Senate amends MPs’ version of tax bill citing 'negative effects' on economy

AMMAN — The Senate on Wednesday returned the 2018 draft income tax law to the Lower House after making amendments to
the bill.

Senators decided to impose a fixed tax of 10 per cent on capital profits resulting from stock trading, and exempt the first JD10,000 of share profits distributed by public shareholding companies while imposing a 10 per cent tax on amounts exceeding this figure, the Jordan News Agency, Petra, reported. 

In its version, the Lower House had exempted profits of shares distributed by public shareholding companies from tax.

The Upper Chamber cancelled MPs’ introduced levy on the industrial sector of 14 per cent allowing a possible 5 per cent reduction, that should need a special bylaw to be issued for this purpose.

Senators decided to bring back an article from the government's draft law which sets tax on industrial activities, except pharmaceuticals and clothes, at 25 per cent in 2019, 20 per cent in 2020, 15 per cent in 2021, 10 per cent in 2022 and 5 per cent in 2023. 

As for the pharmaceuticals and clothes, the levy will be 50, 30, 20, 10 and 5 per cent between 2019 and 2023, according to the Senate’s amendments.

Senators raised the minimum limit of taxation from JD500 to JD1,000 on partnership and limited partnership companies that are registered in the Kingdom and practice any activity or investment the income of which is subject to taxation.

Head of the Senate’s Finance and Economy Committee Umayyah Toukan said that the Lower House’s version reduces the expected revenues by JD100 million, which negatively affects the economic reform programme and puts Jordan in a “difficult position” when it comes to donors and the international community.

Toukan said that the panel had accepted the government’s proposals when discussing the bill due to the difficult economic conditions facing the Kingdom.

Finance Minister Ezzeddine Kanakrieh said that the Lower House’s version harms the Kingdom’s interests and is not in accord with Amman’s deal with the International Monetary Fund.

Kanakrieh noted that the government, through the law, aims at addressing tax evasion, improving tax administration and providing the Treasury with 1 per cent of the GDP (JD280 million). 

Meanwhile, the Senate endorsed the 2018 Arbitration Law and the 2018 Illicit Gains Law as referred from the Lower Chamber.

The 2018 amendments to the Illicit Gains Law expanded the segment of employees subject to the financial disclosure requirement to include heads and members of ad hoc municipal councils, executive directors of municipalities and heads and members of governorate councils. 

The bill also allowed the Council of Ministers to subject any job to the law.

Employees holding the aforementioned positions will be required to present financial disclosures with details about their movable and immovable assets and those owned by their spouses and minor children.