Jordan: Insurers protest 40% tax rate, up from 24%
Source: Middle East Insurance Review | Jul 2018
The Jordan Insurance Federation (JIF) has rejected a draft income tax law that, if passed, would hike the tax rate on insurers from 24% to 40%.
The association called on the government to withdraw the Bill, and not to go into the proposed tax amendments before opening a comprehensive national dialogue on any tax revisions.
“The law will have catastrophic consequences for all economic sectors and investments,” JIF said in a statement.
With the proposed tax rate of 40%, the insurance sector, together with banks and financial leasing companies, would be subject to the highest tax rate in the kingdom. In contrast, the tax rates are not expected to change remaining at 24%: telecommunication companies; financial intermediation and brokerage firms; and electricity generation and distribution companies.
The Jordanian insurance sector, comprising 24 insurers, achieved a net profit after tax of only JOD3.9m ($5.5m) in 2017 compared to JOD26.7m in 2016, a plunge of 85.3%. Despite the losses accumulated by insurers in compulsory lines, and the government’s insistence on not raising premium rates in these lines, insurers are still continuing to offer the insurance in the national interest, JIF said.
As a key part of reforms to boost the finances of a debt-burdened economy hit by regional conflict, Jordan’s Cabinet recently approved major IMF-guided proposals that aim to double the income tax base. M
JOD1 = $1.41