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Tax law changes expected to be ready in May

By JT - Apr 23,2018 - Last updated at Apr 23,2018

AMMAN — Amendments to the Income Tax Law are expected to be endorsed by the Cabinet in the first half of May, Minister of State for Media Affairs Mohammad Momani said on Monday. 

At a press conference that followed a Cabinet session earlier in the day, Momani, who is also the government spokesperson, said that the tax evasion, which can be similar to theft, is among top issues addressed in the amended law. 

Tax evasion in some professional sectors reach 80 per cent, the minister added, according to a government statement. 

Officials and experts have estimated that the phenomenon costs the Treasury around JD1 billion a year, while the collection mechanisms is expected to be revisited in the bill. 

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Tax evasion will continue to be a problem in the foreseeable future unless the government finds a way to restrict the widely spread cash-based transactions that are recurring throughout the country every day. The large majority of vendors and technicians don't give out receipts, some don't even have cash registers. How will the tax law be able to estimate the average sale per day or week? The people that are dealing with cash only transactions are going to evade both income and sales taxes. They are not going to contribute anything towards their retirement program, in addition, they will deprive the people working for them of having any retirement income. A classic example is all yellow Taxi drivers that work on a lease based agreements with the owners.There are at least 10,000 of them in the capital alone. They receive cash from the customers, they pay the owners in cash and receive their own pay from the residual amount of income in cash as well. The technicians are no different, they do the requested jobs, be that fixing a pipe, installing electric wire, or even put a complete elevator set in a given building. The owner pays the technicians in cash and in turn they don't give out receipts. All the money exchanged among them remains anonymous and never get reported as income and no sales tax is collected on behalf of the government. Most tradesmen don't accept checks or credit cards, they prefer the cash payment because it isn't traceable. The government is losing a lot of money not only on income but also on uncollected by the vendors' sales tax. In my opinion, the tax collection of the uncollected taxes can be resolved- in- first finding a mechanism to restrict the extensive cash usage and second by imposing a mandatory give out receipts to customers even if the transaction is as little as one Jordanian Dinar. The loopholes that are being used cost a lot of tax money going uncollected. You can't hold anyone to task if there are no receipts available to cross-check them. The new tax law amendments should have something in it to encourage the people to eschew from massive cash usage and always ask for the receipt.

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