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 Friday, February 12, 2010

Wireless network operators in Jordan have criticised the government's plan to increase taxes on mobile phone services. It is estimated that the telecom industry now pays tax rates equivalent to 58% of its revenue to the government. The latest tax is an increase in the special cellular phone tax from 4% to 8%. In total, the network operators pay 16% in sales taxes, 24% income tax on profits and 10% on their total revenues. There is also the newly raised special phone tax of 8%. ‘The increase in the tax will certainly have a negative impact on the telecom sector. Whenever the government wants to increase tax, it thinks of the telecom sector because it is faster and easier to collect the tax, and there are zero efforts involved in the process,’ Raslan Diranieh, chief financial officer of the Jordan Telecom Group, told the The Jordan Times. Rival Zain said the decision was ‘shocking and negative’ and it that it contradicts the government's plan to expand the use of telecom services.

In response to the complaints that the higher taxes will hurt the poorer customers, government spokesperson Nabil Sharif said the government expects citizens to be up to the responsibility by changing their consumption patterns. ‘One can find four or five mobile phones in the same family. In light of the current difficult economic situations it is best for all to direct their spending towards essential items rather than luxury items,’ the minister said.

Source: TeleGeography