Gov’t to Lower Exemptions, Restructure Income Segments

تم نشره في Sun 6 May / May 2018. 12:00 AM - آخر تعديل في Sun 6 May / May 2018. 04:39 PM
  • Ministry of Finance building in Amman - (Archives)

AMMAN —AlGhad— Ranking official sources with the Ministry of Finance uncovered to AlGhad that the government’s suggested amendments to the Income Tax Law will indeed, as economists expected, lower the income tax exemption ceiling, expand the taxable base, restructure income segments, further progressive taxation and criminalise tax evasion.

Sources confirmed the government’s intent to lower the exemption ceiling from JOD24,000 and JOD12,000 per annum for households and individuals, respectively, to JOD16,000 and JOD8,000.

Accordingly, instead of three segments, the income distribution for Jordanian households and individuals will be restructured into five income segments over the exemption ceiling.

Under the new structure, progressive taxation will start at 5 per cent on the first JOD5,000 per annum over the exempt income ceiling, increasing 5 per cent for every additional JOD5,000 per annum.

Furthermore, income from leasing and capital revenues will be taxable under the new law, which will come into effect as of 2019.

Expected domestic revenues for the treasury in 2019 is expected to reach JOD280 million under the new law, the source said.

He also explained that the first JOD150 million is expected to be retained from counter tax evasion mechanisms enacted under the law. The rest is expected to come from the amendments to income segments and exemption downsizing.

The exempt demographic according to the amendments will shrink from 95 per cent to 87 per cent, he elaborated.

Recent figures indicate the tax exemption is not as substantial as earlier figures show, he said. Once estimated at around JOD700 million, annually, tax evasion is now estimated by the government at around JOD250 million.

The aim of the counter-evasion measures is to shrink evasion to 7-10 per cent of the overall estimated income tax payable.

To achieve this goal, a number of collection mechanisms were suggested to enhance assessment and collection efforts, he noted.

Notably, these amendments are essential to meeting the requirements of the International Monetary Fund (IMF) agreement and the entailed reforms.