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FZIC raises alarm over Treasury losses due to hiked vehicle taxation

'Accumulated losses from car customs reach JD225m'

By JT - Aug 18,2019 - Last updated at Aug 18,2019

AMMAN — The Treasury’s accumulated losses from the free zone customs fund of vehicles between the beginning of 2016 and June 30, 2019 stood at around JD225 million, President of the Jordan Free Zones Investment Commission (FZIC) Mohammad Bostanji said on Sunday, attributing the decline to a series of government decisions raising taxation on cars. 

Bostanji said that the number excludes the annual growth rate of revenues that used to exceed 10 per cent before a set of government measures raised taxation on vehicles, and does not take into consideration the 11-per cent fees of registration, licensing and insurance, according to a FZIC statement. 

The president said that clearance statements were issued for a total of 38,662 vehicles in the first half of 2016 with a value of JD172 million. 

He added that these numbers went down as of the beginning of 2017 due to amending the “consumption rates” for passenger vehicles and imposing a 5 per cent tax on pick-up trucks. 

The total of custom fees on vehicles declined between January 1 and June 30, 2017 to JD132 million, which was collected from clearing 28,513 vehicles, Bostanji elaborated.

The president noted that the decline “further worsened” after amending the custom fees on hybrid cars and adding the weight tax on all gasoline and hybrid saloon cars as of the beginning of 2018. 

Custom revenues continued to drop in the first six months of 2018, registering JD88 million for clearances of 16,615 vehicles, he said, attributing the persistence of the drop to a decision to raise the customs and weight taxes on hybrid and gasoline cars.

Bostanji added that a total of 14,309 cars were cleared in the January-June period of 2019, with a customs value of JD72 million.

The president said that the decline worsened further this year due to increasing the added tax rates on hybrid vehicles and imposing a 25 per cent tax on electric cars, in addition to amending the exemptions bylaw for vehicles of people with disabilities.

He said that the Treasury loss from the free zone fund only reached JD225 million during the first half of 2019 when compared to the same period in 2016.

The president noted that these losses do not include vehicle customs at car agencies, the Amman Customs Centre and the damage incurred by assisting sectors, such as the Aqaba terminal, clearance companies, bank facilities and fuel consumption.

Bostanji questioned the role of the Lower House’s finance and economy and investment committees in following up on the impact of government decisions and the damage to all sectors in general, and the vehicle sector in particular, stressing that the commission has met several times with the concerned MPs and stakeholders, in addition to sending letters to government officials, to raise the alarm over the sector’s realty. 

Stakeholders and traders have reported on several occasions a steep drop in demand for vehicles following recent decisions hiking car taxes.

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