AMMAN -- Mobile phone vendors on Wednesday said the government's decision to impose an 8 per cent tax on mobile devices would cause "major losses" and layoffs in the sector, which employs about 10,000 Jordanians.
The tax, which telecom companies and mobile stores started imposing as of Wednesday, will lead to a drop in sales of mobile phones not only to Jordanians but also to traders who come to the Kingdom from neighbouring countries to purchase devices and to sell in their countries, according to workers in the sector.
"The 8 per cent tax will have disastrous consequences for mobile stores. These stores will face difficulties and I expect that many will either shut down or lay off employees," Mohammad Anees Al Qalam, head of the committee representing mobile device importers in Jordan, told The Jordan Times on Wednesday.
According to Qalam, there are 4,000 mobile stores across the Kingdom, with each employing two or three Jordanians.
"The majority of these stores are small- and medium-sized businesses and they cannot afford more burdens. These stores will have to regularly report to the Income and Sales Tax Department and hire an accountant to do the auditing for the new tax. This is an extra burden," he said.
Qalam said the new sales tax was expected to generate about JD4 million in revenues annually.
In 2011, Jordan imported JD196 million worth of mobile phones, of which about JD147 million were sold to traders from neighbouring countries, according to the committee representative.
"The majority of the mobile devices Jordan imports are bought by traders from Syria, Iraq and Palestine. They come to Jordan because it is cheaper to buy the mobile devices in the Kingdom than elsewhere," he said.
"After the new tax, traders from nearby countries will go to other places such as Dubai, where there are no taxes on sales of mobile devices."
Fadi Osama, a worker at a mobile store in the Wihdat area, expressed concern that the new tax would also encourage consumers to buy cheaper or smuggled mobile phones, which would also affect his livelihood.
"I think people will stop buying smartphones and will resort to buying cheaper devices, which means less profits for mobile stores," Osama told The Jordan Times on Wednesday.
"Mobile stores do not make huge profits. It is the telecom companies that take the lion's share of the profits. The new sales tax will harm our business," he said.
© Jordan Times 2012
