Jordan – Round-up of indirect tax changes

Jordan – Round-up of indirect tax changes

The government of Jordan recently made a number of changes to its various indirect taxes. Highlights of these developments are as follows:

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Clean energy manufacturing inputs

The government of Jordan is increasing the country’s general sales tax to 16 percent (from 0 percent) on imported raw material and inputs used to manufacture electricity consumption saving equipment and renewable energy equipment such as solar energy, wind energy and water energy. At the same time, custom duties on such raw material and inputs, which were previously exempt, will rise to 30 percent (from 5 percent).

Imported clothes

The customs duty rate on imported clothes will rise to 20 percent (from 5 percent).

Cell phones and tablets

Mobile devices, smart phones and tablet devices have been added to the list of goods subject to consumption tax at a rate of 7 percent in the Aqaba Special Economic Zone; such devices previously were exempt from consumption tax.

Interest earned by insurers

For insurance companies, interest earned on investments in bonds and from loans granted to life insurance policies holders was previously exempt from general sales tax. Recently, the Jordanian Income and Sales Tax Department has subjected such interest to general sales tax at a rate of 16 percent.

Classifying business activities

For purposes of determining and classifying taxpayers’ activities, Jordan’s tax authority intends to adopt version 4 of International Standards Industrial Classifications (ISIC) as of 1 January 2014. Version 3 of ISIC was previously used for this purpose.

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