By Andrew Seymour
Resellers say business is getting back to normal after the government last month ruled against the removal of sales taxation on computers
Jordanian PC resellers say business is getting back to normal after the government last month ruled against the removal of sales taxation on computers.
Talk of the 16% sales tariff on PCs being axed earlier this year caused consumers to hold off their purchases, but channel players now cite a return to more regular PC buying patterns.
“A department within the Ministry of Finance announced that there will be no change to the sales tax and people have started to forget about the story,” said Safwan Kakish, chairman at IT retailer Compute. “It has created some stability and business is coming back — not to the usual level — but things are coming back slowly.”
The government’s decision to end any uncertainty by confirming the tax rate is to remain unchanged has led to an improvement in July sales compared with May and June, according to Mamoun Zater, general manager at PC Zone.
However, like most retailers, PC Zone is hopeful that the verdict will be reviewed as it believes scrapping the tariff will improve the health of the local channel.
“We are disappointed by the news because if it happened we would recover from the world economic crisis more quickly and achieve growth. Everybody in the retail market, and even the corporate market, in Jordan is trying not to close because sales from the beginning of this year dropped by 50% at least,” said Zater.
Advocates of a zero tax rate on PC sales claim it would make the Jordanian channel more competitive and affordable, as well as reducing the attraction of sourcing products from the re-export market.
One reseller expects the ruling to eventually be overturned, insisting it will be announced without any warning to prevent the uncertainty that has disrupted the market this year.
“The reduction will be made, but they will make sure everything is running correctly when they announce it. The national target is a PC penetration rate of 50% by 2010 and for this to happen the tax needs to be reduced,” said the source.