WORLD TRADE  
ORGANIZATION  G/SCM/N/186/JOR 
G/SCM/N/192/JOR 23 June 2009 
 
(09-3065) 
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 notification, dated 16 June 2009, is being circulated at the request of the Delegation of Jordan.   
 
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In accordance to Article XVI:1 of the GA TT 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 Jo rdan 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 2008.   
 G/SCM/N/186/JOR 
G/SCM/N/192/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, and to promote exports to non-traditional markets.   
 
Jordan's export markets were depressingly affected by the 1991 and the 2003 gulf wars, 
SMEs were deprived from attaining wide-reaching ec onomic state, added to this, the increase in oil 
prices which have rocked up in recent times, and whic h 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 2008 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 
which has started to appear during the third quarter of the same year.   
 
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 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 law 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 
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:  G/SCM/N/186/JOR 
 G/SCM/N/192/JOR 
 Page 3 
 
 
  • Potash & fertilizers 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 official  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 subs idy 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 th e 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):   G/SCM/N/186/JOR 
G/SCM/N/192/JOR Page 4 
 
 
  Trade effects 
  In the year 2008, the value of exports en titled for exemption was US$ 612,101,233.07 while 
the approximate calculated value of exemption amou nted for US $ 9,181,518.  This figure indicates 
that the programme is still vital in supporting be neficiaries' efforts to explore further export 
opportunities.    
As a matter of fact the total amount of exempti on 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 trad e 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 $ 
2005 US$ 4.3 b US$ 70,753,276  US$ 1,061,299  
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  
 
Table 1-Income Tax Relief under Law No. 57 of 1985, as amended  
Classified by HS Chapters in US$ for the year 2008  
 Total Exports Value:   US$ 7.9 b 
Total Exports Value benefiti ng from this programme:   US $ 612,101,233.07 
Income Tax Relief:   US$ 9,181,518.50 
 
Income tax relief EXPORT VALUE $ Chapters 
118,318.28 7,887,885.16 17-19 
1,266,673.96 84,444,930.87 21-23 
2,229,928.68 148,661,911.68 25-30 
255,466.30 17,031,086.34 32-35 
40,915.31 2,727,687.64 37-38 
723,872.85 48,258,189.90 39-40 
854.33 56,955.42 41-42 
18,759.97 1,250,664.50 44 
182,391.79 12,159,452.60 47-49 
529.06 35,270.88 51 
698.36 46,557.56 53-54 
1,745,311.48 116,354,098.48 56-63 
4,183.83 278,922.12 64-65 
328.02 21,867.95 67 
117,056.38 7,803,758.47 68-70 
5,433.48 362,231.94 71 
1,020,232.96 68,015,530.47 72-76 
126.98 8,465.01 78  G/SCM/N/186/JOR 
 G/SCM/N/192/JOR 
 Page 5 
 
 
  Income tax relief EXPORT VALUE $ Chapters 
26,390.94 1,759,396.16 80-83 
936,918.64 62,461,242.95 84-85 
260,236.27 17,349,084.37 87 
10,839.45 722,629.80 90-91 
164,222.72 10,948,181.43 94-96 
51,828.47 3,455,231.38 97-98 
9,181,518.50 612,101,233.08 Total 
 
10. Internal steps for eliminating export subsidies  
(a) Consultations with relevant government bodies and organisations have been made;  
among which is the Income Tax Department as the authority responsible for the exemption, as 
well as with the chambers of commerce and cham bers of industry and other related bodies in 
Jordan.   
 
(b) Beneficiaries have been informed that th e programme will be ended by the end of the 
period considered by the WTO, and will not  be extended beyond the end of calendar 
year 2015, seeing that this was the maximum period according to our commitments during the 
negotiations of extending the programme, which would in turn necessitate the direct and 
systematic termination of the programme at the end of the year 2015.   
  
 
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