Legal Definitions - subsidy

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.