‘Authorities mulling tax cuts on hybrid car imports’

AMMAN — Authorities are considering the option of reducing tax rates imposed on hybrid cars imported for the domestic market to further boost demand for the environment-friendly vehicles, an official said on Monday. 

The informed source, who requested anonymity, said a special committee has been formed to study the financial impact of tax cuts on the Treasury, in addition to the impact of increasing the number of hybrids on the Kingdom’s energy bill and the environment. 

Currently, buyers of hybrids with engines smaller than 2,500cc pay 25 per cent of the value of the vehicle as a special tax, while cars with larger engines are subject to a 55 per cent tax.

The government has also granted motorists who trade in cars that are 10 years old or more, a further tax discount, under which they pay 12.5 per cent in a special tax for hybrids while their old cars are scrapped.

Nabil Rumman, president of the Jordan Free Zone Investors Association (JFZIA), told The Jordan Times on Monday that policy makers should consult with local auto importers to discuss any future decisions related to taxes on green vehicles in order to avoid confusion in the market.

Rumman said policy makers should consider two tax systems that include a 12.5 per cent tax on cars with engines less than 2,500cc and a 25 per cent rate on those with larger engines. 

The discounted tax rate given to motorists who trade in their old cars with new hybrids should be scrapped, as only a small number of people have benefited from such a rate, Rumman added. 

He explained that some traders purchase old cars, which are supposed to be scrapped, and trade them in for fuel-efficient cars to benefit from the tax discount. “There are around 50 to 60 traders who search for cheap old cars, that should not be driven on the Kingdom’s streets, in order to buy them and trade them in for hybrids,” the JFZIA president said.

According to Rumman, sales of the fuel-efficient cars are on the rise, with over 5,000 hybrids entering the local market in the first quarter of this year. 

More than 16,000 hybrids were imported for the domestic market in 2014, he said, noting that the number would have doubled if taxes had been lower. 

He criticised instability in legislation covering hybrid cars, noting that there have been three government decisions related to tax rates since 2010. 

The overall number of hybrid cars in Jordan is over 36,000 with the Toyota Prius standing as the top selling car.