Jordan is moving towards "billing" to increase tax revenues
The Jordanian government is approaching the introduction of the "billing" system, which was introduced by the new income tax law for the first time in the history of the Kingdom, to oblige all sectors to issue invoices for every sale conducted on a daily basis as part of attempts to reduce tax evasion. This action is also feared by citizens to bear more burdens.
"The new system aims to collect the treasury rights of many sectors that were not previously obliged to pay the income tax and supply it to the government," said Hussam Abu Ali, director general of income and sales tax department.
Abu Ali said that under this system, which will be implemented soon without a date, all sectors will be subject to income tax, including lawyers, engineers, doctors, professionals, traders and others, which contributes to increasing income tax benefits and improving local revenues.
According to the draft system, the invoice is considered as a document issued by the seller (whether the seller of the goods or the service provider to the buyer or the recipient of the service) indicating the description of the goods or services provided, the price and the quantity sold, and the amount of the general sales tax calculated on the invoice.
The Director General of the Income and Sales Tax Department said that the law obligates professionals and other sectors to issue invoices either electronically or paper to the buyer whether for service or merchandise. There is an electronic system that will be linked with the Income Tax Department, which is ready to provide any official billing books to control the process, And expected that this measure, which is applied for the first time in Jordan, will limit the size of tax evasion.
He pointed out that the Department of Tax was able last year to collect about 254 million dollars through the pursuit of tax evasion by some quarters.
"The risk of not issuing an official invoice, monitored by the income and sales tax, is that the seller or the service provider deducts the tax substantively and does not provide it to the state treasury or does not provide part of it, which promotes evasion and creates distortion in economic activities. Wealth at the expense of the citizen who pays sales tax at the expense of the state that provides services to citizens. "
Every person selling a good or service of at least JD must issue an invoice in at least two copies containing the seller's tax number if registered in the sales tax and the national number if not registered in the sales tax.
It is excluded from the organization and issuance of the invoice established, with sales of less than $ 110 thousand per year, and craftsmen whose sales or revenues are less than $ 42,000 per year.
"The billing system is a step in the right direction to reduce the size of tax evasion and thus increase domestic revenues," said economist Hossam Ayesh. "Large sectors have not paid the tax before.
A study by the Income and Sales Tax Department found that about 132,000 companies are officially registered and are engaged in tax evasion, with only $ 82 million being delivered to the Treasury each year.
The study said that the annual income tax of about 113 thousand companies registered as a solidarity company and 18.6 thousand companies registered as a simple recommendation company, amounting to about 84 million dollars.
She stressed that this fact in the tax revenue from these companies clearly indicates the existence of tax evasion in registered companies in solidarity or a simple recommendation, in which family businesses are a part.
The Jordanian Strategy Forum also noted that the total tax revenue from about 150,000 professionals and SMEs in 2016 was about $ 110 million, a very modest figure.
But citizens worry that they will be burdened with a financial system, with traders and producers charging consumers with any costs or taxes.
Under the new income tax law, income tax exemptions for individuals have been reduced to $ 14,000 and families to $ 28,000 in 2019, down to $ 12.7 thousand for individuals and $ 25.4 thousand for families starting next year 2020 and beyond.
Some syndicates refuse to oblige their members to the billing system, including the Bar Association, whose chairman, Mazen Rachidat, said in a recent press statement that "the union expects the government to respond to the union's demands as soon as possible before resorting to any escalation measures. Positive, the union's response and procedures will not be easy. "
Rachidat added that the union addressed Prime Minister Omar al-Razzaz regarding the supplementary instructions to the tax law, which treat lawyers as traders by charging them with the billing system, despite the presence of computer programs in the courts and the income tax department.