Jordan to become first Arab nation to introduce income tax Jordan to become first Arab nation to introduce income tax

Jordan to become first Arab nation to introduce income tax
06 Mar 2019

With the dinar depreciating and unemployment at 18%, Jordan is set to become the first Arab nation to introduce an income tax.

Considered necessary by the government and its principal backer, the International Monetary Fund (IMF), the unpopular proposed tax has already led to widespread strikes and protests. The unrest is due to the fact that Arab countries famously do not have income tax. It was only last year that a value-added tax was introduced in most Gulf countries.

Following a review of the situation, the IMF said: “The outlook for the Jordanian economy brings renewed momentum. The re-opening of the border with Iraq and associated trade and investment agreements; the extension and broadening of the trade agreement with the European Union as well as other efforts to lower the cost of generating energy, all bode well for a steady recovery in investment, exports, competitiveness, and growth."

But the organisation added that challenges still remained, particularly as a result of tighter and more volatile global financing conditions and elevated vulnerabilities.

 “To successfully confront these challenges and improve economic performance, the IMF team and the Jordanian authorities have reached agreement on policies and reforms for 2019 anchored on a gradual and steady fiscal consolidation path and the continued implementation of reforms to enhance business conditions and employment prospects," the review said.

The new tax will result in employees paying income tax of 5%, while employers will be required to pay between 20% and 40%. According to the Big News Network, the levy will not apply to venture capital companies to ensure start-ups are not lost to other countries.

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With the dinar depreciating and unemployment at 18%, Jordan is set to become the first Arab nation to introduce an income tax.

Considered necessary by the government and its principal backer, the International Monetary Fund (IMF), the unpopular proposed tax has already led to widespread strikes and protests. The unrest is due to the fact that Arab countries famously do not have income tax. It was only last year that a value-added tax was introduced in most Gulf countries.

Following a review of the situation, the IMF said: “The outlook for the Jordanian economy brings renewed momentum. The re-opening of the border with Iraq and associated trade and investment agreements; the extension and broadening of the trade agreement with the European Union as well as other efforts to lower the cost of generating energy, all bode well for a steady recovery in investment, exports, competitiveness, and growth."

But the organisation added that challenges still remained, particularly as a result of tighter and more volatile global financing conditions and elevated vulnerabilities.

 “To successfully confront these challenges and improve economic performance, the IMF team and the Jordanian authorities have reached agreement on policies and reforms for 2019 anchored on a gradual and steady fiscal consolidation path and the continued implementation of reforms to enhance business conditions and employment prospects," the review said.

The new tax will result in employees paying income tax of 5%, while employers will be required to pay between 20% and 40%. According to the Big News Network, the levy will not apply to venture capital companies to ensure start-ups are not lost to other countries.

OTHER STORIES THAT MAY INTEREST YOU

Jordan's MPs under fire for avoiding debate over new income tax law

Jordan's controversial income tax bill awaits Senate approval

Jordan withdraws draft income tax law after protests

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