Jordan .. Does the billing system reduce tax evasion?

Mahmoud al-Sharaan-Amman

The Jordanian dispute over the income tax law and the new billing system appears to be fading, with the government's insistence on its current form and without amendment, in exchange for a shy union rejection led by the Bar Association.

Billing is required for anyone who sells any goods or performs a service to issue an invoice, but the system excludes certain categories from the application of the system such as groceries, those who work in the villages, and the like, whose annual sale does not exceed $ 100,000. Craftsmen with annual sales of less than $ 42,000.

The new system aims to reduce tax evasion and increase income tax revenues from business operations, which were previously not included in the tax collection mechanism.

Positive reflection
The government spokeswoman Jumana Ghanimat justifies the recognition of the billing system that it came to reduce tax evasion, which is one of the reasons for the decline in government revenues in the budget this year.

Ghanimat says in press statements that more than 1500 tax evasion has been seized this year, despite the government's use of all possible tools to combat tax evasion and increase revenues.

Finance Minister Ezzedine Kanakria promotes the new system by saying that "all parties to the equation benefit from the billing system, whether a citizen or buyer who needs to prove the value of what he paid to the seller or the service provider often, not just for tax purposes."

"The system preserves the rights of the service provider towards others or the citizen seller to prove the value of the purchases received or the recipient of the service to show it when necessary to the buyer or any entity that may need it, including the Income Tax Department and the Tax Department," Kanakriyah said in a statement seen by Al Jazeera Net.

The Minister explained that the billing system will positively reflect on the national economy by creating an internationally applicable system, thus reducing tax evasion and increasing justice in the tax arrangement without exception.

Failed decision
The Bar Association is facing the new system as it has nothing to do with the income tax either in the near future, it is only to monitor the money and its movement in Jordan, as evidence that the bills requested by the government does not benefit from the final tax collection, according to Captain Mazen Irsheidat.

Irshidat points out in an interview with Al Jazeera Net that the system as it is "failed" will help tax evasion and administrative and financial corruption, and it is not possible to apply the billing system and its instructions to the work of law.

The Council of the Union decided not to abide by the application of billing on members of the union, because of irregularities in it and not to be presented to the professional unions when approved, threatening to escalate measures after the Eid al-Adha holiday.

The professional unions had blocked the income tax bill in 2018, and protests escalated to the fourth roundabout, and managed to overthrow the government of Hani Mulqi, and withdraw the law, while the cloud of protests does not appear again.

Consensuses and penalties
The Income and Sales Tax Department has announced the accessibility of agreements with all sectors and syndicates on the application of the billing system, the latest of which has been with the Association of Physicians and Dentists, where mechanisms have been developed with all unions and associations except the Bar Association.

The law amending the Income Tax Law of 2018 imposed penalties for not issuing the tax invoice.

According to the law, the penalty for not issuing a tax invoice by the taxpayer obliged to issue it is “a compensatory fine equivalent to the tax difference for anyone who has not issued a tax invoice”.

Fears
Some traders fear that the goal of the new system is to look directly at income data and try to penetrate further into the accounting data or income sources of these categories.

In addition, it is wary to use the information that will be obtained by the Income Tax Department to obtain additional additional data that allows the creation of new taxes, or a tax accounting that increases the cost to the taxpayers, whether the buyer or the seller.

Economist Hossam Ayesh agrees with traders' fears, pointing out that the problem in Jordan is that "despite the increase in taxes, raising fees and amending the income tax law," officials are talking about tax cuts, increased budget deficits, and increased debt.

Ayesh points out in an interview with Al Jazeera Net that all tax increases did not lead to the desired results.

He believes that the above reasons create a fear of the use of information or data that will reach the government through the billing system to impose taxes and surcharges, both to citizens and the various economic sectors that issue this invoice.