Tax regulations for imported production inputs amended in favour of local industry

AMMAN — The Cabinet on Thursday decided that it will no longer allow postponing sales tax payments for imported production inputs that have local alternatives. 

The decision also excludes such imports from amended regulations pertaining to methods of payment, installment plans and deference to the sales tax, the Jordan News Agency, Petra, reported. 

Thursday’s measures seek to rectify discrepancies between tax rates imposed on industry inputs and outputs so that tax rates on production inputs are relatively equal to or less than tax rates on manufactured goods. 

Furthermore, the Cabinet has decided to lower the tax imposed on the production inputs of dairy, such as packaging materials, from 16 to 10 per cent. 

Under the new measures, fresh milk in packages weighing more than 5 kilogrammes will be subjected to a 4 per cent tax as opposed to being exempted, according to Petra. 

Meanwhile, sales tax on oil production inputs such as bottles will also decrease from 16 to 4 per cent. 

Fertiliser and pesticide production inputs will be completely exempted from the 16-per cent sales tax, since these products are also exempted from sales tax. 

Income and Sales Tax Department Director General Hussam Abu Ali said these decisions are the result of a review conducted by the department to achieve tax reform, protect local industrial production and mitigate production costs. 

A study done in cooperation between the Trade Ministry and the Sales Tax Department led to a recommendation for the Cabinet not to give an advantage for imports at the expense of locally produced alternatives, according to Abu Ali. 

The outlined decisions cover 117 production inputs offered locally, and are likely to lead to invigorating production and industry and mitigating costs for manufacturers, the official added.