Investment incentives in Jordan:

Measuring costs and benefits

DRAFT METHODOLOGY NOTE FOR FURTHER DISCUSSION

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Contents1. Introduction.........................................................................................................................................3

2. Data collected so far............................................................................................................................3

2.1. Dataset on domestic taxes...........................................................................................................4

2.2. Dataset on customs exemptions..................................................................................................5

2.3. Dataset on exports.......................................................................................................................5

2.4. Dataset on employment..............................................................................................................6

2.5. Summary of data issues...............................................................................................................6

3. Methodological considerations...........................................................................................................6

3.1. Measuring tax expenditure..........................................................................................................6

3.2. Comparing costs and benefits......................................................................................................7

3.3. Identifying marginal investors.....................................................................................................8

4. Application to Jordan data...................................................................................................................9

5. Preliminary results.............................................................................................................................10

5.1. Tax expenditure on investment incentives.....................................................................................10

5.2. Costs and benefits of CIT reductions from investment incentives ‘under relevant decrees’..........14

5.3. Costs and benefits of customs duty and GST/SST on imports.........................................................16

6. Conclusions........................................................................................................................................18

References.................................................................................................................................................19

Annex........................................................................................................................................................20

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1. IntroductionJordan maintains an extensive system of incentives aimed at promoting various types of investment. A recent incentives inventory compiled by the World Bank counts 47 separate legal and regulatory provisions that grant incentives with the aim to promote investment in Jordan. More than a half of these provisions (27) are tax exemptions; the rest are split equally between customs exemptions and financial incentives (10 each). (Figure 1).

Figure 1

Source: World Bank 2016.

Although the government of Jordan took significant steps to register, systematize and publicize incentives, there is currently no systematic analysis available on the costs and benefits to the country from these different incentives. Thus, policy makers and legislators in charge of deciding on these provisions must rely primarily on anecdotal evidence as to their cost efficiency, which poses the risk of suboptimal outcomes resulting in unnecessary costs to the country that are not justified by a corresponding benefit.

The purpose of this note is to present methodological considerations and preliminary results from an effort to collect available data and analyze it with regard to the cost efficiency of investment incentives. Given data availability and the predominance of investment incentives granted through fiscal measures, the analysis focuses on fiscal incentives (tax and customs exemptions), while cost benefit analysis of financial, in-kind, and regulatory incentives would be highly desirable as part of future efforts. The note is intended as a basis for further discussion with Jordanian authorities to systematically collect and analyze additional firm level data, before preparing a more extensive report on the findings for the consideration of policymakers. Policy recommendations on the future use of incentives and the creation of a permanent monitoring and evaluation mechanism will be made in that final report, while this note focuses on data and methodological questions.

2. Data collected so farFour datasets were obtained from the Jordanian authorities:

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2.1. Dataset on domestic taxesThe first dataset is on domestic tax exemptions. It provides information on total income, expenditures, taxable income, various deductions and exemptions (from CIT, GST), as well as reductions in CIT due to investment incentives mandated under ‘relevant decrees’. The dataset was aggregated to the 4-digit ISIC sector level rather than providing information at the firm level, which makes it impossible to accurately calculate tax expenditure from CIT and only allows a general approximation of the cost of some incentives. Also, despite ongoing correspondence with Jordanian tax authorities, we have not yet formed a full picture of how the Jordanian GST and SST tax exemptions function. Further work and clarifications will be asked from Jordanian authorities to calculate expenditures associated with GST and SST exemptions.

STRENGTHs: The ability of the tax and statistical units to produce data on so many fiscal variables is impressive. The usage of the 4-digit ISIC codes allows to quickly merge it with other data across standardized, internationally recognized sectoral lists.

QUESTIONS FOR CLARIFICATION: The terminology of data provided in the file in some cases deviates from the description of items on the tax return form, making it difficult to juxtapose the two. For example, the tax return form mentions “Total Income Tax Offset”, which seems to correspond to “Accumulated Tax Exemption for which tax is accounted”. Also, what does the column “Of which exempted from taxation” contain, is it “domestic donations & subscriptions paid for religious, charitable, humanitarian, scientific, sport or professional purposes, or paid for parties” from the tax return form?

In the latest dataset provided, there is a difference between CIT and GST/SST taxes due and paid. Please clarify the source of these discrepancies. POTENTIAL AREAS FOR IMPROVEMENT:

The data is made available only at the sectoral level, allowing for only preliminary sector-level insights and preventing a full tax expenditure analysis. For further, more detailed study of the costs and benefits of incentives, it is recommended to carry out tax expenditure analysis at the firm level (in light of data confidentiality issues, this could be done in house at the Jordanian revenue authority with WB support). This should start with the compilation of tax information on all firms, not only those receiving incentives. Being able to distinguish between firms that received incentives and those that did not and link it to other data would make it possible to strengthen the analysis by assessing how incentives are distributed amongst firms in Jordan and gain a deeper understanding of both their effectiveness and potential costs resulting from economic distortions.

The dataset reports many underlying financial data used to calculate tax exemptions. It would be advisable to expand the current rich dataset to include total fixed assets, statutory tax rate, reduced tax rate due to exemption, etc. to get a more granular picture of tax expenditure and ensure that the calculation is done in line with international practices. Including these details would also make it possible to calculate the effect of incentives on firms’ after-tax-profitability, which would help to establish attribution of employment and other outcomes to the incentives received by the firm.

Also, the current dataset sums up investment incentives available under various legal acts into a category "Accumulated Tax Exemptions /Investment Tax Incentives in accordance with relevant decrees’". To distinguish among various incentive programs it would be advisable to indicate exactly

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what decrees this refers to and assess the legal basis or a code for each investment program exemption. Also, gains and losses from exports, donations to government entities and various adjustments now seem to have been collapsed into the category of "Total Statutory Income [share] exempted from taxation". It would be advisable to clarify and provide separate data for each adjustment mechanism (various adjustments, income/loss from exports, loss carry forward and donations).

2.2. Dataset on customs exemptionsThe second dataset contains information on customs duty, general sales tax (GST) and special sales tax (SST) exemptions granted on imported goods. It provides information on 1,74m import transactions benefitting from customs exemptions, 1,74m transactions benefitting from GST exemptions and almost 257 thousand transactions benefitting from SST exemptions in 2014-16. Additional data fields contain the date of the transaction, names and tax ID number of the importer, the product that is being imported at a high level of detail, its origin and value, the tariff applied, and the justification for exemptions that were granted (CPC code and its description). Around a thousand entities lacked tax ID numbers. A quick google-translation of their names suggests these entities are individual importers or non-commercial actors (e.g. “Governorate of Mafraq”).

STRENGTHs: The ability of the customs, tax and statistical units to produce firm and transaction level expenditure information and link it to statistical information on sector is impressive and allows a detailed analysis of tax incentives’ costs by sector, firm and individual CPC code.

QUESTIONS FOR CLARIFICATION: Please confirm that the GST and SST exemptions on imports reported in this dataset are not duplicated in the domestic GST/SST exemptions reported in the domestic tax dataset.

2.3. Dataset on exportsThe third dataset contains information on exported goods and values. It provides information on around 445,000 export transactions that took place in 2014-16. For each transaction, the database records the date, name and tax ID number of the exporting firm, the code and name of the exported good, the destination and value of export, as well as the Customs Procedure Code (CPC code) for each transaction and its description. An additional file was made available linking tax ID numbers to sectors where companies operated, allowing further consolidation of the data into sectoral level (4-digit sectors as per the International Standard Industrial Classification (ISIC) of All Economic Activities, Rev.4).

STRENGTHs: The ability of the customs authorities to produce transaction level export information is impressive and allows a detailed analysis of the export profiles of firms. This data also allows to link incentive and firm profile data to export performance.

POTENTIAL AREAS FOR IMPROVEMENT: As with the other datasets, it would be preferable to collect information for all export transactions (including those not receiving incentives) to be able to assess how export performance differs between beneficiary and non-beneficiary firms.

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2.4. Dataset on employmentThe last dataset contains information on employment of 43,000 to 48,000 thousand firms (depending on the year) for the years 2014-16. The firms are identified by name, national ID number and sector of activity. For each firm, the number of male, female, Jordanian and foreign employees is recorded.

STRENGTHs: The SSD made the data available at the firm level and also provided data for 2012 and 2013. This will allow the research team to also look into employment decline or growth, in addition to overall employment in any given year.

QUESTIONS FOR CLARIFICATION: World Bank data records for Jordan's labor force show 2.2m in 2014 and 2.4m in 2017, with unemployment rate averaging around 12%. This suggests labor force participation of around 2m, while the SSD data totals around 600,000 employees. It would be important to clarify this discrepancy.

POTENTIAL AREAS FOR IMPROVEMENT:

Unfortunately, the firms are identified by national ID numbers, while export and import records identify firms by tax ID numbers. Without a file linking these two ID numbers, only very general, sectoral insights could be offered on the incentives.

Furthermore, the sector codes recorded in the dataset do not seem to correpond to either section (A for agriculture, B for mining) or division (01 for crop and animal production, 02 for forestry and logging etc) headings of the ISIC system. For now, the data was consolidated with the other datasets at sector level by translating sector descriptions from Arabic, but this is a very error-prone methodology.

2.5. Summary of data issuesThe transaction-level export and import data was consolidated at firm level. For each firm in 2014, 2015 and 2016, we calculated customs duty exemptions, customs-collected GST and SST exemptions, the value of exports and top three export goods. Firm-level analysis is not possible for the domestic tax data, however, because it was provided at the 4-digit ISIC sector level, rather than firm level.

The labor data was provided at the firm level, but firms are identified by national ID numbers, not tax ID numbers. Until government partners provide further data linking tax ID numbers to national ID numbers, labor data would also be impossible to link at the firm level. Moreover, since labor statistics do not use the 4-digit ISIC codes, this data can only be linked to tax and customs data at the highest sectoral level, based on a manual translation, i.e. at the level of the section, rather than class, to use ISIC terminology (e.g. Section A - agriculture, instead of Class 0111 - Growing of cereals, leguminous crops and oil seeds), leading to a significant loss of detail in the analysis.

3. Methodological considerations3.1. Measuring tax expenditure

Measuring the revenue foregone by the government due to a tax incentive is a non-trivial undertaking that requires detailed firm level data and various assumptions with regard to firm behavior. In the context of a cost benefit analysis of investment incentives, an additional challenge is to isolate those expenditures intended to influencing firms’ investment decisions from other expenditures, e.g. for social purposes.

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A tax expenditure analysis starts by defining a benchmark tax system that defines the regular applicable tax rate and deductions from taxable income, such as the expenses incurred to generate income, standard depreciation of fixed assets, provisions to avoid double taxation, etc. Many countries also consider the ability to carry forward losses as an element of the benchmark tax system rather than an incentive. The hypothetical revenue that would have been collected under the benchmark system is then compared to the revenue collection with incentives – such as tax holidays, preferential tax rates, accelerated depreciation, investment allowances, etc. – to calculate tax expenditure.

Such calculations should ideally be made over a number of years based on a firm level microsimulation exercise to account for the interactions and intertemporal linkages between incentives. For instance, a customs exemption on imported capital goods represents a loss to the government in the year it is granted, but also diminishes the cost of the imported good and thus leads to lower depreciation deductions (and thus higher taxes) in coming years. Similarly, accelerated depreciation leads to a loss for the government in the years it is granted, but diminishes future depreciations deductions. Interactions can also occur, e.g. if a deduction is granted to a firm that is already under a tax holiday, in which case the additional revenue loss resulting from the deduction is zero unless resulting losses can be carried forward and used to diminish the tax burden after the expiration of the tax holiday.

In the absence of detailed firm level data over a number of years, tax expenditure calculations can only be made on an approximation basis, and depending on the nature of the instrument. For example, the difference between the collected customs revenue and revenue due if the standard tariff had been applied is a reasonable upper threshold approximation of tax expenditure resulting from customs exemptions, even if future effects on depreciation or input cost deductions cannot be accounted for. Similarly, direct tax credits or reductions can simply be added up in the year they are granted to account for the resulting revenue losses. On the other hand, the effects of different depreciation rules or deductions are impossible to assess without multi-year firm level data.

3.2. Comparing costs and benefitsUltimately, an incentive can be considered a desirable policy if the benefits it generates for the country outweigh its costs. However, understanding the full range of costs and benefits that can be associated with incentives is a non-trivial undertaking.

On the one hand, governments tend to rely on incentives for a wide range of policy objectives. Promoting FDI, creating jobs, increasing productivity, or introducing new technologies are just a few examples of the often interlinked objectives associated with incentives.

The Jordanian Investment Law does not have a section on policy objectives of the various incentives, but the overall reading of the Law and analysis of the CPC codes for import exemptions suggests the government is pursuing investment promotion, development of certain regions and selected industries as its top priority. Error: Reference source not found

Going forward, it would be recommendable to identify specific and measurable policy objectives for each set of incentives, so that the performance of incentives in attaining policy goals could be tracked and monitored through data collection – for regular adjustment of mechanisms of delivery and incentives design for biggest policy impact for each dinar spent.

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It is also important to note that costs of incentives can arise in various forms and are often not immediately visible or attributable to incentives. The following types of costs of incentives are found particularly relevant based on a global literature review1:

Fiscal losses resulting from the non-collection of taxes that would otherwise be due, also referred to as tax expenditure. Such expenditure through foregone revenue often does not undergo the same scrutiny and public control as regular government spending, and in many developing countries tax expenditure is not even systematically measured or published.

Rent-seeking by firms engaging in non-productive behavior to obtain an incentive, or outright corruption where decision-makers are bribed to grant incentives (James 2009). Such costs are often amplified by a lack of transparency in the design and administration of incentives.

Tax planning and evasion by the private sector, for example, through shifting profits from non-exempted to exempted affiliates in the same firm by manipulating internal transfer prices (Heckemeyer and Overesch 2013; UNCTAD 2015).

Administrative costs for both firms and the government through cumbersome procedures for granting and monitoring incentives.

Economic distortions resulting from reallocating resources to sectors benefiting from incentives, including a “status quo bias,” in that already established firms or sectors tend to be more successful than newcomers in lobbying to extend incentives (Zolt 2013).

Retaliation against new or more generous incentives by competing investment locations (Klemm and Van Parys 2012; OECD 1998).

While a complete cost benefit analysis along all these dimensions is rarely possible even in advanced economies with strong data availability, it is important to bear in mind these considerations in the design of a monitoring and evaluation framework from the beginning. Not all costs and benefits may be relevant for a particular country or fully measurable, but in some cases proxy indicators can be used to at least get a broad understanding of the multifaceted nature of costs and benefits of incentives.

3.3. Identifying marginal investorsEven when the costs of an incentive and the benefits for society generated by the firm receiving it can be calculated, the question of attribution remains: Did the incentive actually cause the firm to move forward with an investment and was thus instrumental for the benefits to materialize (marginal investment)? Or would the investment have happened in any case (infra-marginal investment)? In the latter case, the incentive is redundant, and has only costs but no benefits. In the former case, an incentive may be justifiable if the benefits outweigh the costs. A number of methodologies have been used to determine the attribution of potential benefits to incentives2:

Return on investment analysis: One possibility to establish attribution is to analyze a firm’s return on investment with and without the incentive. While this approach involves judgment in defining a credible minimum return for an investment to proceed, it can lead to intuitive yet highly policy relevant insights. For example, a recent World Bank study using this approach in a

1 This section is taken from Andersen et al (2017).2 The following list list is a modified version from Andersen et al (2017).

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South Asian country revealed that firms in the communication sector averaged high returns on investment, and that these returns would have remained above the country average even without the incentives they received. Such a finding suggests that incentives granted to this sector were likely redundant.

User cost of capital analysis: A formal quantitative assessment of the tax incentive’s costs and benefits is offered by the user cost of capital (UCC) methodology. This approach is more data intensive as it requires firm-level data from balance sheets and/or tax returns over a period of several years. It can produce an econometrically solid estimate of the tax-investment relationship in a country by isolating the marginal investment effect of a given tax concession. Recent analytical work based on this methodology has produced rigorous measures of the net fiscal costs per job created, or unit of investment generated, for different sectors and incentive instruments in several middle income countries with advanced statistical capabilities, but its heavy data needs make this approach difficult to replicate in more data constrained environments.

Investor motivation survey: A more easily replicable approach to shed light on the question of attribution of benefits to tax incentives is an investor motivation survey. Such surveys ask firms a series of questions about the role of incentives and other characteristics in their location decisions. Firms are classified as marginal investors if attracted by an incentive versus non-marginal investors that would have come anyway based on their responses. While this classification by survey responses requires some non-trivial judgment, the approach has been used widely across developing countries. However, because of significant variation by sector and investor motivation, aggregate results are insufficient to derive credible cost-benefit results. Thus, the survey sample size must be large enough to disaggregate the resulting redundancy rates by sector and motivation of the investor, which is costly.

4. Application to Jordan dataThe data described in section 2 on domestic tax is insufficient to conduct a full tax expenditure analysis for Jordan. Results are aggregated at the sector level rather than the firm level, making it impossible to compare the tax rate applied to a given firm to the benchmark tax rate. This would be particularly important in light of the fact that some incentives in Jordan are based not on the sector of operation, but e.g. on the location of firms in preferential zones. The dataset also lumps together some deductions that represent legitimate parts of the benchmark tax system with deductions, e.g. for export revenues, that could be considered a tax expenditure. Thus, the CIT tax expenditure resulting from deductions and preferential tax rates or holidays could not be calculated with the available data.

However, the dataset does contain a separate line item for reductions of the CIT tax burden due to accumulated investment incentives “in accordance with relevant decrees”. The fiscal cost of these deductions is summarized in the next chapter and analyzed in comparison to employment in the beneficiary sectors.

The customs data provided makes it possible to calculate an approximate upper bound revenue loss from customs duty and GST exemptions granted at the border. A more accurate assessment would be possible by linking this information to firm level CIT data in order to account for interactions between customs and CIT revenue resulting from deductions and depreciation of imported items.

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A causal attribution between fiscal costs of incentives and resulting employment is not possible with the data provided at the sector level. However, a high level analysis of tax expenditure vs employment by sector is conducted to identify any outliers where the cost per job supported would be excessive even one were to assume full attribution of these jobs to the incentives granted.

POTENTIAL AREAS FOR IMPROVEMENT: As explained in section 2, making the data available at the firm level and including information on firms’ fixed assets in the domestic and customs tax datasets would make it possible to apply the ‘return on investment’ methodology described in section 3 to formally establish attribution of benefits to costs from incentives. An alternative approach could be to conduct an investment motivation survey to establish attribution. However, this would likely exceed the time and budget limitations for the work at hand. Extending the datasets to also include those firms who did not receive incentives would be useful to further illustrate indirect costs of incentives in terms of distortive effects to competition and allocation of resources across sectors. Linking the tax and employment data at the firm level rather than the sector level would make it possible to calculate the number of workers in firms actually supported by incentives rather than comparing incentives granted to a sector with all jobs in that sector, which is likely to introduce significant bias given that incentives are often found to focus on a small number of firms within a sector.

It would further be important to clarify the legal basis and nature of incentive instruments underlying the expenditures that are reported as investment incentives ‘in accordance with relevant decrees’

5. Preliminary results5.1. Tax expenditure on investment incentivesIt should be noted that not all tax exemptions necessarily constitute investment incentives. Only those tax exemptions that are granted to a specific firm or group of firms to influence their location decision or behavior are considered investment incentives (Figure 2). On the other hand, tax exemptions that e.g. have social objectives, or customs duties due to diplomatic immunities or general free trade agreements applicable to all firms, are not considered investment incentives and are thus not captured in the figures presented here.

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Figure 2

Source: Authors

The customs exemptions dataset, on the other hand, provides detailed justifications as to why an exemption was granted - the CPC codes make it possible to link specific amounts exempted to the specific legal acts. Following the above described logic, an exemption was considered an investment incentive if it is clearly related to the objective of influencing the investment behavior of the beneficiary firm. For the purposes of the preliminary results presented here, customs exemptions have been classified as follows. Only expenditures marked in green and yellow (but not in red) were included in the expenditure results.

QUESTIONS FOR CLARIFICATION: Please review the color codes in order to determine whether they constitute investment incentives or not. A full list with the original text in Arabic is in Annex I

POTENTIAL AREAS FOR IMPROVEMENT: It would also be useful to include the legal basis (or bases) for the CIT exemptions granted to a firm. This, along with the provision of firm level CIT tax data, would make it possible to break CIT expenditure down by type of incentive / legal basis, and thus strengthen the policy relevance of conclusions.

Figure 3Column1 Column3000 General001 Prepared for industrial use (duty free only and subject to sales)002 Prepared for agricultural use (duty free only and subject to sales)004 Prepared for medical use (duty-free and subject to sales)005 Prepared for laboratory use (duty-free only and subject to sales)006 Prepared for use for environmental health (exempt from a uniform fee only and subject to 4% general

sales)013 Imported by factories as production inputs (exempted and subject to sales)041 Special preparation for feeding children (discounted 20% and exempt from sales)094 Paper packaging, packaging and paper imported by packaging factories for the manufacture of containers165 Imported by factories as inputs (exempt) from tariff236 Imported cement ..

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300 The exemption of agricultural products imported through specific periods of time in the agricultural calendar

400 For industrial use (discounted for a flat fee of 5% and exempt from sales)402 Exempt from the unified fee and subject to sales by 4%406 Exempt from the combined fee as production inputs and from the advance payment of income tax407 Exemption from prepayment of income tax (for general use)408 Exempted from the common fee for industrial use and from the advance income tax payment412 7% sales are subject to Medium Buswork - Imported Replay Update414 7% discount. Special for medium bus - 6 year replacement. Imported415 4% m. Special for medium bus - replacement update 6 (local)420 Exemption from production income from a unified fee and payment of deferred tax and payment of sales

tax421 Unified fee for industrial use, pre-paid tax and deferred sales425 Exemption of a specific fee (reinforcing steel for the countries mentioned in the Customs Department's

2013 report)491 Payment of customs duties + exemption from auction fees for goods and spare parts492 Exemption from auction auction fee only493 Sale allowance + Exemption from auction fees498 Sale of sales allowance for 12 months501 Exemption on behalf of His Majesty the King of all fees and taxes502 Exemptions and donations (for government, government, university, and councils) and subject to sales.505 Exemption from importation of embassies and commissions506 Exemption for personal use of heads of diplomatic and consular corps507 Exemption of Maired for the ignition .. For the administrative staff of personal belongings and furniture

and tools ..512 Exemption of imports of armed forces and security services from all duties and taxes515 Exemption of military consumer institution imports (and subject to sales)516 Exemption of imports of civilian consumer institution (subject to sales)518 Guarantee of fees and what is the cost of sales on the guarantee and the sale of the value of the sword519 Ensure warranty fees and complete sales on CIF + value charges520 Exemption from bail by the entire exempt party (except for service allowances) and guaranteed by bail521 Exemption by customs duty only (this shall be guaranteed by bail522 Exemption by means of an exempt party (except service allowances and university secretariats)523 Exemption from sales tax and guarantee of customs duties and other taxes on bail524 Guarantee of sales tax on tax-exempt entities provided by the intermediary526 (Unified Fee and Sales) for imports of schools, institutions and programs for persons with disabilities527 The exemption of donations, donations and gifts to mosques, churches, monasteries, etc.530 Exemption of imports of concession companies approved by law of customs duties only535 Guaranteed warranty and sales guarantee guaranteed at CIF value536 Exemption of the National Petroleum Company (customs duty + public and private sales + endeavors +

stamps).537 Ensuring a general sales tax by guaranteeing the tax exempt entities provided by the intermediary540 Exemptions under the Investment Promotion Law (for the Industrial Sector)541 Exemptions under the Investment Promotion Law (for the agricultural sector)542 Exemption under the Investment Promotion Law (for the hotel sector)543 Exemption under the Investment Promotion Law (for the Hospital Sector)544 Exemption under the Investment Promotion Law (for the Maritime Transport and Railways Sector)545 Exemption under the Investment Promotion Law (for any sector that the Council of Ministers decides to

exempt)546 Exemption pending the issuance of the decision to encourage investment and guarantee fees and sales on

bail550 Exemption of imports of regional offices from customs duties only552 Exemption of official universities from customs duties only553 Exempting pharmaceutical companies from all duties and taxes and subject to drawing 4% university

secretaries554 Exempt pharmaceutical companies from all duties and taxes and subject to service allowances556 Exemption from customs duties and sales and subject to service allowances and stamps557 Exemption of pharmaceutical companies from fees and subject to allowances for university services and

secretaries of sales558 Exempt pharmaceutical companies from fees and subject to service and sales allowances580 Investment Incentives Table 1 / A Unified Exemption, Import G575 Ensuring a uniform standard fee and the consequent sales of insurance580 Investment Incentives Table 1b581 Investment Incentives Table 1b582 Investment incentives Table 1c / Unified exemption, public debt, g import583 Investment incentives Table 1 / D Industrial craftsman Unified exemption, General import, Non import584 Investment incentives Table 3 Agriculture and livestock585 Investment incentives Table 3 hotel and tourist586 Investment incentives Table 3 Hospitals and medical centers587 Investment incentives Table 3 Air and sea transport and railways588 Investment incentives Table 3 cities entertainment and tourism591 Investment incentives Table 3 Technical and media production

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595 Investment incentives Public transport and high speed buses BRT601 Exemption (for general use) of all duties and taxes602 Exemption from customs duties and service allowances and subject to sales (for general use)603 Exemption from all duties and taxes and subject to service allowances (for general use)604 Pesticide pesticides are subject to a general sales tax of 4%605 Exemption of production inputs from the pharmaceutical industry only from sales tax606 Production of fertilizer and pesticide production inputs to the sales tax of 4%608 Exemption of industrial machinery (exempt from tariff) .. For medicines .. and laboratory .. Exchanges

(sales)609 Packaging of fresh agricultural products is subject to a sales tax of 4%610 Standard and sales tax exemption only (for general use)611 Exemptions (unified fee, service allowances and sales tax) (for general use)612 Postponement of payment of the general sales tax614 Exemption for the industrial use of medicines (uniform and sales)615 Exempt from all fees and taxes other than sales tax to subject parties616 Subjecting the betemos to the general sales tax of 4% as fertilizer617 Exemption from the consolidated fee and sales by value618 Replacement of vehicles from the security authorities - exempt from the unified fee and sales620 Exemption from the consolidated fee and subject to sales based on CIF value621 Renewal of Renewable Energy Saving Systems and of ROE and General Energy System No. 10/2013622 Exemption from general sales tax only (for general use)623 Exemption from general and special sales tax (for use627 Exemption (for general use) of all duties and taxes624 Hybrid cars are exempted from a relative sales tax625 Submitting a special 40% replacement for hybrid cars628 Hybrid car exemption from 50% of 55% Special sales tax relative Resolution 438 for the year 2011629 Exempt fee for scrap import services630 General exemption from all official fees and taxes632 Submitting a special 12.5% substitute for replacement of hybrid cars with an engine capacity not exceeding

2500 oz633 Exemption and payment of data paid for the financial arrival of other payments634 Exemption of QIZ purchases from public sales until 25/1/2015636 Exemption through bail and full service and guarantee637 Exemption by the exempt party from customs duties only + 1% (to be guaranteed by bail650 Exemption of calendars prepared for advertising from customs duties only651 Exemption of brochures + posters .. + promotional materials .. + Bags .. (from a unified drawing and sales660 Postponement of the payment of the general sales tax and the exemption of the income tax699 Exemption from standard charges, sales and advance income tax payment700 Exemption from service allowances (for general use)702 Exemption of development zone institutions for stamps and service allowances (zero sales)703 Excluded from fees and sales other than stamps (general use).704 Payment of a uniform fee and exemption from other fees and taxes705 Exemption of development zones except for unified fees, stamps and service allowances (zero sales)710 Free of charge and subject to service and sales allowances720 Exemption of radioactive materials used as laboratory reagents from sales tax only730 Exemption from the additional import duty of the exempt parties from this fee740 Exemption from import duty and service allowances760 Exemption from import duty, service allowances and stamps780 Exemption from the common fee and general sales only781 Guarantee a uniform fee and general sales on bail789 Submitting some goods to a general sales tax of 0% (for general use)790 Subjecting some goods to 4% general sales tax (for general use)791 Subjecting some goods to 16% general sales tax (for general use)795 Subjecting the imports of the Jordanian cell / university treatment center to a general sales tax of 0%796 Subjecting the imports of the center of cell treatment / University of Jordan800 Exemption of public vehicles to be replaced (except for 3% flat fee) and exempt from sales803 Exemption of public vehicles replaced by fees and sales850 Distribution of fees to (75%) for the Customs Department and (25%) to the relevant party852 25% of fees and sales are paid on a clearance basis and the balance is guaranteed853 75% of the sales allowance for the Customs Department854 Completion of 50% of the sales allowance for the Customs Department855 Completion of (75%) of the sales allowance for the Customs Department901 Payment of the tax payable on the vehicles of retired military officers902 Payment of 50% of the tax payable on the cars of the retired officers and the rest by installments903 Exemption of retired cars from customs duties and special sales tax only906 The exemption of judges' cars from the unified fee and the general and special sales tax only907 Exemption of vehicles of officers working in the armed forces (fees + public and private sales)908 Exemption of judges' cars from the unified fee and general and special sales tax 35%921 Exemption of cars with special needs922 Exemption of retired senior officers' vehicles (customs duties + special sales tax)926 Exemption of VIP cars 100% of the unified fee + public and private sales

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928 Major retired retirees from customs duties and sales for general sales929 Exemption of military vehicles with blind limbs and permanent upper limbs947 Exemption of total vehicle deficiencies - 1600CC948 Exemption of Hearing Impairment949 Exemption of small vehicles with a capacity not exceeding 2200CC

Source: Authors based on data provided by customs authorities of Jordan.

Figure 4 presents the results of the above described partial analysis of tax expenditure resulting from investment incentives. The total tax revenue lost due to incentives is likely significantly higher as it would also include losses from preferential tax rates / holidays and other deductions that could not be assessed with available data.

Even without domestic GST/SST exemptions, tax expenditure is found to be significant, averaging well over 3 percent of GDP between 2014 and 2016. Among the expenditure items that could be assessed with available data, the largest share results from exemptions on GST collected at the border. Domestic CIT reductions resulting from investment incentives ‘under relevant decrees’ seem to cost the least in terms of foregone revenue.

Figure 4Year 2014 2015 2016

amounts % of GDP amounts % of GDP amounts % of GDPTax Expenditure by TypeCustoms Exemptions 751,109,273 3.0 837,865,101 3.1 716,231,266 2.6 Customs Duty Exemptions 211,349,194 0.8 268,307,877 1.0 192326428 0.7 GST Exemptions 479,104,325 1.9 492,877,536 1.9 471,419,749 1.7 SST Exemptions 60,655,756 0.2 76,679,691 0.3 52,485,089 0.2

Tax Exemptions (GST/SST exemptions TBI) ? ? ? ? ? ?CIT holidays / preferential rates ? ? ? ? ? ?CIT reductions from investment incentives "under relevant decrees" 8,725,060 0.0 15,319,841 0.1 13,816,866 0.1CIT exemptions and deductions ? ? ? ? ? ?

GDP 25,437,117,300 26,637,361,300 27,444,856,700

Source: Authors based on data from tax and customs authorities of Jordan. All figures are in Jordanian dinar.

5.2. Costs and benefits of CIT reductions from investment incentives ‘under relevant decrees’A breakdown by economic sector reveals that the largest shares of CIT expenditure under this heading benefits mainly the manufacturing sector (65%), and to a lesser extent the utilities sector (18%) as shown in Figure 5.

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Figure 5: Sector CIT exemptions proxy, 2014-2016, total: JD 38m

manufacturing65%

utilities18%

water supply and sewage

5%

construction4%

sales3%

agriculture2%

mining1%

other 2%

Source: Authors based on data from tax and statistics authorities of Jordan.

Error: Reference source not found shows that the ratio of tax expenditure under this heading to the hypothetical minimum wage bill (calculated as the number of workers in a sector multiplied by the annualized monthly minimum wage of JD 190) is highest in the utilities sector, where it amounts to 8%. 3 In other words, the revenue foregone through sector CIT exemptions would be sufficient to pay every worker in this sector a stipend equivalent to 8% of the minimum wage. The corresponding number is 2% for manufacturing and 3% for agriculture, and close to zero for most other sectors. It is not possible to conclude from this that the incentives are effective or cost-efficient. However, the analysis does not raise red flags in terms of sectors where the cost of incentives per job is excessive even under the most favorable assumptions.

POTENTIAL AREAS FOR IMPROVEMENT: Matching tax and employment data at firm level would make it possible to differentiate the number of jobs in firms actually benefitting from incentives in the sector (rather than looking at total jobs in the sector) and thus get to a more accurate assessment, identifying potential outliers with high cost per job ratios at the firm level rather than the sector level. A first step in this direction would be to improve the matching between tax and jobs data to be done at the detailed ICIS 4 digit sector level. t

3 This estimate is impossible to calculate for all sectors, as, for example, SSD data does not seem to contain administrative and support services firms. This may be due to the above described sub-optimal process used for matching the tax and employment data and could likely be resolved if the match was made at firm level (based on firm ID numbers) or a formal correspondence table between ISIC and the sector classification used by SSD.

15

Figure 9: CIT exemption expenditure/worker (expressed as percentages of the annualized JD190 monthly minimum wage)

utilities

agricultu

re

manufacturin

g

mining

constructi

onsales

real esta

te

health &

socia

l work

other servi

ces

transp

ortation

accomodation &

food se

rvice

financial a

nd insurance

education

extraterri

torial

households

public se

ctor &

defence0%

1%

2%

3%

4%

5%

6%

7%

8% 7.7%

2.8%

2.2%

0.7% 0.5%0.2% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

CIT

exem

ption

as %

of s

ecto

r wag

e bi

ll

Source: Authors based on data from tax and SSD authorities of Jordan.

It is likely that CIT incentives provided to these sectors follow policy objectives other than job creation, such as the provision of better services to consumers or other firms in the economy. Therefore, a clarification of the exact policy objectives of these incentives, and the collection of relevant data to measure them, would be indispensable for a comprehensive cost benefit analysis of incentives in Jordan.

POTENTIAL AREAS FOR IMPROVEMENT: In the medium term, it would be advisable to set up a M&E framework that would seek to identify specific and measurable policy objectives associated with the various incentives that are granted in Jordan and collect / analyze data on these outcomes.

5.3. Costs and benefits of customs duty and GST/SST on importsA breakdown by economic sector reveals that the largest shares of customs and import GST/SST expenditure benefit the manufacturing sector (43%), sales (18%) and utilities (9%), followed by a few other sectors (Figure 6).

16

Figure 6: Customs duty and import GST/SST expenditure by sector (2014-16, total: JD 2.3b)

manufacturing43%

sales18%

utilities9%

unclassified7%

other services5%

construction4%

information & communication

3%

public sector & de-fence

2%

transportation2%

admin & support services2%

other 5%

Source: Authors based on data from customs authorities of Jordan.

The cost of exemptions expressed in multiples of the hypothetical minimum wage bill (# of workers in the sector * annualized minimum monthly wage of JD 190) for customs and import GST/SST exemptions raises a number of red flags (Figure 7). The utilities sector shows a ratio of almost 500%, suggesting that the exemptions granted to this sector on imported goods are equivalent to paying each employee in this sector a stipend equivalent to five times the minimum wage. It is important to note that the utilities sector tends to be capital intensive and has an important horizontal function in providing services to citizens and firms alike. Thus, the policy objective of these incentives may not be to create employment, but to promote the delivery of such services at lower costs. This illustrates the importance of being explicit with regard to the policy objective an incentive is intended to accomplish, and to collect data accordingly.

A number of other sectors, including manufacturing (150%), other services (110%), sales (80%) and construction (60%) also reveal high ratios of customs tax expenditure to the hypothetical minimum wage bill. Thus, even if customs incentives were very effective in terms of supporting employment in these sectors, the cost per job raises cause for concern. Further analysis will be conducted to assess customs incentives to these sectors at a more disaggregated level and disentangle the types of imported inputs or capital goods for which the exemptions were granted.

POTENTIAL AREAS FOR IMPROVEMENT: As with other tax instruments, further work to set up an M&E framework would seek to identify the exact policy objectives associated with the various incentives that are granted in Jordan and collect / analyze data on these outcomes at the firm level. If the objectives is export promotion, for example, the team has already compiled export dataset, which could be utilized for cost-benefit analysis.

17

Figure 7: Border GST&SST and customs duty expenditure (expressed as multiples of the annualized JD190 monthly minimum wage)

Source: Authors based on data from customs and statistics authorities of Jordan.

6. Conclusions This note focuses on the description of the methodology and data received for the analysis of costs and benefits of investment incentives in Jordan. Its purpose is to facilitate discussion with Jordanian authorities to provide feedback on the proposed methodology and discussion points raised throughout the note. A detailed report presenting the final results along with recommendations on the future use of investment incentives in Jordan and requirements for a Monitoring and Evaluation framework will be prepared once this discussion has been concluded.

18

ReferencesAndersen, M., B. Kett and E. von Uexkull. 2017. “Corporate Tax Incentives and FDI in Developing Countries”, in World Bank. “Global Investment Competitiveness Report 2017”. forthcoming.

Heckemeyer, J., and M. Overesch. 2013. “Multinationals’ Profit Response to Tax Differentials: Effect Size and Shifting Channels.” ZEW Discussion Paper 13-045, Zentrum für Europäische Wirtschaftsforschung, Mannheim.

James, S. 2009. “Tax and Non-Tax Incentives and Investments: Evidence and Policy Implications.” Foreign Investment Advisory Service, World Bank, Washington, DC.

Klemm, A., and S. Van Parys. 2012. “Empirical Evidence on the Effects of Tax Incentives.” International Tax and Public Finance 19 (3): 393–423.

OECD (Organisation for Economic Co-operation and Development). 1998. “Harmful Tax Competition: An Emerging Global Issue.” OECD Publishing, Paris.

UNCTAD (United Nations Conference on Trade and Development). 2015. World Investment Report: Reforming International Investment Governance. Geneva: UNCTAD.

Zolt, E. M. 2013. “Tax Incentives and Tax Base Protection Issues.” Papers on Selected Topics in Protecting the Tax Base of Developing Countries Draft Paper 3, United Nations, New York, NY.

19

Annex

Column1 Column2 Column3CPC CODES FROM IMPORT DATA000 عام وضع General

001الموحدةفقط ) الرسوم من معفاة الصناعي المعدةلالستعمال

) للمبيعات وتخضع Prepared for industrial use (duty free only and subject to sales)

002الموحدةفقط ) الرسوم من معفاة الزراعي لالستعمال المعدة

) للمبيعات وتخضع Prepared for agricultural use (duty free only and subject to sales)

004وتخضع ) الموحدة الرسوم من معفاة الطبي المعدةلالستعمال

للمبيعات ( Prepared for medical use (duty-free and subject to sales)

005الموحدةفقط ) الرسوم من معفاة المخبري المعدةلالستعمال

) للمبيعات وتخضع Prepared for laboratory use (duty-free only and subject to sales)

006 ( ل وتخضع موحدفقط رسم معفاةمن لصحةالبيئة المعدةلالستعمال

4) عامة% مبيعاتPrepared for use for environmental health (exempt from a uniform fee only and subject to 4% general sales)

013وتخضع ) معفاة انتاج كمدخالت المصانع قبل من المستوردة

للمبيعات( Imported by factories as production inputs (exempted and subject to sales)

041مخفضةلرسم ) االطفال لتغذية خاصا اعدادا ومعفاةمن% 20المعد

المبيعات( Special preparation for feeding children (discounted 20% and exempt from sales)

094العبوات مصانع قبل من المستورد والورق وتغليف حزم ورق

العبوات لصناعةPaper packaging, packaging and paper imported by packaging factories for the manufacture of containers

165 التعريفة ) ( من معفاه انتاج كمدخالت المصانع قبل من المستورد Imported by factories as inputs (exempt) from tariff

236 اسمنت

.. ... .. ومسجلةلدىالدائرة.. انتاجها المصانع مستوردومشترىمحليا Imported cement ..

300فترات زراعيةسوريةمستوردةخالل اعفاءمنتجات

زمنيةمحددةبالرزنامةالزراعيةThe exemption of agricultural products imported through specific periods of time in the agricultural calendar

400موحد ) لرسم مخفضة الصناعي من% 5لالستعمال ومعفاة

المبيعات( For industrial use (discounted for a flat fee of 5% and exempt from sales)402 بنسبة للمبيعات وتخضع الموحد الرسم من Exempt from the unified fee and subject to sales by 4% %4معفاة

406المسبقة الدفعة ومن انتاج كمدخالت الموحد الرسم من معفاة

الدخل لضريبةExempt from the combined fee as production inputs and from the advance payment of income tax

407 ) العام ) لالستخدام الدخل لضريبة المسبقة الدفعة من إعفاء Exemption from prepayment of income tax (for general use)

20

408ضريبة دفعة ومن الصناعي لالستعمال الموحد الرسم من معفاة

المسبقة الدخلExempted from the common fee for industrial use and from the advance income tax payment

412وتخضع. موحد -7إعفاءر تحديث% متوسطة للحافلةوركوب مبيعات

مستورد استبدالي 7% sales are subject to Medium Buswork - Imported Replay Update

414موحدوتخضع. -7إعفاءر . تحديث% متوسطة خاصةللحافلةوركوب م

سنة مستورد6استبدالي 7% discount. Special for medium bus - 6 year replacement. Imported

415موحدوتخضع. -4إعفاءر . تحديث% متوسطة خاصةللحافلةوركوب م

سنة (6استبدالي محلي) 4% m. Special for medium bus - replacement update 6 (local)

420رسم من انتاج إعفاءمدخالت

ضريبةمبيعات موحدودفعةالضريبةالمسبقةومؤجلةدفعExemption from production income from a unified fee and payment of deferred tax and payment of sales tax

421المسبقة ضريبةالدخل ودفعة الصناعي موحدلالستعمال إعفاءرسم

ومؤجلةالمبيعات Unified fee for industrial use, pre-paid tax and deferred sales

425دائرة ) بالغ حسب المذكورة للدول تسليح حديد نوعي رسم اعفاء

(2013الجمارك Exemption of a specific fee (reinforcing steel for the countries mentioned in the Customs Department's 2013 report)

491 + مزادلبضائع اعالن رسوم اعفاءمن جمركية رسوم تقسيط

عنها متنازل ومركبات Payment of customs duties + exemption from auction fees for goods and spare parts492 فقط علني مزاد إعالن رسم من إعفاء Exemption from auction auction fee only

493 + ومركبات مزادلبضائع اعالن رسوم اعفاءمن بيع بدل تقسيط

عنها متنازل Sale allowance + Exemption from auction fees498 لمدة ) التلزيم بواسطة البيع بدل شهر(12تقسيط Sale of sales allowance for 12 months501 والضرائب كافةالرسوم من المعظم الملك جاللة باسم إعفاءمايرد Exemption on behalf of His Majesty the King of all fees and taxes

502. .. .. ( ومجالس حكوميةوجامعة لوزارةودائرة وتبرعات إعفاءهبات

) للمبيعات) وتخضعExemptions and donations (for government, government, university, and councils) and subject to sales.

505(. من .. غيرالفخرية والمفوضيات السفارات إعفاءمستوردات

والضرائب كافةالرسوم Exemption from importation of embassies and commissions

506لرؤساءواعضاءالسلكين الشخصي لالستعمال يرد اعفاءما

والقنصلي الدبلوماسي Exemption for personal use of heads of diplomatic and consular corps

507 .. شخصية أمتعة من االداريين للموظفين لالستعال مايرد اعفاء

.. وأدوات واثاثExemption of Maired for the ignition .. For the administrative staff of personal belongings and furniture and tools ..

512واألجهزةاألمنيةمن المسلحة القوات مستوردات اعفاء

والضرائب كافةالرسوم Exemption of imports of armed forces and security services from all duties and taxes

515وتخضع ) العسكرية االستهالكية المؤسسة إعفاءمستوردات

للمبيعات( Exemption of military consumer institution imports (and subject to sales)516 ) للمبيعات ) وتخضع المدنية االستهالكية المؤسسة مستوردات إعفاء Exemption of imports of civilian consumer institution (subject to sales)518 بكفالةواستيفاءالمبيعات مبيعات عليهامن ومايترتب رسوم Guarantee of fees and what is the cost of sales on the guarantee and the sale of the ضمان

21

سيف علىالقيمة value of the sword

519سيف + القيمة على المبيعات واستيفاء بكفالة الرسوم ضمان

الرسوم Ensure warranty fees and complete sales on CIF + value charges

520) الخدمات ) بدالت عدا إعفاءمايردبالواسطةلجهةمعفاةبالكامل

بكفالة وتضمنExemption from bail by the entire exempt party (except for service allowances) and guaranteed by bail

521( علىأن الجمركيةفقط الرسوم إعفاءمايردبالواسطةلجهةمعفاةمن

بكفالة هذه تضمن Exemption by customs duty only (this shall be guaranteed by bail

522وأمانات ) الخدمات بدالت عدا معفاة لجهة بالواسطة إعفاءمايرد

جامعات(Exemption by means of an exempt party (except service allowances and university secretariats)

523الجمركيةوالضرائب الرسوم وضمان المبيعات ضريبة من اعفاء

بكفالة االخرى Exemption from sales tax and guarantee of customs duties and other taxes on bail

524الضريبةوالواردة المعفاةمن بكفالةللجهات ضريبةالمبيعات ضمان

بالواسطة Guarantee of sales tax on tax-exempt entities provided by the intermediary

526مدارس ) لمستوردات الموحدوالمبيعات الرسم إعفاءمن

المعوقين وبرامج ومؤسسات(Unified Fee and Sales) for imports of schools, institutions and programs for persons with disabilities

527والكنائس تردللجوامع والهداياالتي والتبرعات إعفاءالهبات

الخا.. واألديرةThe exemption of donations, donations and gifts to mosques, churches, monasteries, etc.

530الرسوم من بقانون االمتيازالمصدق شركات إعفاءمستوردات

فقط الجمركية Exemption of imports of concession companies approved by law of customs duties only535 سيف القيمة على بكفالة مضمونة والمبيعات بكفالة الرسوم ضمان Guaranteed warranty and sales guarantee guaranteed at CIF value

536+ ( مبيعات جمركي رسم الوطنيةمن إعفاءشركةالبترول

.. + طوابع+ مساعي عامةوخاصةExemption of the National Petroleum Company (customs duty + public and private sales + endeavors + stamps).

537المعفاةمن بكفالةللجهات عامة ضريبةمبيعات ضمان

بالواسطة الضريبةوالواردةEnsuring a general sales tax by guaranteeing the tax exempt entities provided by the intermediary

540 الصناعي ) ( للقطاع االستثمار تشجيع قانون بموجب إعفاءات Exemptions under the Investment Promotion Law (for the Industrial Sector)541 ) ( الزراعي للقطاع االستثمار تشجيع قانون بموجب إعفاءات Exemptions under the Investment Promotion Law (for the agricultural sector)542 الفنادق ) ( لقطاع االستثمار تشجيع قانون بموجب إعفاء Exemption under the Investment Promotion Law (for the hotel sector)543 المستشفيات ) ( لقطاع االستثمار تشجيع قانون بموجب إعفاء Exemption under the Investment Promotion Law (for the Hospital Sector)

544البحري ) النقل لقطاع االستثمار تشجيع قانون بموجب إعفاء

) الحديدية والسككExemption under the Investment Promotion Law (for the Maritime Transport and Railways Sector)

545يقررمجلس ) قطاع ألي االستثمار تشجيع قانون إعفاءبموجب

الوزراءإعفاءه(Exemption under the Investment Promotion Law (for any sector that the Council of Ministers decides to exempt)

546الرسوم وضمان االستثمار تشجيع قرار صدور لحين إعفاء

بكفالة والمبيعاتExemption pending the issuance of the decision to encourage investment and guarantee fees and sales on bail

550 فقط الجمركية الرسوم من االقليمية المكاتب مستوردات إعفاء Exemption of imports of regional offices from customs duties only

22

552 فقط الجمركية الرسوم من الرسمية الجامعات إعفاء Exemption of official universities from customs duties only

553لرسم وتخضع والضرائب الرسوم كافة من األدوية شركات إعفاء

جامعات% 4 أماناتExempting pharmaceutical companies from all duties and taxes and subject to drawing 4% university secretaries

554لبدالت وتخضع والضرائب الرسوم كافة من األدوية شركات إعفاء

الخدماتExempt pharmaceutical companies from all duties and taxes and subject to service allowances

556 الخدمات لبدالت وتخضع الجمركيةوالمبيعات الرسوم من اعفاءوالطوابع Exemption from customs duties and sales and subject to service allowances and stamps

557 وأمانات خدمات لبدالت وتخضع الرسوم األدويةمن إعفاءشركاتومبيعات جامعات

Exemption of pharmaceutical companies from fees and subject to allowances for university services and secretaries of sales

558الخدمات لبدالت وتخضع الرسوم من األدوية إعفاءشركات

والمبيعات Exempt pharmaceutical companies from fees and subject to service and sales allowances580 جدول استثمارية , 1حوافز استيراد/ غ موحد اعفاء أ Investment Incentives Table 1 / A Unified Exemption, Import G575 بالتأمين مبيعات من عليه يترتب وما نوعي موحد رسم ضمان Ensuring a uniform standard fee and the consequent sales of insurance580 جدول استثمارية , 1حوافز , استيراد/ غ عامة م موحد اعفاء ب Investment Incentives Table 1b581 جدول استثمارية , 1حوافز , استيراد/ غ عامة م موحد اعفاء ب Investment Incentives Table 1b582 جدول استثمارية , 1حوافز , استيراد/ غ عامة م موحد اعفاء ج Investment incentives Table 1c / Unified exemption, public debt, g import

583جدول استثمارية ,1حوافز , غ/ عامة م موحد اعفاء حرفي صناعي د

استيرادInvestment incentives Table 1 / D Industrial craftsman Unified exemption, General import, Non import

584 جدول استثمارية الحيوانية 3حوافز والثروة الزراعة Investment incentives Table 3 Agriculture and livestock585 جدول استثمارية وسياحي 3حوافز فندقي Investment incentives Table 3 hotel and tourist586 جدول استثمارية طبية 3حوافز ومراكز مستشفيات Investment incentives Table 3 Hospitals and medical centers587 جدول استثمارية حديدية 3حوافز وسكك وبحري جوي نقل Investment incentives Table 3 Air and sea transport and railways588 جدول استثمارية السياحي 3حوافز والترويح التسلية مدن Investment incentives Table 3 cities entertainment and tourism591 جدول استثمارية واالعالمي 3حوافز الفني االنتاج Investment incentives Table 3 Technical and media production595 السريع التردد حافالت و العام النقل قطاع استثمارية BRTحوافز Investment incentives Public transport and high speed buses BRT601 ) والضرائب) الرسوم كافة من العام لالستخدام إعفاء Exemption (for general use) of all duties and taxes

602للمبيعات وتخضع الخدمات وبدالت جمركية رسوم إعفاءمن

العام) ( لالستخدامExemption from customs duties and service allowances and subject to sales (for general use)

603الخدمات لبدالت وتخضع والضرائب كافةالرسوم إعفاءمن

) العام) لالستخدام Exemption from all duties and taxes and subject to service allowances (for general use)

604عامة مبيعات لضريبة الزراعية لآلفات المقامة المبيدات إخضاع

%4بنسبة Pesticide pesticides are subject to a general sales tax of 4%605 فقط ضريبةالمبيعات األدويةمن صناعة إنتاج مدخالت إعفاء Exemption of production inputs from the pharmaceutical industry only from sales tax

23

606والمبيدات صناعةاألسمدة إنتاج مدخالت اخضاع

نسبة %4الحشريةلضريبةالمبيعات Production of fertilizer and pesticide production inputs to the sales tax of 4%

608..) ( معفاةبالتعريفة.. صناعية إعفاءآالت

) ( .. مبيعات.. الغيار والمخبرية لألدويةExemption of industrial machinery (exempt from tariff) .. For medicines .. and laboratory .. Exchanges (sales)

609مبيعات لضريبة الطّازجة الزراعيّة المنتجات تعبئة عبوات إخضاع

%4بنسبة Packaging of fresh agricultural products is subject to a sales tax of 4%

610لالستخدام ) فقط المبيعات وضريبة الموحدة الرسوم من إعفاء

العام ( Standard and sales tax exemption only (for general use)

611) وضريبةالمبيعات) الخدمات وبدالت موحد رسم إعفاءمن

) العام) لالستخدام Exemptions (unified fee, service allowances and sales tax) (for general use)612 المبيعات على العامة الضريبة دفع تأجيل Postponement of payment of the general sales tax

614موحد.. ) لألدويةمن الصناعي بالتعريفةلالستعمال معفاة إعفاءآالت

ومبيعات( Exemption for the industrial use of medicines (uniform and sales)

615لجهات المبيعات ضريبة عدا والضرائب كافةالرسوم من معفاة

لذلك خاضعة Exempt from all fees and taxes other than sales tax to subject parties

616بنسبة المبيعات على العامة للضريبة البيتموس %4إخضاع

زراعية كمخصبات Subjecting the betemos to the general sales tax of 4% as fertilizer617 سيف القيمة حسب والمبيعات الموحد الرسم من إعفاء Exemption from the consolidated fee and sales by value

618 - الموحد الرسم من معفاة األمنية الجهات من مركبات استبدال

والمبيعاتReplacement of vehicles from the security authorities - exempt from the unified fee and sales

620القيمة أساس على للمبيعات وتخضع الموحد الرسم من إعفاء

سيف Exemption from the consolidated fee and subject to sales based on CIF value

621. . . .. عامةحسب م وض موحد ر من و توفيرطاقةمتجددة اعفاءنظم

طاقةرقم 10/2013نظامRenewal of Renewable Energy Saving Systems and of ROE and General Energy System No. 10/2013

622 ) العام ) لالستخدام فقط العامة المبيعات ضريبة من إعفاء Exemption from general sales tax only (for general use)623 ) العام ) لالستخدام والخاصة العامة المبيعات ضريبة من إعفاء Exemption from general and special sales tax (for use627 ) والضرائب) الرسوم كافة من العام لالستخدام إعفاء Exemption (for general use) of all duties and taxes624 نسبية خاصة مبيعات ضريبة من هجينة سيارات اعفاء Hybrid cars are exempted from a relative sales tax625 . خاصة م هجينة% 40اخضاع سيارات استبدال بدل Submitting a special 40% replacement for hybrid cars

628هجينةمن نسبية% 55من% 50اعفاءسيارات خاصة مبيعات ضريبة

2011لسنة438قرار Hybrid car exemption from 50% of 55% Special sales tax relative Resolution 438 for the year 2011

629 خردة استيراد خدمات رسم اعفاء Exempt fee for scrap import services630 والضرائب الرسوم كافة من الرسمية للجهات عام إعفاء General exemption from all official fees and taxes632 . خاصة م محرك% 12.5اخضاع سعة هجينة سيارات استبدال Submitting a special 12.5% substitute for replacement of hybrid cars with an engine بدل

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س 2500التتجاوز س capacity not exceeding 2500 oz633 أخرى دفعات مالية بوصول مدفوعة بيانات وتسديد اعفاء Exemption and payment of data paid for the financial arrival of other payments634 شركات مشتريات لغاية QIZاعفاء عامة مبيعات 25/1/2015من Exemption of QIZ purchases from public sales until 25/1/2015

636وتضمن الخدمات واستيفاء إعفاءبالواسطةلجهةمعفاةبالكامل

بكفالة Exemption through bail and full service and guarantee

637 + الجمركيةفقط الرسوم على%)1إعفاءبالواسطةلجهةمعفاةمن

بكفالة هذه تضمن أن Exemption by the exempt party from customs duties only + 1% (to be guaranteed by bail650 فقط الجمركية الرسوم من للدعاية المعدة التقاويم إعفاء Exemption of calendars prepared for advertising from customs duties only

651( .. +.. +.. + رسم من حقائب دعائية مواد بوسترات بروشورات إعفاء

ومبيعات موحدExemption of brochures + posters .. + promotional materials .. + Bags .. (from a unified drawing and sales

660وإعفاءمن المبيعات على العامة الضريبة دفع تأجيل

دفعةضريبةالدخلPostponement of the payment of the general sales tax and the exemption of the income tax

699الدخل ضريبة ودفعة والمبيعات الموحدة الرسوم من إعفاء

المسبقة Exemption from standard charges, sales and advance income tax payment700 العام ) ( لالستخدام الخدمات بدالت من إعفاء Exemption from service allowances (for general use)

702الخدمات وبدالت تنمويةعداالطوابع مناطق اعفاءمؤسسات

) بنسبةالصفر) مبيعاتExemption of development zone institutions for stamps and service allowances (zero sales)

703 .) عام ) استخدام الطوابع عدا والمبيعات الرسوم معفاةمن Excluded from fees and sales other than stamps (general use).704 والضرائب الرسوم باقي من واعفاء موحد رسم دفع Payment of a uniform fee and exemption from other fees and taxes

705خدمات وبدالت وطوابع موحد رسم عدا تنموية اعفاءمناطق

) بنسبةالصفر) مبيعاتExemption of development zones except for unified fees, stamps and service allowances (zero sales)

710 والمبيعات الخدمات لبدالت وتخضع الموحدة الرسوم من معفاة Free of charge and subject to service and sales allowances

720ضريبة مخبريةمن ككواشف تستخدم التي المشعة المواد إعفاء

فقط المبيعات Exemption of radioactive materials used as laboratory reagents from sales tax only730 الرسم هذا من المعفاة للجهات االضافي االستيراد رسم من إعفاء Exemption from the additional import duty of the exempt parties from this fee740 الخدمات وبدالت االضافي االستيراد رسم من إعفاء Exemption from import duty and service allowances760 والطوابع الخدمات وبدالت االضافي االستيراد رسم من إعفاء Exemption from import duty, service allowances and stamps780 فقط العامة والمبيعات الموحد الرسم من إعفاء Exemption from the common fee and general sales only781 بكفالة عامة ومبيعات موحد رسم ضمان Guarantee a uniform fee and general sales on bail

789بنسبة عامة مبيعات لضريبة السلع بعض لالستخدام% ) 0إخضاع

العام( Submitting some goods to a general sales tax of 0% (for general use)

790بنسبة عامة مبيعات لضريبة السلع بعض لالستخدام% ) 4إخضاع

العام( Subjecting some goods to 4% general sales tax (for general use)791 بنسبة عامة مبيعات لضريبة السلع بعض Subjecting some goods to 16% general sales tax (for general use) لالستخدام% ) 16إخضاع

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العام(

795 / مبيعات لضريبة جامعةاردنية خاليا مركزعالج مستوردات إخضاع

بنسبة %0عامةSubjecting the imports of the Jordanian cell / university treatment center to a general sales tax of 0%

796 . / م ض جامعةاردنية خاليا مركزعالج مستوردات . 0اخضاع م س.0ر غ

0 Subjecting the imports of the center of cell treatment / University of Jordan

800عدا ) يراداستبدالها عمومي رسم% 3إعفاءسيارات

المبيعات( ومعفاةمن موحدExemption of public vehicles to be replaced (except for 3% flat fee) and exempt from sales

803 والمبيعات الرسوم من المستبدلة العمومي السيارات إعفاء Exemption of public vehicles replaced by fees and sales

850الى ) الرسوم و%( )75توزيع الجمارك دائرة للجهة%( 25لحساب

العالقة ذاتDistribution of fees to (75%) for the Customs Department and (25%) to the relevant party

852وضمان% 25استيفاء عندالتخليص دفعةاولى والمبيعات الرسوم منبكفالة الباقي 25% of fees and sales are paid on a clearance basis and the balance is guaranteed

853 الجمارك% 75استيفاء دائرة لحساب البيع بدل من 75% of the sales allowance for the Customs Department854 الجمارك%( 50استيفاء ) دائرة لصالح البيع بدل من Completion of 50% of the sales allowance for the Customs Department855 الجمارك%( 75استيفاء ) دائرة لصالح البيع بدل من Completion of (75%) of the sales allowance for the Customs Department

901المتقاعدين الضباط سيارات الضريبةالمستحقةعلى دفع

دفعةواحدة العسكريين Payment of the tax payable on the vehicles of retired military officers

902المتقاعدين% 50دفع الضباط سيارات الضريبةالمستحقةعلى من

بالتقسيط والباقيPayment of 50% of the tax payable on the cars of the retired officers and the rest by installments

903وضريبةالمبيعات الجمركية الرسوم من المتقاعدين سيارات إعفاء

فقط الخاصة Exemption of retired cars from customs duties and special sales tax only

906العامة المبيعات وضريبة الموحد الرسم من القضاة سيارات إعفاء

فقط والخاصةThe exemption of judges' cars from the unified fee and the general and special sales tax only

907القوات في العاملين الضباط إعفاءسيارات

) + عامةوخاصة) مبيعات رسوم المسلحةمنExemption of vehicles of officers working in the armed forces (fees + public and private sales)

908العامة المبيعات وضريبة الموحد الرسم من القضاة سيارات إعفاء

%35والخاصة Exemption of judges' cars from the unified fee and general and special sales tax 35%921 الخاصة االحتياجات ذوي سيارات اعفاء Exemption of cars with special needs

922رسوم ) من المتقاعدين الضباط قدامى سيارات إعفاء

) خاصة+ ضريبةمبيعات جمركية Exemption of retired senior officers' vehicles (customs duties + special sales tax)

926األعيان مجلس سيارات + 100اعفاء عامة% مبيعات موحد رسم من

وخاصة Exemption of VIP cars 100% of the unified fee + public and private sales

928جمركيةومبيعات رسوم من رائد برتبة متقاعدين اعفاءضباط

عامة خاصةعدامبيعات Major retired retirees from customs duties and sales for general sales929 دائم علوية أطراف ومصابين كفيفين عسكريين سيارات اعفاء Exemption of military vehicles with blind limbs and permanent upper limbs

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947 مركبات - كلي قصور 1600CCاعفاء Exemption of total vehicle deficiencies - 1600CC948 سمعية - اعاقة 1600CCاعفاء Exemption of Hearing Impairment949 عن سعتها التزيد مركبات القامة قصار 2200CCاعفاء Exemption of small vehicles with a capacity not exceeding 2200CC

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