King Abdullah reforms Jordanian tax laws

30 December 2009

Government plans to increase revenues

Jordan’s King Abdullah has radically changed his country’s tax code as part of efforts to increase the government’s revenues.

From 1 January 2010, personal income and corporate income taxes will fall and become simpler. Jordan’s Finance Ministry, which drafted the proposals, hopes the moves will increase government revenues.

Jordan’s complex tax system has five different tax bands for personal income tax and numerous exemptions for companies in different sectors.

The new tax code cuts the number of tax bands to three and cuts the maximum rate of personal income tax from 35 to 14 per cent.

Jordan’s banks, which enjoyed the most exemptions, will lose their perks under the changes, although their effective rate of tax will still fall from 35 to 30 per cent as a result of a cut to the rate of corporate tax for banks.

King Abdullah dissolved parliament and sacked his government in November. In December, he appointed a new government, but he will not hold parliamentary elections until October 2010 at the earliest allowing the tax changes to bed in before the new parliament has the chance to vote on them.

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