WORLD TRADE  
ORGANIZATION  G/SCM/N/211/JOR 
27 July 2010 
 
 (10-4036) 
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  
 
JORDAN 
  
 The following notification, dated 22 July 2010, 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 pursuant 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 Jordan was 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 th e 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 2009.  
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. G/SCM/N/211/JOR 
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   Jordan's export markets were depressingly aff ected by the 1991 and the 2003 gulf wars, SMEs 
were deprived from attaining wide-reaching economic state, added to this, the increase in oil prices 
which have rocked up in recent times, and which have changed the prices of energy resources, thus 
increasing the cost of outputs, all of which have been reflected in a slower activity of small and medium size enterprises who were already facing mounting competitive pressures as a result of trade 
liberalization and the prevailing political situations in the Middle East. 
 
 The programme was necessary in the year 2009 in  order to face the remarkable increase in the 
oil price during the first three quarters of the year 2008,  jointly with the incident of the financial crisis 
and its negative outcomes. 
 
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 by such  from reaching economies of scale, which led to 
higher costs of production and hence limiting thei r competition capabilities in global markets. 
 
(b) The Authority Responsible 
 
 The Income Tax Department/Ministry of finance. 
 
(c) Legislation 
 
 The implemented legislation is "Temporary Income Tax Law No. 28 for the year 2009 
amending Income Tax Law 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 4(e) of the same law which is translated as follows: 
 
e. Certain types of local origin goods and 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 this exemption and the rate 
and period of the exemption shall be determ ined according to a regulation issued for 
this purpose. 
 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 nefiting from this Law.  The translation of the 
Decision is as follows:  
 "The following exports are not entitled to the exemption mentioned there in: 
 
  • Potash & fertilizers exports; 
  • Phosphate exports;  and   • Exports subject to Protocol Trade." 
 
5. Form of the subsidy ( i.e. grant, loan, tax concession, etc.) 
 
 Tax concession.  G/SCM/N/211/JOR 
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  6. To whom and how the subsidy is provide d (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 programme in addition to domestic exporting companies specialized in export ing local goods and products. Large enterprises 
exporting phosphate, potash and fertilizers that account  for about 70 per cent of the country's exports 
are not entitled to beneficiaries of this programme. 
 
 Exemptions are granted through submitting offici al documents to the income tax department, 
verifying the amount of profit resulting of exports 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 ta x 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 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 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 the 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 2009, the value of exports entitle d for exemption was US$ 3,801,719,452.11 while 
the approximate calculated value of exemption amounted for US$ 49,422,352.88.  This figure 
indicates that the programme supports beneficiaries' efforts to explore further export opportunities.   
  As a matter of fact the total amount of exemp tion implies that the income tax relief still has a 
very slight effect on Jordan's international trade, realizing that Jordan is a developing country with a 
share not greater than 0.10 per cent of world's expor t trade, it is clear that no harmful effects have 
been introduced on the international tr ade as a result of the subsidy programme. 
 G/SCM/N/211/JOR 
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   (a) For the three most recent year s for 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 Relief in US$ 
2006 US$ 4.8 b US$ 2,148,014,729.00 US$ 32,220,220.94 
2007 US$ 5.7 b   US$ 533,965,829.45  US$ 8,009,487.44 
2008 US$ 7.9 b   US$ 612,101,233.07  US$ 9,181,518.50 
 
 
Table 1-Income Tax Relief under Law No. 57 of 1985, as amended 
Classified by HS Chapters in US$ for the year 2009 
 
Total Exports Value:  US$ 6.5 b 
 Total Exports Value benefiti ng from this programme:  US$ 3,801,719,452.11 
 
Income Tax Relief:  US$ 49,422,352.88 
 
Chapters EXPORT VALUE $ Income tax relief 
17-19 34,113,907.04 443,480.79 
21-24 186,832,171.83 2,428,818.23 
26-30 676,454,938.03 8,793,914.19 
32-38 146,899,600.00 1,909,694.80 
39-40 125,316,122.54 1,629,109.59 
41-43 2,468,761.97 32,093.91 
44-46 228,237,198.59 2,967,083.58 
47-49 245,127,742.25 3,186,660.65 
51-63 733,413,757.75 9,534,378.85 
64-66 2,279,540.85 29,634.03 
68-70 20,932,439.44 272,121.71 
71 346,850,967.61 4,509,062.58 
72-74 341,288,439.44 4,436,749.71 
76 183,997,011.27 2,391,961.15 
78-83 8,631,800.00 112,213.40 
84-85 364,764,370.42 4,741,936.82 
87-89 79,612,315.49 1,034,960.10 
90-92 3,762,129.58 48,907.68 
94-96 25,538,143.66 331,995.87 
97-98 45,198,094.37 587,575.23 
Total 3,801,719,452.11 49,422,352.88 
  G/SCM/N/211/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 undert ook 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 relate d bodies in Jordan as of the necessity of 
eliminating the programme by the end of 2015. 
 
- Beneficiaries were also notified thro ugh various industry associations, that the 
extension is given on a yearly basis, and th at Jordan will phase out this 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 
seeing that this was the maximum period acco rding to our commitments, the matter 
which would in turn necessitate the dir ect and systematic termination of the 
programme. 
 
- Internal consultations are still ongoing with a view to determining the policy 
adjustments necessary to end the programme, as well as to ensure that exporters are 
not lacking behind due to the 17 July 2007 decision, while guaranteeing at the same 
time that WTO obligations are fulfilled.  
 B. Actions that have been or in the process of being undertaken
: 
 
- A review of the Income tax legislation for amendments was held by a review 
committee, a Temporary Income Tax wa s 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 e xplicitly 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. 
- Another review of the law will be held at the final phase years of the programme with 
continuous follow up till the closing stage of the programme. 
 
- Consultations are ongoing with the Ministry of finance with a view of making the 
export programme in fulfilment with Jordan obligations, and to re inform exporters 
who operate under this programme that th e programme will end by the year 2015. 
 
C. Future Actions
 
 
- As a follow-up, a monitoring mechanism will be taken to monitor the phase out of the 
programme and to ensure that no exporter w ill benefit after the date of termination. 
 G/SCM/N/211/JOR 
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  - Consultations with exporters from priv ate sector will be held starting from the 
year 2013 to further scan the competency of the programme, and to ascertain exporters coming outline plans and means to get through new markets.  
 
- A decision from the Council of Ministers in Jo rdan will be issued by the year 2015 to 
end all benefits of exports under the income tax law.  The decision will be translated 
and notified to the WTO committee. 
 
- The process of phasing out the programme w ill 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 specifi ed period, and ensure that any incentives 
to exports are in accordance with Jordan's  rights and obligations under the Agreement 
on Subsidies and Countervailing Measures. 
  
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