WORLD TRADE  
ORGANIZATION   
G/SCM/N/243/JOR 
4 July 2012 
 (12-3565) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Continuation of Extension under SCM Artic le 27.4 of the Transition Period for 
the Elimination of Export Subsidies Pursuant to the Procedures Contained 
in the General Council Decision in Document WT/L/691 
 
Updating notification 
 
JORDAN 
 
  The following communication, dated 29 June 2012,  is being circulated at the request of the 
Delegation 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 w ith its notification, in compliance with the 
"procedures for continuation of extensions pursuan t to article 27.4 of the SCM Agreement of the 
transition period under article 27.2(b) of the SC M Agreement for certain developing countries" 
(document WT/L/691), and with reference also to document G/SCM/39, on which Jordan was granted 
an extension for the elimination of export subsidi es programme 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 was otherwise eligible to request an extens ion pursuant to Article 27.4 of the Agreement on 
Subsidies and Countervailing Measures ("SCM Agreement").  
 
1. Title of the subsidy programme  
 Partial or Total Exemption from Income Tax for Profits on Certain Export.  
 
2. Period covered by the notification  
 The period covered is the year 2011. 
 G/SCM/N/243/JOR 
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  3. Policy objective and/or purpose of the subsidy  
 The main rationale for introducing this export subsidy programme was to offset the negative 
effects of the 1991 Gulf war, and the loss of Jord an's main trading partner Iraq, the programme was 
introduced then to stimulate export performance, a nd to promote exports to non-traditional markets. 
Jordan's exports were depressingly affected by  the 1991 and the 2003 gulf wars, the remarkable 
increase in oil prices in the year 2008 and its persiste nt fluctuations afterward.  A slower activity for 
small and medium size enterprises has been perceived as a result of trade liberalization and the incident of the financial crisis, along with the rece nt prevailing political situations in a number of 
countries in the Middle East in the year 2010-2011.  4. Background and authority for the subsidy:   
(a) Background  
 
 The programme was established in 1995, exem pting profits gained from exporting activities 
in a trial to remedy the harmful effects of the econo mical and social factors that affected Jordan by 
opening up the economy in light of the mentioned political circumstances.  Ninety-eight per cent of 
the domestic exporting industrial companies which we re of small sized nature, suffered from the lack 
of market accessibility, obstructing them from reac hing economies of scale, which led to higher costs 
of production and hence limiting their competition capabilities in global markets.  
 
(b) The Authority Responsible  
 
 The Income Tax Department/Ministry of Finance.  
 
(c) Legislation  
  The implemented legislation is the "Temporary Income Tax Law No. 28 for the year 2009 
amending the Income Tax Law No. 25 for the year 2001 amending the Income Tax Law No. 57 for the Year 1985.    Article 4(e) of the law deals with the exemp tion from income tax and states the following:  
Article 4(e):   
 
"Certain types of local origin goods a nd services' exports outside the Kingdom may 
be totally or partially exempted from tax, provided that the basis of the exemption and 
the types of goods and services included in th is exemption and the rate and period of 
the exemption shall be determined according to a regulation issued for this purpose."  
 "Regulation No. (70) for the year 2010 for the exemption of the profits of goods and services' 
exports from tax" has been issued. Article 7(a) of the Regulation excludes some exports from the 
exemption as follows:  
1. Phosphate, Potash, Cement and Fertilizer s exports, and any of their components or 
derivatives.  
 
2. Exports of goods and services subject to Protocol Trade, bilateral payments and 
repayment agreements, and any agreemen ts concluded by the government that 
includes the exchange of any goods or  services with any other country.  
 
3. Exports of any good approved by the Council of Ministers upon a joint 
recommendation of Minister of Finance and the competent Minister.   G/SCM/N/243/JOR 
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  5. Form of the subsidy (i.e. gran t, loan, tax concession, etc.)  
 Tax concession. 
 
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  
 
 Domestic industrial companies are entitled to benefit from this program in addition to domestic exporting companies specialized in expor ting local goods and products. Exemptions are 
granted through submitting official documents to the income tax department verifying export 
activities.  
 
(b) Amount  
  The amount of exemption is determined accordi ng to the imputed percentage of net profits 
resulting from export activities. The normal income tax to be paid in absence of the programme, is an 
average of 15 per cent or less on the profits generate d from all operations irrespective of the nature of 
sales.  
 
7. Subsidy per unit or in cases where this is no t 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 to be paid in absence of the programme, is an average of 15 per cent 
or less on the profits generated from all operations  irrespective of the nature of sales and hence 
subsidy per unit amounts to 1.5 per cent or less for each Jordanian Dinar.  
 
8. Duration of the subsidy and/or any other time limits attached to it, including date of 
inception/commencement.  
 This programme has been in effect since the year 1995.  
 
9. Statistical data permitting an assessment of th e trade effects of the subsidy.  The specific 
nature and scope of such data is left to the judgment 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 2011, the value of exports en titled for exemption was US $ 4,143,484,047.14 
while the approximate calculated value of exemp tion amounted for US$ 62,152,260.71.  This figure 
indicates that the programme had supported benefi ciaries' efforts to explore further export 
opportunities.  As a matter of fact the total amount of  exemption implies that the income tax relief still 
has a very slight effect on Jordan's international tr ade, realizing that Jordan is a developing country 
with a share not greater than 0.10% of world's expor t trade, it is clear that no harmful effects have 
been introduced on the international trad e as a result of the subsidy programme.  
 (a) For the three most recent years fo r which statistics are available;   G/SCM/N/243/JOR 
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  (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 Relief  
in US $ 
2011  8 b 4,143,484,047.14 62,152,260.71 
2010  7 b 3,985,481,476.06 59,782,222.14 
2009  6.5 b 3,801,719,452.11 49,422,352.88 
2008  7.9 b   612,101,233.07  9,181,518.50 
 
 
Table 1 
 
Income Tax Relief Classified by HS Chapters in US$ for the year 2011 
 
Total Exports Value:  US $ 8 b  
Total Exports Value benefi ting from this programme :  US $ 4,143,484,047.14  
Income Tax Relief:  US$ 62,152,260.71 
  
Chapters  EXPORT VALUE $  Income tax relief 
17-19 55,519,967.14 8,327,995.07 
21-24 145,351,547.14 2,180,273.21 
26-30 845,341,958.57 12,680,129.38 
32-38 182,363,818.57 2,735,457.28 
39-40 183,734,791.43 2,756,021.87 
41-43 3,921,078.57 58,816.18 
44-46 28,924,882.86 433,873.24 
47-49 217,702,151.43 3,265,532.27 
51-63 976,250,294.29 14,643,754.41 
64-67 132,630,372.86 1,989,455.59 
68-70 225,394,752.86 3,380,921.29 
71 195,506,602.86 2,932,599.04 
72-76 455,469,780.00 6,832,046.70 
79-83 6,563,898.57 98,458.48 
84-85 395,320,298.57 5,929,804.48 
86-88 29,733,324.29 445,999.86 
90-92 6,797,265.71 101,958.99 
94-96 55,021,830.00 825,327.45 
97-98 1,935,431.43 29,031.47 
Total 4,143,484,047.14 62,152,260.71 
 
  G/SCM/N/243/JOR 
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  10. Information referred to in Paragraph 1(f) of the General Council Decision of 2007 
concerning the Action Plan for eliminating the export subsidy programme:   
(a) The domestic procedures necessary to eliminate the export subsidy programme:   
 
 In 2009, the government of Jordan undertook consultations with relevant government bodies 
and organizations;  among which is the Income Tax Department as the authority responsible for the 
exemption, as well as with the chambers of commerce and chambers of industry and other related bodies in Jordan as of the necessity of elim inating the programme by the end of 2015. 
  Beneficiaries were notified through various indus trial associations, that the extension is given 
on a yearly basis, and that Jordan will phase out th is programme at the end of the extension period as 
set out in the general council decision of the WTO, and that all benefits under this programme will be 
terminated by 31 December 2015.  Beneficiaries were also notified through press releases that the 
year 2015 is the maximum period for the programme  according to our commi tments, the matter which 
would in turn necessitate the direct and sy stematic termination of the programme  
 (b) Actions that have been or in the process of being undertaken:   
 
 Income tax legislation was reviewed, a Temporary Income Tax law was issued (Temporary Income Tax Law No. 28 for the year 2009), in a view  to attain compatibility with elements of the 
SCM agreement, and which stated exp licitly in article (3)(a)(4) that:   
 
 Article 3:  
 (a) Any Income incurred in or from the Kingdom for any person regardless of 
the place of payment even if it was from illegal sources, shall be subject to 
tax including the following:   
 
(4) Income from selling goods produced in the Kingdom whether sold in the 
Kingdom or exported.  
 
(c) Future Actions  
 
 Public awareness campaigns will be conducted during the years 2014-2015 to ensure that all 
beneficiaries are informed of the date of termin ation of the programme.  A decision from the Council 
of Ministers in Jordan will be issued by the year  2015 to end all benefits of  exports under the income 
tax law.  The decision will be notified to the WTO committee.  
 
 The process of phasing out the programme will be  systematic and straightforward at the end 
of the year 2015, and it is the intention of Jordan  to remove the current export subsidy programme at 
the end of the specified period, and ensure that  any incentives to exports are in accordance with 
Jordan's rights and obligations under the Agre ement on Subsidies and Countervailing Measures. 
 
 
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