'Sales Tax' exempt brings hope for tourism take-off

الأربعاء 26 أيلول 2007

Written by Dr. Marwan Asmar*

The Jordanian government recently decided to exempt inbound tour operators from the 16% General Sales Tax and the decision was met withenthusiasm by tour operators throughout the Kingdom. The issue has beensurrounded by controversy since 2002 when the government re-imposed the salestax on inbound tour operators after previously stating the operators would beexempt.

The Jordan Inbound Tour Operators Association (JITOA), whichrepresents many of the tour operators who bring tourists to the Kingdom saysthe latest exemption will give a much-needed boost to Jordan’s tourismindustry.

Tour operators say they can now put the sales tax issuebehind and concentrate on developing packages to lure more internationaltourists to the Jordan.

The general sales tax issue  developed into a major controversy between the governmentand tour operators because tour operators were trying to hold off implementingthe sales tax on their packages and at the same time, accruing back taxes, orarrears.

Some government ministries continued to insist that theremust be annual payment together with the payment of arrears that had beenadding up since 2002. Both parties appeared to be deadlocked albeit occasionalmeetings and letters that were being circulated.

According to Awni Kawar, Chairman of JITOA, the organizationmade an effort to find a solution to the problem.

“It was essential to solve the continuing controversythat was proving to be a nightmare for tour operators who couldn’t plan fortourist packages effectively with the sales tax hovering over their back,”said Kawar.

“If they had been forced to pay, many of our members,who represent 80 percent of the inbound tourists who come to the Kingdom, wouldhave gone bankrupt. That would have been a major blow to Jordan’s NationalTourism Strategy that has been put in place since 2004 to make Jordan a majordestination of international tourists and thus help the local economy,” headded.

“This was another very important issue to consider,regional competitiveness was one of the major reasons to realize the NationalTourism Strategy and if selling Jordan is too expansive compared with the restof the region then definitely visitors will continue to go to such places asSharm Al Sheikh rather than come here,” pointed out Kawar.

Many inbound tour operators say the decision to exemptrepresents good cooperation between the public and private sectors. Accordingto the National Tourism Strategy both sectors should work together in theinterest of making tourism a larger part of the national economy.

[Editor’s note – Declaration of possible conflict of interest: Dr.Marwan Asmar is a consultant who has worked with JITOA. He submitted thisarticle to 7iber.com]