September tax collection sees 11.4% increase, use of AI, e-auditing pays off

AMMAN — The Income and Sales Tax Department's utilisation of artificial intelligence in electronic tax auditing is playing a pivotal role in accelerating tax audit procedures and swiftly identifying tax discrepancies, according to officials.

These measures have already resulted in a notable growth of 11.4 per cent in the total value of collected tax in September, they said.

Director-General of the Income and Sales Tax Department Hussam Abu Ali announced on Sunday that the value of tax collection from income and sales levies in September 2023 reached JD470 million, showing a substantial increase from JD422 million collected during the same month in 2022, reported the Jordan News Agency, Petra. 

Abu Ali added that the surge in tax revenues can be attributed to heightened tax collections in both income and sales tax categories. Income tax collections and national contributions witnessed an increase of 23 per cent, while sales tax revenue rose by 10 per cent.

The 23 per cent increase in income tax collections not only contributes to funding the Treasury but also plays a pivotal role in addressing the structural imbalance between direct and indirect taxes, Abu Ali said.

Abu Ali further disclosed that tax collection for the first nine months of 2023 amounted to JD4.7 billion, an increase of JD300 million and a growth rate of 6.5 per cent compared with the same period in 2022.

Income tax and national contributions totalled to approximately JD1.571 billion for the first nine months of 2023, marking an 18 per cent growth rate from the JD1.334 billion collected during the same period in 2022.

Additionally, sales tax collections for the January to September period in 2023 reached around JD3.331 billion, compared with JD3.079 billion for the same period in 2022, indicating a growth rate of 2 per cent.

Abu Ali said that the boost in tax revenues is not only attributed to the Kingdom's economic sector's growth but is also a result of effective reform programmes implemented by the Income and Sales Tax Department. These programmes include initiatives to combat tax evasion and avoidance, the promotion of voluntary taxpayer compliance and the integration of AI in tax auditing. 

National contributions refer to the total amount of taxes that individuals and companies contribute to the increase in income and sales taxes.

"National contributions increased by 23 per cent during the first nine months of this year in comparison with last year," economist Hussam Ayesh told The Jordan Times. 

The total amount of national contributions for the first nine months of 2022 stood at JD1.3 billion, while in 2023 national contributions for the same period stood at JD1.6 billion, marking an increase of JD300 million, Ayesh said.

"The significant increase in tax collection is a positive sign for Jordan's fiscal stability, it reflects not only economic growth but also the government's successful efforts in enhancing tax compliance,” Ayesh noted. 

Ayesh added that to sustain this growth, the government should continue implementing policies that promote economic expansion while ensuring tax fairness.

It's worth noting that the increase in exports contributed significantly to the increase in overall sales and income tax, Ayesh said. 

The growth in income tax and national contributions is a promising development, but it is crucial to strike a balance between direct and indirect taxes to ensure equitable taxation, Ayesh said.

“The success in increasing tax return should be also faced by more enhanced and restricted management of the government's spendings to cover the running expenses,” Ayesh added. 

Economist Khaled Salameh told The Jordan Times that the adoption of AI in tax departments holds immense potential for improving tax collection, reducing evasion, and enhancing the overall efficiency and fairness of tax systems. 

“The integration of AI represents a significant step forward in leveraging technology to meet the evolving needs of tax administration in the digital age,” Salameh said. 

However, Salameh said that the department is urged to focus on tax evasion on individuals, such as doctors, lawyers and free-lancers. 

Many service providers like dentists, doctors and lawyers ask their clients or patients for a service charge — a side amount to be paid in cash in return of their services —  this amount doesn’t have any proof and people don’t usually ask for a receipt, Salameh said.