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Tourism Ministry, tour operators at odds over sales tax

Annab says tax required by law, will not affect sector; society says otherwise

By Dana Al Emam - Dec 15,2016 - Last updated at Dec 15,2016

Tourists visit the Baptism Site, 40km west of Amman, recently. The Jordan Society of Tourism and Travel Agents claims that the sales tax on tour operators will negatively affect the tourism sector (Photo by Amjad Ghsoun)

AMMAN — While authorities see in imposing the general sales tax on outbound tour operators mere law enforcement, tour operators describe it as a “step back”.

Tourism Minister Lina Annab said the 16 per cent sales tax is stipulated by law, even if it had not been collected regularly over the past few years. 

“If outbound tour operators had not been importing their tax dues to the Income and Sales Tax Department [ISTD], and the department had not been following up closely on uncollected dues, this does not mean that outbound tour operators are exempted from taxes,” she told The Jordan Times on Thursday.

But, Shaher Hamdan, president of the Jordan Society of Tourism and Travel Agents, said outbound tourism is considered an exported service and should, therefore, be exempted from sales tax.

He added that the authorities over the past 10 years have been “bargaining with the sector on this given” exemption, describing the recent decision to impose the tax as a means of money collection with a negative impact on the sector’s performance. 

Back in 2011, when the sales tax exemption to outbound tour operators was cancelled, the ISTD did not notify operators, according to Hamdan, who added that some outbound tour operators discovered by coincidence that they were tax evaders.

Meanwhile, Annab said the ministry had two options. The first was a retroactive collection of unpaid tax dues, which would result in large financial losses to outbound operators, and the second was imposing tax collection starting this Thursday. 

The ministry adopted the second option, she explained.

The tax, which is imposed on outbound tour operators, not passengers, covers the untaxed income of the businesses, and not travel packages that are already taxed, Annab said, adding that inbound and domestic operators are exempted from sales tax.

“Imposing the tax does not have anything to do with the ministry’s commitment to promoting and supporting the sector,” she said, adding that the ministry is keen on enhancing incentives and facilitations to the sector.  

While criticising the government for “taking decisions without negotiating with the private sector”, Hamdan said outbound operators will increase the prices of tickets and services, an issue that will affect the performance of the tourism sector as a whole.

Agencies with annual sales that reach JD70,000 are required to pay a general sales tax of 16 per cent on JD25,000 of the overall amount at the end of the year, said Hamdan, who protested that authorities require agents to pay their dues to the ISTD every two months.

“This is confusing,” he said, adding that if the authorities were to tax outbound tour operators, they must also tax online booking agencies.

 

The Jordan Society of Tourism and Travel Agents encompasses 723 agencies offering all kinds of services in the field of tourism. 

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