WORLD TRADE  
ORGANIZATION  G/SCM/N/123/JOR 
G/SCM/N/128/JOR 7 July 2005 
 
(05-2991) 
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  
 
Updating Notification  
 
JORDAN 
 
 The following communication, dated 4 July 2005,  is being circulated at the request 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 Govern ment of Jordan is pleased to provide the WTO 
Committee on Subsidies and Countervailing Measures with 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, for the elimination 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 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/123/JOR 
G/SCM/N/128/JOR Page 2 
 
 
 1. Title of the Subsidy Programme 
Partial or Total Exemption From Income Tax For Profits On Certain Exports. 
 
2. Period Covered by the Notification 
The period covered is the year 2004. 
 
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 2004 to 
ensure sustainability of domestic industry's performance. 
  Indeed, the Jordanian economy is still su ffering from the implications of the 1
st and 2nd Gulf 
Wars, which imposed heavy pressure on infrastru cture, 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.  By 1993, remittances had fallen to 
the point of accounting for only 10 per cent of GDP.   The Gulf Wars, however, have had an adver se effect, leading to the migration of over 
800,000 citizens to Jordan and hence demand for services increased, prices rose, the citizen's share of 
water was reduced and the incidence of poverty an d unemployment increased, all of which affected 
the overall situation in domestic industry. 
  Also, oil prices rose as a result of the two wars, changing by such prices of energy resources and consequently cost of outputs got more expensive.   Additionally, the instable political situation in 
the region constrained Jordanian exports from entering Iraq, and domestic industries suffered 
uncertainty which negatively affected their performance. 
  The programme is therefore needed to help  the domestic industry adjust to the general 
economic situation in order to help enhance its cap abilities 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 
to remedy the harmful effects of the economical and so cial factors that affected Jordan by opening up 
the economy in light of the mentioned political circ umstances.  98 per cent of the domestic exporting 
industrial companies, which were of small-sized na ture, 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".  G/SCM/N/123/JOR 
 G/SCM/N/128/JOR 
 Page 3 
 
 
  
 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-exports shall be deemed to have 
been generated in the Kingdom, and the Council of Ministers, may upon the 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. 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.  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.  G/SCM/N/123/JOR 
G/SCM/N/128/JOR Page 4 
 
 
 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 the trade effects of the subsidy.  The specific 
nature and scope of such data is left to the judgement 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 2003, total exports data was US$522,370,342 while the approximate calculated 
value of exemption was US$8,285,555.  As for the year 2004, the value of exports entitled for 
exemption was US$76,682,351, while the approximate  calculated value of exemption amounted for 
US$1,150,235.  
 The above figures conclude that a decrease rate  of 86 per cent in total exports value entitled 
for exemption was recorded in the year 2004 compared  to the year 2003, this considerable percentage 
indicates that the Jordanian subsidy programme is  still important and needed towards achieving its 
mentioned objectives.   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 ca used by the small size of the local market and the difficulties 
raised by regional developments and h azardous economical and political situations. 
  As a matter of fact the total amount of exem ption of US$1,150,235 constitutes only 0.02 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 its meagre 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 eff ects 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. 
  G/SCM/N/123/JOR 
 G/SCM/N/128/JOR 
 Page 5 
 
 
 Income tax relief in 
US$ Total exports value 
in US$ Total exports value 
benefiting from this 
programme in US$ Income tax relieve in 
US$ 
2001 US$1.7 billion US$593,564,589 million US$8,903,469 million 
2002 US$ 2.2 billion US$522,237,246.79 
million US$7,833,558.70 
million 
2003 US$3 billion US$552,370,342 million US$8,285,555 million 
 
Table 1 – Income Tax Relief under Law No. 57 of 1985, as amended  
classified by HS Chapter in US$ for the year 2004  
  
Total Exports Value:  US$3,95 billion. 
Total Exports Value benefiting from this programme;  US$76,682,351. 
Income Tax Relief:  US$1,150,235. 
   
Chapters Export Value Income Tax Relief 
17-23 469,586.74 7,044 
27 15,234,273.62 228,514 
28-38 4,166,366.71 62,496 
39 733,765.87 11,006 
42 1,076.16 16 
46 101,435.83 1,522 
48-49 25,412,362.48 381,185 
51-63 8,000,619.18 120,009 
64 9,133.99 137 
68-70 12,637.52 190 
73-81 19,464,218.62 291,963 
84-85 2,582,877.29 38,743 
94 325,846.26 4,888 
98 168,150.92 2,522 
Total 76,682,351 1,150,235 
 
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