The government has decided recently to raise tax rates on automobile imports by nearly 10 per cent, a government official said on Tuesday.
As imported cars are currently subject to a special tax calculated at 81 per cent of a vehicle’s value, the official, who requested anonymity, said the new special tax rate will be 90 per cent of the value of the car. He told The Jordan Times Tuesday that under the new regime, cars manufactured less than five years ago will be subject to an 8 per cent increase, while used automobiles older than five years will be slapped a 10 per cent hike.
“The Cabinet has approved the new tax regulations for imported cars and forwarded the decision to the Legislation and Opinion Bureau,” the official said, expecting the tax system to go into effect in the coming few weeks. Nabil Rumman, President of the Jordan Free Zone Investors Association (JFZIA), warned that raising the tax rate on car imports will negatively affect the sector, as automobile prices will go up leading to further slowdown in demand.
“It is not a good time to hike taxes as the local market is still stagnant,” he told The Jordan Times over the phone, saying that the auto sector is the second after the real estate in terms of generating revenues to the Treasury with around JD500 million a year.
According to Rumman, the average number of cars imported to the local market is around 75,000 vehicles per year. He indicated that rumours about government plans to increase taxes on cars have pushed traders in the free zone, which is the main hub for car imports, to speed up customs clearance measures.