Jordan government takes on tax evasion, abuse of public office

Jordanians have welcomed the government’s latest push to prosecute officials and businessmen accused of tax evasion and money laundering, but wonder if the effort will be sustainable.

al-monitor Police officers stand during trial held for over 30 businessmen and customs officials charged with millions of dollars in tax evasion, at the State Security Court, in Amman, Jordan March 12, 2019. Photo by REUTERS/Muhammad Hamed.

Jun 24, 2020

Soon after it lifted most restrictions associated with COVID-19 health measures, the Jordanian government launched an unprecedented anti-corruption campaign June 6 against former officials, businessmen and companies suspected of involvement in tax evasion, money laundering, abuse of power and embezzlement.

There have been various news reports of police raids at the request of the Integrity and Anti-Corruption Commission (JIACC) of offices belonging to major businessmen, including one linked to a senior parliamentary figure. The owner of a cigarette manufacturing company is being investigated for unpaid taxes estimated at 134 million Jordanian dinars ($189 million), Al-Monitor has learned.

On June 10, Prime Minister Omar Razzaz was quoted by the Jordan Times as saying that the government is committed to implementing all of its anti-corruption measures, adding that corrupt persons have “no immunity” and that the law “applies to all.” Razzaz added, “What the JIACC is doing on the procedural level must be strengthened through legislation and regulations to help it play its role in recovering public money in the public sector as well as in the private sector in regard to tax evasion.”

Economic analyst and editor of the Maqar news site Salameh al-Dar’awi told Al-Monitor, “Tax evasion has challenged previous governments and since the government cannot raise taxes during these difficult times to generate income, it had to confront this issue directly.” He added that according to a World Bank study, tax evasion costs the treasury between 600 million to 800 million Jordanian dinars ($845 million-$1.1 billion) annually.

On June 14, Minister of Finance Mohammad al-Ississ announced at a press conference that tax evasion will be treated as money laundering, which carries a harsher sentence. He added that police raids are used as a last resort and that the current campaign is not political but part of genuine structural reform.

In the same press conference, Minister of Media Affairs Amjad al-Adaileh said the government has made amendments to the 2020 Integrity and Anti-Corruption Commission Law that will grant the anti-corruption body greater autonomy and legal backing to investigate a wider scope of crimes. The amendments allow the commission to monitor and investigate sudden and questionable gains of wealth or assets by officials, private individuals and groups.

On June 16, a government official told a local news site that the government's income tax department had managed to collect an additional 54 million dinars ($76 million) in unpaid taxes in addition to 95 million dinars ($133 million) in fines during the first five months of this year.

According to Ississ, the list of those being investigated is long and that the law will have the final say on all cases. According to local observers, the campaign shows a new political will to fight corruption, enforce the rule of law and enhance transparency. Needless to say, the campaign has been welcomed by the general public. Some have described it as Jordan’s version of the Saudi Ritz Carlton affair, in which the the authorities gathered prominent Saudi businessmen and negotiated billion-dollar settlements with them.

Political columnist Fahd al-Khitan wrote June 7 in Al-Ghad that it was time the government took measures to confront tax evasion instead of relying on ordinary peoples’ pockets for revenue through VAT or sales tax. “Jordanians have long called on governments to fight tax and customs evasion by influential figures instead of raising taxes on small and medium businesses,” he added.

Khitan likened the government’s campaign to attacking a hornet’s nest, adding that the plan had preceded the COVID-19 crisis. He advised the government to make the campaign a permanent policy and not a passing operation. “The problem is endemic and had cost Jordanians hundreds of millions of dollars in money that was not collected by the treasury or was smuggled out of the country,” he said.

One important triumph for the government came on June 8, when an international arbitration center in Washington, DC, overturned a ruling against the Jordanian government in a case involving an international cellular phone company’s sale of its shares to a local company in 2006. The new ruling means the government can pursue a legal case against the company and ask for compensation worth 123 million dinars ($173 million).

But some Jordanians wonder if the government has the will and backing to effectively question former prominent officials about their sources of wealth or to reach settlement deals to repatriate millions of dinars. One local businessman who requested anonymity told Al-Monitor that Jordanians had been promised by previous governments to fight corruption and abuse of public office in cases that have become well known, but nothing had happened. “It’s a good thing, what this government is doing now, but can its efforts continue as it investigates powerful figures?” he asked.

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