activity of any public institution or the surplus of its
annual income, including government public institutions.G/SCM/N/2/JOR
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Article (4)
A. The husband and wife are considered independent taxpayers.
B. The taxpayer's husband only enjoys exemptions and deductions prescribed under this law.
these exemptions and deductions may be accorded partially or wholly to the wife under the husband's
request or if she is the sole supporter of the family.
C. The wife enjoys partial exemption from salaries, allowances, bonuses and appropriations
included in provision of paragraph (A) and paragrap hs (G) and (H) of Article (14) and the exemptions
mentioned in Article (13) of this law for the person (S) she supports.
D. The husband and wife may be treated as one taxpayer, for the purpose of this law under their
request.  Assessment shall be made in the name of the husband.  In such case tax shall be collected
from one or both.
E. The husband is obliged to carry out all measures, and duties prescribed under this law relating
to the effecting of the assessment, including the filing of annual returns, appearing before the
assessing officer to present documents and the required detailed information on his income or his
wife's income or both, unless requested otherwise by the wife.
Article 39
(a) The Central Bank may discount or rediscount for, sell to, or buy from Licensed Banks the
following credit instruments:
1. Bills of exchange and promissory notes drawn in the Kingdom for the purposes of
financing genuine commercial transactions, and maturing within not more than 90
(ninety) days from the date of their acquisition by the Central Bank, provided that the
Licensed Bank concerned undertakes to repurchase them on the dates fixed by the
Central Bank;
2. Bills of exchange, promissory notes a nd other credit instruments drawn in the
Kingdom to finance industrial, tourism, agricultural, constructional or miningoperations provided that they mature within not more than nine months from the date
of their acquisition by the Central Bank, and provided that the Licensed Bank
concerned undertakes to repurchase them on the dates fixed by the Central Bank.  The
Central Bank may require as collateral th e assignment, mortgage or pledge of the
related products or properties, or demand any other security or collateral;
3. Government securities maturing within not more than ten years from the date on
which they are presented to the Central Bank;
4. Securities issued by public institutions with Government guarantee, offered for public
subscription provided that they mature within not more than ten years from the date
on which they are presented to the Central Bank.
(b) The Central Bank may grant to Licensed Banks advances for fixed periods not exceeding nine
months;  such advances shall be guaranteed by one or more of the following documents:
1. The credit instruments specified in paragraph (a) of this Article;G/SCM/N/2/JOR
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2. Negotiable bonded warehouse receipts issued by warehouses recognized by the
Central Bank or appointed by the Customs Authorities, provided that the goods
covered by such certificates are insured and non-perishable.
3. Negotiable shipping documents relating to the imports or exports provided that goods
concerned are insured and non-perishable.
Article 40
The Central Bank may grant to Specialized Credit Institutions advances for fixed periods not
exceeding five years and which are secured by any of the following credit instruments:
(a) Credit instruments drawn in the Kingdom, and in particular, promissory notes, bills and
instalments originating from loans extended by the borrowing specialized institutions
provided that the maturity of such credit instruments and loans does not exceed a period of
seven years from the date of their presentation to the Central Bank;
(b) Government securities maturing within a pe riod not exceeding ten years from the date of
presentation of such securities to the Central Bank;
(c) Securities issued by public institutions and guaranteed by the Government which have been
offered for public subscription, provided that their maturity does not exceed ten years fromthe date of their presentation to the Central Bank.
Article 41
(a) The Central Bank shall announce from time to time the rates of interest it will charge for
rediscounts and for granting advances;
(b) The Central Bank shall determine the general terms and conditions for extending credit
facilities to Licensed Banks and Specialized Credit Institutions;
(c) The Central Bank may, in cases of emergency, or under extraordinary circumstances which,
in the opinion of the Central Bank, constitute a threat to monetary or banking stability in theKingdom, extend special credit facilities to any Licensed Bank under such terms and
conditions established by the Board and approved by the Council of Ministers.
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