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

Jordan’s cabinet 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. (Photo courtesy of PETRA)
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.”


Flydubai denies claims it’s resuming flights to Syria

Updated 25 min 34 sec ago
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Flydubai denies claims it’s resuming flights to Syria

  • Airline spokesman says there are no plans to resume service
  • Two countries have recently denied similar claims over their embassies in Syria

DUBAI: The United Arab Emirate’s budget airline, flydubai, has responded to claims stating it was planning to resume flights to the Syrian capital Damascus.

None of the Emirati airlines currently serve Syria and a spokesman for flydubai said the company had plans to change that.

“flydubai follows the regulations of the General Civil Aviation Authority (GCAA),” the statement read.

“flydubai is considering the option to re-enter the market and will announce any operational updates once the decision is made by the relevant authorities to reinstate the UAE national carriers’ operations to Syria.”

This is the latest in a line of denials over such claims. In the past two weeks both the UK and Russia have denied reports that they were planning to reopen their embassies in the wartorn country.