By: Issa Al-Hyari
Tax Consultant and Trainer
Jordan Daily – Tax policy in any country is a cornerstone of social justice and fiscal stability. However, the repeated amendments to tax laws, regulations, and executive instructions in Jordan in recent years have had a noticeable impact on the business environment and taxpayer confidence. Although the Income and Sales Tax Department (ISTD) has made substantial efforts to modernize its administration and improve collection efficiency, the frequency of legislative changes and the diversity of legal interpretations have undermined the clarity and stability of the tax system.
Frequent Amendments and Divergent Interpretations
The Income Tax Law No. (34) of 2014 and the General Sales Tax Law No. (6) of 1994 have both undergone several amendments within short time frames, accompanied by the issuance of multiple implementing regulations and instructions. While the declared aim of these changes was to ensure fairness and keep pace with economic developments, their frequency and inconsistent field application have created a climate of tax uncertainty among taxpayers and weakened the private sector’s ability to plan long-term financial strategies.
Increased Tax Collections Do Not Necessarily Reflect Economic Improvement
Official data indicate continuous growth in total income and sales tax revenues over the past five years – a trend that diverges from the modest growth in gross domestic product (GDP), which should normally rise in tandem with tax revenues. Although this increase demonstrates institutional effort in collection, it does not necessarily reflect enhanced anti-evasion performance or recovery in productive sectors. Given the current economic slowdown and declining business activity, part of this growth likely results from taxpayers’ compliance with discretionary assessments and mandatory administrative measures, rather than from genuine expansion in the tax base or actual economic growth.
The Royal Vision as a Foundation for Reform
His Majesty King Abdullah II’s Royal Discussion Papers, particularly the third through the sixth, emphasized the principles of justice, accountability, and participatory decision-making, calling for a transparent public administration built on partnership with citizens and the private sector.These papers highlight the importance of the rule of law, legislative stability, and procedural clarity as key entry points for restoring mutual trust between the state and taxpayers. From this perspective, any genuine tax reform must align with this royal vision, where fairness, transparency, and clarity form the pillars upon which tax policy is built.
Economic Implications of Repeated Amendments
The multiplicity of amendments, regulations, and instructions has resulted in several challenges:
– Investor uncertainty and difficulty estimating future tax costs.
– Decline in voluntary compliance due to vague or inconsistently interpreted provisions.
– Slowed economic activity stemming from heightened fiscal risk.
– Growth of the informal economy as some businesses seek to avoid complexity.
These outcomes highlight the need for a transition from a reactive amendment-based approach to a stable legislative framework guided by assessment and evidence before any change is enacted.
A Strategic Plan to Enhance Tax Performance
To achieve balance between equity, revenue, and stability, a comprehensive strategic plan is proposed based on the following pillars:
– Legislative Stability: establishing a fixed timetable for reviewing tax laws at least once every five years, limit non-essential amendments, and adopt the principle of legislative impact assessment before approval.
– Clarity and Guidance: issuing unified official interpretive manuals, prepared in collaboration with experts and the private sector, to ensure consistent application and equality before the law.
– Transition to Smart Tax Administration: expanding the use of digital analytics and artificial intelligence in auditing to reduce subjective discretion and promote procedural fairness.
– Strengthening Partnership and Education: involving representatives of economic sectors and tax advisors in drafting regulations and policies, and expand taxpayer education and awareness programs.
– Performance Measurement Based on Voluntary Compliance, Not Just Revenue: evaluating performance primarily through voluntary compliance rates and the quality of tax services, rather than solely by revenue collection figures.
Conclusion
While the repeated amendments to Jordan’s tax laws and regulations were driven by reformist intentions, they have inadvertently weakened legislative stability and diminished confidence in the economic system. Sustainable tax reform, therefore, requires a strategic and balanced vision- one that combines fairness in legal provisions, stability in implementation, and partnership in decision-making. Only through such an approach can Jordan achieve social justice, strengthen its business environment, and advance the Royal vision of a state governed by law and sound institutions.