Jordan Customs Department adjusts hybrid tax reduction for scrapping used cars

AMMAN The Jordan Customs Department (JCD) on Tuesday circulated adjustments on the taxing system regarding scrapping used cars to benefit from a tax reduction on hybrid cars.

The trader buys a used car and then hands it to the concerned customs department, forfeiting it for the Treasury, and receives a 15 per cent tax reduction upon buying a hybrid car.

In return for scraping a used car, regardless of its engine capacity and provided that it is older than 10 years, hybrid cars with an engine capacity lower than 2,500 cubic centimetres (cc) are subject to a 44 per cent tax rate, instead of the 59 per cent tax rate imposed by the original system, as per the decision.

The adjustments also stipulate that hybrid cars with an engine capacity exceeding 2,500 cc benefit from the tax reduction, provided that the scrapped cars engine capacity is the same as or less than that of the hybrid car.

Last year, the tax on hybrid cars was 45 per cent, according to traders.

In 2018, the Cabinet passed a decision stipulating a gradual increase on the special tax imposed on hybrid cars to reach 55 per cent in 2022, in addition to the 4 per cent tax on all cars, which was imposed in 2019.

Samer Ghanayem, a clearance accountant, noted that after these adjustments, scraping used cars is no longer profitable for traders.

It might help traders save a little on the latest hybrid car models, which have high customs values, but all car prices will witness at least a JD700 to JD1000 rise, Ghanayem told The Jordan Times.

If we were to say that an older hybrid model costs JD10,000, it now has an original tax of 59 per cent amounting to JD5,900. If the trader scraps a car, which he bought for at least JD1,300, then the tax becomes 44 per cent amounting to JD4,400. This means that, all in all, the trader saves only JD200, he said.

Ghanayem also noted that upon adding the forfeit fee traders pay when they sell a car, which is around JD150 to JD300, the saved amount comes to nothing.

Whereas last year, when the original tax was 49 per cent, traders would pay customs amounting to JD4,900 for this kind of car without buying and scrapping a used car, he said.

Eyad Al Saidi, a trader at the Zarqa Free Zone, agreed with Ghanayem.

All hybrid cars prices will witness a rise, he told The Jordan Times.

Saidi noted that while scrapping used cars might still help traders save a little on hybrid cars with newer models, they arent sold that often.

Its not every day that we get a customer in Jordan who can afford to buy a car that costs over JD21,000, he said, adding that average buyers opt for hybrids that cost them roughly JD13,000 to JD15,000, plus customs.