03 Sep 2018

showCASE no. 84 I No Taxation without Representation? On Tax Reforms in Jordan

As Jordanians celebrated Eid al-Adha (commemorating the willingness of Prophet Abraham to sacrifice his own son at the will of God) last month, the spirit of protests that shook the political scene in the country only two months ago seemed to have diluted. With festivities and indeed the holiday period approaching their end, it might be a good moment to take a step back and analyse one particularly controversial aspect of the proposed – and for the time being withdrawn – reforms that sparked so much discontent in the country earlier on: taxes.

The protests broke out on May 31, 2018 following an announcement by the government of a new set of austerity measures aiming to improve the economic situation in the country. Particularly disputed were the proposed amendments to Tax Income Law. In an attempt at widening the tax base, the government planned to decrease the limit of non-taxable income from Jordanian Dinar (JD) 12,000 (approx. USD 17,000) down to JD 8,000 (approx. USD 11,000) for individuals and from JD 24,000 to JD 16,000 for families. Moreover, the law assumed removal of additional exemptions of up to JD 4,000 on expenditure items such as education, housing loans’ interests or medical expenses and introduced alterations to the income tax brackets decreasing them from five to three. Additionally, new penalties for tax evasion (in the amount of 100% of the amount due), tax understatement (between 10% and 50% of understated tax depending on the amount of understatement above a 20% threshold) and late tax filing (5% of tax due calculated on monthly basis, up to a 25% threshold) were introduced as well.


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 Jordan protests

Photo: Protests near the Prime Minister's office in Amman, Jordan, June 6, 2018. REUTERS