WORLD TRADE  
ORGANIZATION   
G/SCM/N/220/JOR 
G/SCM/N/226/JOR 5 July 2011 
 
(11-3285) 
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 
 
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 communication, dated 28 June 2011,  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 SCM 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 s ubsidies 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  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 2010. 
 G/SCM/N/220/JOR 
G/SCM/N/226/JOR Page 2 
 
 
  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, and the remarkable 
increase in oil prices in the year 2008 and its persiste nt fluctuations afterward, leading to a continued 
upward pressure on small and medium size enterpri ses who were already facing mounting competitive 
pressures as a result of trade liberalization and the in cident of the financial crisis, jointly with the 
prevailing political situations in the Middle East 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. 98 per cent of the domestic 
exporting industrial companies which were of small –s ized  nature, suffered fr om 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 comp etition 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 an d 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 determined acco rding 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 Fertilizers exports, and any of their components or 
derivatives. 
2. Exports of goods and services subject to Pr otocol 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/220/JOR 
 G/SCM/N/226/JOR 
 Page 3 
 
 
  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. 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 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 j udgment 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 2010, the value of exports en titled for exemption was US $ 3,985,481,476.06 
while the approximate calculated value of ex emption amounted for US$ 59,782,222.14.This figure 
indicates that the programme supports beneficiaries’ 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 trade, realizing th at Jordan is a developing country with a share not 
greater than 0.10 % of world’s export trade, it is cl ear that no harmful effects have been introduced on 
the international trade as a result of the subsidy programme.  G/SCM/N/220/JOR 
G/SCM/N/226/JOR Page 4 
 
 
   
(a) For the three most recent years for which statistics are available; 
(b) For a previous representative y ear, 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 $ 
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 
2007 5.7 b 533,965,829.45 8,009,487.44 
 
Table 1  Income Tax Relief Classified by HS Chapters in US$ for the year 2010 
 
Total Exports Value:  US $ 7 b 
Total Exports Value benefiting from this programme : US $ 3,985,481,476.06     
 Income Tax Relief:  US$    59,782,222.14  
 
Income tax relief EXPORT VALUE $ Chapters 
1,184,445.21 78,963,014.08 17-19 
2,534,945.01 168,996,333.80 21-24 
12,729,475.94 848,631,729.58 26-30 
4,036,748.09 269,116,539.44 32-38 
3,468,073.90 231,204,926.76 39-40 
44,135.68 2,942,378.87 41-43 
396,552.72 26,436,847.89 44-46 
4,571,128.99 304,741,932.39 47-49 
11,517,017.49 767,801,166.20 50-63 
25,685.92 1,712,394.37 64-67 
1,430,539.39 95,369,292.96 68-70 
4,505,654.47 300,376,964.79 71 
7,282,888.14 485,525,876.06 72-76 
185,191.44 12,346,095.77 78-83 
4,455,780.74 297,052,049.30 84-85 
448,222.37 29,881,491.55 86-88 
104,172.53 6,944,835.21 90-92 
817,201.96 54,480,130.99 94-96 
44,362.14 2,957,476.06 97-99 
59,782,222.14 3,985,481,476.06 Total 
 
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 De partment as the authority responsible for the  G/SCM/N/220/JOR 
 G/SCM/N/226/JOR 
 Page 5 
 
 
  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 also notified through various  industrial associations,  that the extension is 
given on a yearly basis, and that Jordan will ph ase 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 
according to our commitments, the matter which would in turn necessitate the direct and systematic 
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 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 sour ces, 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 da te of termination 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 decisi on will be translated and 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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