Jordan’s government increased funding for impoverished families on Monday amid the coronavirus pandemic and record unemployment.
The Department of Statistics said unemployment had reached 23.9 per cent in the third quarter this year compared with 19.1 per cent in the same period last year.
The highest unemployment rate recorded since 1968 was made public as Finance Minister Mohamad Al Ississ announced the 2021 budget.
He said 38 per cent more money will be spent next year on the National Assistance Fund, which provides cash assistance to the kingdom’s poorest household.
At least 15 per cent of Jordanians lived below the official poverty line of 68 dinars ($95) per capita per month at the end of 2018.
The government-owned fund gave 50 to 200 dinars on regular bases to more than 75,000 families by the end of last year.
The amount each family receives is based on the number and ages of members in the household and their physical and material condition.
But the funds size of 145 million dinars ($203 m) before the projected increase, would still comprise only a fraction of the overall budget for 2021.
Mr Al Ississ told reporters that “one of the government’s most important priorities is to care for the vulnerable classes suffering in this difficult time”.
“We therefore initiated an unprecedented increase in the National Assistance Fund,” he said.
The 2021 budget forecasts spending of 9.9 billion dinars and a deficit of 2 billion dinars, levels roughly similar to those that the government had projected for this year.
Mr Al Ississ said high unemployment was “the main concern” of authorities.
But he made it clear that the government’s room for manoeuvre is limited because salaries account for 65 per cent of spending.
Another 17 per cent of the 2021 budget will go to pay for servicing the public debt, which is at least $37 billion.
He said these parameters constitute “hard financial reality”.
Jordan’s public debt is huge compared with the modest output of the country’s economy.
The population is 10 million and Jordan’s gross domestic product was $44 billion last year.
The government expects the economy to shrink by at least three per cent this year, citing curfews and other measures to try and contain the spread of the coronavirus as the reasons.
“A large part of the revenue drop we are suffering is linked to the closures we have been through this year,” he said.
But a two per cent growth the Jordan central bank said it registered last year was part of more than a decade-long economic stagnation accompanied by high poverty and unemployment rates.
Most of Jordan’s 219,000 coronavirus cases and 2,751 deaths were officially registered the last two months, prompting the authorities to reinstate closures and curfew measures in the last two weeks.
Mr Al Ississ expected a 2.5 per cent economic growth next year, fuelled by pent up demand for goods and services, unless the coronavirus situation takes a turn for the worse.
He said that because of the coronavirus the hardest challenge “for any financial official is the lack of clarity in reading next year’s economic and financial curves.”
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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- Full hormone production regained within 4-6 months
