WORLD TRADE  
ORGANIZATION  G/SCM/N/146/JOR 
4 July 2006 
 (06-3208) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
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 30 June 2006,  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/146/JOR 
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  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 2005. 
 
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 2005 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/146/JOR 
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   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 programme 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 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. 
 G/SCM/N/146/JOR 
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  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 2004, total exports data was US$76,682,351 while the approximate calculated 
value of exemption was US$1,150,235.  As for the year 2005, the value of exports entitled for 
exemption was US$70,753,276, while the approximate  calculated value of exemption amounted for 
US$1,061,299. 
  As a matter of fact the total amount of exem ption of US$1,061,299 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. 
 
Income tax relief in 
US$ Total exports value 
in US$ Total exports value 
benefiting from this 
programme in US$ Income tax relieve in 
US$ 
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 
2004 US$3.95 billion US$76,682,351 US$1,150,235 
  G/SCM/N/146/JOR 
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  Table 1 – Income Tax Relief under Law No. 57 of 1985, as amended  
classified by HS Chapter in US$ for the year 2005  
  
Total Exports Value:  US$4.3 billion. 
Total Exports Value benefiting fro m this programme;  US$70,753,276 
Income Tax Relief:  US$1,061,299 
 
Chapters Export Value Income Tax Relief 
17-19 83,377 1,251 
21-23 2,099,234 31,489 
28-38 27,097,625 406,464 
39-40 3,647,639 54,715 
41 846 13 
44-46 17,117 257 
48-49 1,456,801 31,852 
50-63 315,656 4,735 
64 14,406 216 
68-70 4,059,553 60,893 
72-83 3,856,513 57,848 
84-85 25,489,409 382,341 
87 3,526 53 
90-91 192,587 2,889 
94-96 1,393,653 20,905 
98 1,025,334 15,380 
Total 70,753,276 1,061,299 
 
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