Jordan's crackdown on tax cheats has raised $600mln -finance minister

The boost to revenues will help improve public finances and support the economy after the shock of the COVID-19 pandemic

  
Image used for illustrative purpose. Jordanian dinar.

Image used for illustrative purpose. Jordanian dinar.

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AMMAN - Jordan has identified at least $600 million in taxes owed by companies under an ambitious drive to curb tax evasion, Finance Minister Mohamad Al Ississ told Reuters on Thursday.

The boost to revenues will help improve public finances and support the economy after the shock of the COVID-19 pandemic. Economists say rampant tax evasion has deprived the Jordanian government of billions of dollars over decades.

"We are cutting tax evasion and going ruthlessly, with no red lines, against anybody who evades," Al Ississ said in an interview.

The campaign to catch tax cheats, which began in earnest early this year, addresses longstanding public concerns and is part of a four-year $1.3 billion programme of structural reforms undertaken under International Monetary Fund supervision.

Al Ississ said the tax proceeds would help offset a 17% year-on-year decline in revenues in the first half of the year, when the coronavirus pandemic halted much economic activity --especially tourism, a main source of foreign currency.

Jordan's economy is set to shrink by around 5% this year, compared with an IMF estimate of around 2% growth prior to the health crisis, he said, but will rebound in 2021.

The government is targeting proceeds of over a billion dinars ($1.4 bln) from the tax drive this year -- more than a quarter of total tax revenues, which officials estimate will be between 3 and 4 billion dinars in 2020.

Tax officials say the country's first such campaign has seen inspectors empowered by detailed audits swoop on hundreds of firms, including large companies that have dodged taxes for years.

The government has seized assets and pressured big corporations to strike deals to pay back millions owed, businessmen familiar with the situation have said.

Al Ississ brushed aside criticism that the campaign has been used a means of settling scores and could deter investors, saying the proceeds meant the government could spend more on social safety nets for low earners. Rampant tax evasion had come largely at the expense of average Jordanians, he added.

"The tax burden has to be more fairly distributed, otherwise there will be no fair competition among businesses. It will improve the business climate, not the opposite."

More importantly, it would boost fiscal stability and help the indebted country secure sustainable growth and recover faster from the impact of COVID-19, he said, adding that the IMF had signalled its confidence in Jordan's reform agenda.

"Fiscal stability comes by enhancing your collection capacity from direct taxation through closing loopholes and fighting tax evasion. If not, we will be in very challenging situation, something I am not even interested in entertaining," Al Ississ said.

(Reporting by Suleiman Al-Khalidi; Editing by Catherine Evans) ((suleiman.al-khalidi@thomsonreuters.com; +96279-5521407;))

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