WORLD TRADE  
ORGANIZATION  G/SCM/N/155/JOR 
G/SCM/N/160/JOR 17 July 2007 
 
(07-3038) 
Committee on Subsidies 
and Countervailing Measures Original:   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 for the  
Elimination of Export Subsidies Pursuant to the Procedures  
in Document G/SCM/39  
 
 
JORDAN 
   The following communication, dated 20 June 2007,  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 
WTO decision circulated in document (G/SCM/79) to grant Jordan an extension of the transition 
period until 31 December 2007 under article 27.2(b) of the SCM Agreement, which take the form of 
full or partial exemptions from import duties and inte rnal 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  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").   G/SCM/N/155/JOR 
G/SCM/N/160/JOR Page 2 
 
 
  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 2006.  
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 the region, the subj ect subsidy programme was necessary in 2006 to 
ensure sustainability of domestic industry's performance.    
 Indeed, the Jordanian economy is still suffe ring from the implications of the unstable 
situations in Iraq, which imposed heavy pressure on  infrastructure, public services, and housing, thus 
destabilizing the system of resource and capital redistribution and hastened the demise of the 
economic system upon which a welfare state had been established.     Also, oil prices rose up, changing by such pri ces of energy resources and consequently cost of 
outputs got more expensive.  Additionally, the inst able political situation in the region constrained 
Jordanian exports from entering Iraq, and domestic industries suffered uncertainty which negatively 
affected their performance.  The programme is theref ore needed to help the domestic industry adjust 
to the general economic situation in order to help  enhance its capabilities in light of the mentioned 
circumstances.   
 
4. Background and authority for the subsidy 
 
(a) Background   The programme was established in 1995, exem pting profits gained from exporting activities 
trying to remedy the harmful effects of the economi cal and social factors that affected Jordan by 
opening up the economy in light of the mentione d political circumstances.  98 per cent of the 
domestic exporting industrial companie s which were 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 their competition capabilities in global markets.   
 
(b) The Authority Responsible   The Income Tax Department/ Ministry of finance.    (c) Legislation 
 
 The concerned 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) of the same which is translated as follows:   
 
"(c) Income earned from exports or re-e xports shall be deemed to have been 
generated in the Kingdom, and the Council of Ministers, may upon the  G/SCM/N/155/JOR 
 G/SCM/N/160/JOR 
 Page 3 
 
 
  recommendation of the Minister, 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 nefiting 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. gr ant, loan, tax concession, etc.) 
 
 Tax concession.    
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 program in addition to 
domestic exporting companies specialized in expor ting 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.   G/SCM/N/155/JOR 
G/SCM/N/160/JOR Page 4 
 
 
   
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 2006, the value of exports entitle d for exemption was US$ 2,148,014,729.00 while 
the approximate calculated value of exemption am ounted for US$ 32,220,220.94.  This figure gives 
us an indicator that the programme in someway is st arting to make a slight effect for the beneficiaries 
in endorsing their efforts to overcome the ha rd economic circumstances in the region.   
  As a matter of fact the total amount of exemption of US$ 32,220,220.94 constitutes only 
0.67 per cent of Jordan’s national exports.  This im plies that the income tax relief still has a slight 
effect on Jordan’s International Tr ade due to its meager value.   
  Realizing that Jordan is a developing country with a share not greater than 0.10 per cent of 
world’s export trade, it is clear that no harmful effe cts have been introduced on the international trade 
as a result of the subsidy programme.   
 (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 Relief in 
US $ 
2003 US $ 3 b US $ 552,370,342 US $ 8,285,555 
2004 US $ 3.95 b US $76,682,351 US $1,150,235 
2005 US$ 4.3 b US$ 70,753,276 US$ 1,061,299 
  G/SCM/N/155/JOR 
 G/SCM/N/160/JOR 
 Page 5 
 
 
  Table 1-Income Tax Relief under Law No. 57 of 1985, as amended  
Classified by HS Chapters in US$ for the year 2006  
 Total Exports Value:   US$ 4.8 b 
 Total Exports Value benefiti ng from this programme:   US$ 2,148,014,729.00. 
 Income Tax Relief:   US$ 32,220,220.94. 
 
Chapters Export Value  Income tax relief  
13 774,317.16  11,614.76  
17-24 144,825,499.44  2,172,382.49  
26-27 57,314,434.26  859,716.51  
28-38 422,154,259.31  6,332,313.89  
39-40 77,361,299.38  1,160,419.49  
41-43 2,946,124.44  44,191.87  
44-46 8,834,815.18  132,522.23  
47-49 81,950,863.43  1,229,262.95  
50-63 424,488,273.14  6,367,324.10  
64-66 1,683,507.34  25,252.61  
68-70 38,878,807.84  583,182.12  
71 334,286,858.07  5,014,302.87  
72-83 274,538,613.15  4,118,079.20  
84-85 211,533,572.23  3,173,003.58  
86-89 27,078,141.93  406,172.13  
90-92 5,254,849.04  78,822.74  
94-96 30,905,577.03  463,583.66  
97-99 3,204,916.76  48,073.75  
Total 2,148,014,729.12  32,220,220.94  
 
 
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