“Abu Ali”: the amended income tax law excluded the IT sector from tax increase

 

Director General of the Income and Sales Tax Department, Hossam Abu Ali stressed that the reviewed income tax law excludes Information and Technology (IT) companies from tax increase and that the tax rate will remain 20%. This has come during a discussion held and organized for the first time by Orange Jordan, for BIG's entrepreneurs in particular and entrepreneurs in general. The session was attended by journalists, companies, entrepreneurs and stakeholders. The session was dedicated to startups, as many of them fall under the umbrella of the IT sector.

Abu Ali pointed out that the IT sector was exempted from the new income tax law amendments, once he began drafting them. This was due to the prevailing talent of Jordanians and great innovation in the sector, which required further support. The result was adding an article to the amended law, in order to go on with the exemption of these companies from the income tax for the first five years, since their establishment on capital gains from sales of successful companies.

Regarding the reasons behind not reducing the income tax rate on the IT sector, Abu Ali clarified that this action, even if it supports the IT sector, which is considered as one of the most important local and entrepreneurial sectors, will affect other sectors, as this could result in increasing the income tax on other sectors to offset the difference in the estimated revenue, that will result from these amendments.

Abu Ali showcased the previous governmental exemptions for the sector, stressing on the need to support it through different channels, starting with amendments in the investment law to support startups, as such amendments are still not covered in the articles of the current investment law, and will provide economic incentives to encourage these companies, which would in result, contribute to their performance and overall development.

Abu Ali went over the purpose of the government applying amendments to the income tax law, as he pointed out that if approved, they will provide the treasury with more than 250 million JDs, which confirms its aim for financial reform and social justice.

As part of its responsibility in providing advice and guidance to Jordanian startups, Orange Jordan organized this special session through BIG program, which stems from the company's five-year corporate strategy, "Essentials 2020". The session benefitted participants and non-participants of BIG through discussing and understanding the Income Tax Law with the experts.

It is worth noting that since its launch in 2015, BIG has been supporting startups to improve their businesses, which clearly reflects the company's commitment towards social development, through working with the local community to promote economic growth and reducing unemployment. The program also aims to provide guidance to Jordanian startups wishing to expand into new markets and increase their customer base.

 

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