Tax hike takes its toll on sales

24 Jul 2013

Sales of mobile subscriptions and pre-paid cards has dropped by roughly 15% since the government doubled taxes on wireless services earlier this month, according to the Jordan Times. The paper cites a number of local small business owners as saying that sales have suffered since the introduction of the higher tax rate, in some cases by as much as 20%. Zain CEO Ahmad Hanandeh was also quoted as saying that the company’s sale of pre-paid cards dropped by around 10%-15% since the tax hike, adding that he expected revenues to drop by around JOD113 million (USD158.99 million) annually as a result.

Multiple-SIM users, previously a lucrative segment of the market for pre-paid voucher sellers, were reportedly on the decline as the tax increase has made maintaining several phone subscriptions unsustainable. Another major cause of the decline was attributed to the sudden increase in price for SIM cards and pre-paid vouchers, causing confusion amongst retailers and customers. The paper quotes one businessman as saying: ‘There is no fixed price for pre-paid cards nowadays. It all depends on the distributors. After the tax increase, I bought a pre-paid card of the JOD5 category for JOD7.15 and I sold it for JOD7.25. Then the distributor increased the price to JOD7.3 and I started selling it for JOD7.5. Shops [all] sell pre-paid cards at different prices now.’