Jordan Banks Disappointed By Amended Tax Law

by Lorys Charalambous, Tax-news.com, Cyprus

06 June 2001

Last Sunday, in a move which bitterly disappointed the Jordanian banking sector, the Senate approved a Lower House amendment to the draft law on income tax which will keep in place the current 35% tax levied on banks for the forseeable future.

Originally, the government had proposed a 10% reduction in the tax, hoping to: 'bolster the financial market and revive business and investment's trust in investing [in Jordan].' However, deputies strongly opposed the proposal, fearing that the resulting treasury loss of JD28 million per year would be difficult to compensate. There were also concerns that the government would attempt to minimise the shortfall by taking the money 'from the pockets of ordinary citizens' either by hiking petrol prices, or by imposing more individual taxes.

Deputies also argued that as the banking sector was one of the few which earns high profits, a higher tax would help to create an 'economic equity' in Jordanian society, whereby the widening gap between rich and poor could be bridged.

The draft law has been under discussion for some time now, and had the Senate refused, or changed the amendment, a joint session between the two houses would have become necessary. However, as it stands now, the law which will deny the Jordanian banks their tax break will come into force from January 1st, 2002.

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