Daimler sees currency effects tempering Mercedes revenue growth

The profitability of its luxury cars division was dented by higher expenses for revaluing the leasing portfolio in Germany, Daimler said. (Reuters)
Updated 27 April 2018
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Daimler sees currency effects tempering Mercedes revenue growth

FRANKFURT: Daimler said currency headwinds will dampen revenue growth at its Mercedes-Benz luxury vehicles division this year, after foreign exchange effects and the absence of one-off gains pushed the group’s first-quarter operating profit 12 percent lower.
Daimler’s Chief Financial Officer Bodo Uebber said the company now expected a burden on earnings this year in excess of 1 billion euros tied to currency effects and the strong euro.
Group earnings before interest and taxes (EBIT) dropped to €3.34 billion in the three months through March, below analyst expectations.
Results in the year-earlier quarter were boosted by the reversal of an impairment of Daimler’s equity investment in BAIC Motor Corp. and the valuation of a stake in map maker HERE.
The return on sales at its Mercedes-Benz Cars division inched up to 9 percent in the first quarter, from 8.9 percent a year earlier, thanks to a 5 percent rise in car sales to 594,299 vehicles, the company’s best ever quarter for luxury sales.
The profitability of its luxury cars division was dented by higher expenses for revaluing the leasing portfolio in Germany, Daimler said.
Although Mercedes-Benz expects to continue posting new sales records, revenue growth will be impacted going forward, the Stuttgart-based carmaker said.
“At Mercedes-Benz Cars, the expected exchange rate developments and lifecycle effects will dampen the development of revenue, so the division is expected to post full-year revenue at the high level of 2017,” Daimler said.


Jordanian cabinet approves new IMF-guided tax law to boost finances

Updated 21 May 2018
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Jordanian cabinet approves new IMF-guided tax law to boost finances

AMMAN: Jordan’s cabinet on Monday approved major IMF-guided proposals that aim to double the income tax base, as a key part of reforms to boost the finances of a debt-burdened economy hit by regional conflict.
“When only 4 percent of Jordanians pay (personal) income tax, this may not be the right thing,” Finance Minister Omar Malhas said in remarks after the cabinet meeting, adding the goal was to push that to eight percent. The draft legislation was submitted to parliament.
The IMF’s three-year Extended Fund Facility program aims to generate more state revenue to gradually bring down public debt to 77 percent of GDP in 2021, from a record 95 percent.
A few months ago Jordan raised levies on hundreds of food and consumer items by unifying general sales tax (GST) to 16 percent — removing exemptions on many basic goods.
In January subsidies on bread were ended, doubling some prices in a country with rising unemployment and poverty among its eight million people.
The income tax move and the GST reforms will bring an estimated 840 million dinars ($1.2 billion) in extra annual tax revenue that will help reduce chronic budget shortfalls normally covered by foreign aid, officials say.
Corporate income tax on banks, financial institutions and insurance companies will be pushed to 40 percent from 30 percent. Taxes on Jordan’s phosphate and potash mining industry will be raised to 30 percent from 24.
The government argues the reforms will reduce social disparities by progressively taxing high earners while leaving low-paid public sector employees largely untouched.
“This is a fair tax law not an unfair one,” said Malhas, who shrugged off criticism the law is lenient on many businesses connected to politicians whose transactions are not subject to tax scrutiny.
Husam Abu Ali, the head of the Income and Sales Tax Department, said a proposed IMF-recommended Financial Crime Investigations Unit will stiffen penalties for tax evaders. Critics say it will not tackle pervasive corruption in state institutions.
Abu Ali said the government could be losing hundreds of millions of dollars through tax evasion, which is as high as 80 percent in some companies.
The amendments lower the income tax threshold and raise tax rates. Unions said the government was caving in to IMF demands and squeezing more from the same taxpayers.
“It is penalizing a group that has long paid what it owes the state,” the unions syndicate said in a statement.
“It imposes injustice on employees whose salaries have barely coped with price hikes rising madly in recent years.”