Gov’t mulls tax on Internet giants

AMMAN — The government is planning to impose sales tax on global companies, such as Facebook, Google and Amazon, Minister of Digital Economy and Entrepreneurship Muthana Gharaibeh said during the "Sawt Al Mamalaka" TV programme on Wednesday.

"This is a premature thing, nothing is yet confirmed, this is a global discussion that is happening everywhere and we just need to make sure that Jordan is not missing the opportunity," Gharaibeh told The Jordan Times on Thursday in a telephone interview. 

The minister confirmed that the idea revolves around Google and Facebook ads, which if implemented would mean that advertisers have to pay more as all the ads currently run on Facebook from within Jordan bring no value to the Kingdom. 

He justified the idea by saying that these advertisement companies do not operate in Jordan or pay any taxes, and it gives them a privilege over local advertisers, so if taxes are imposed it becomes a "level playing field", which he considered more fair for the local advertisement businesses. 

The idea will allow the advertisement business to grow within the Gross Domestic Product (GDP) and not without, he said, adding that there are many countries around the world that impose taxes on Facebook and Google ads, considering them a profitable commercial activity. 

Mohammd Obeidat, a digital marketing expert, said that if it does happen and taxes are imposed on ads running on Facebook or Google, the advertiser will be the one who shoulders the tax, because these global companies will not.

"The pretext is that the decision is meant to strengthen local advertisers, such as newspapers or magazines, but the offline industry is dying on a global level and going digital, the only ways of offline advertisement remaining are banners and flyers and so on," he said.

Obeidat said that from a business perspective, an advertiser pays fees to manufacture a product, deliver it and market it, and if business owners have to pay more to market their products in Jordan, they might not find it worth it to do business in Jordan anymore. 

"This means that the whole business model will be affected, just like when the e-commerce customs taxes were imposed, and CashBasha [a company that facilitated online shopping for Jordanians through Amazon] suspended their operations in Jordan, because they found it has become not worth it anymore," Obeidat said, noting that it would have been better to improve local advertisers and help them learn how to operate online more than offline. 

The government is supporting home business and small enterprises, and such taxes will impose more burdens on them and might stop them from growing because they will have to shoulder these taxes as part of their expenses, he added. 

The issue sparked a discussion on social media, following the Cabinet decision to impose customs fees on online products ordered for personal use, which are clothes, shoes, foodstuffs and children's toys. The discussion was the main topic of Sawt Al Mamlaka's episode on Wednesday.