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LSDefine
Simple English definitions for legal terms
subsidy
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A quick definition of subsidy:
A subsidy is a type of financial assistance given by the government or public entities to support certain enterprises or industries that are considered to be in the public interest. This assistance can come in various forms, such as tax breaks, low-interest loans, or provision of raw materials at below-market prices. Subsidies can also be given by foreign governments to exporters, which can be countervailed by the importing country. In international law, subsidies can be given by one nation to another to support it in a war or to preserve its neutrality.
A more thorough explanation:
A subsidy is a grant or financial assistance given by the government or a public entity to promote an enterprise that is considered to be in the public interest. It can take various forms, such as tax breaks, low-interest loans, or provision of raw materials at below-market prices.
- The government provides a tax break to a company that invests in research and development to create new technologies that benefit society.
- A public entity offers a low-interest loan to a small business to help it expand and create jobs in the community.
- A foreign government gives financial assistance to its exporters to the United States, which is considered a countervailable subsidy and can lead to the imposition of countervailing duties on the imported goods.
These examples illustrate how subsidies can be used to support activities that have a positive impact on the economy, society, or environment. However, they can also distort competition and harm domestic industries if they are not properly regulated.