Is it the End of Jordan as Silicon Valley of the Arab World: IT Companies Threaten to Move out of Jordan

19 Aug, 2013

jordan ict
Jordan has been debuted as silicon valley of the Arab world excluding the occupation state of “Israel”. Many well known regional and global IT and Internet brands came from Jordan: Maktoob which was acquired by Yahoo! Jeeran, TeleFinity, Globetel, Ketab Technologies, Optimiza and Rubicon to name a few.
But that might be changing as representatives of IT companies in Jordan said according to Jordan Times they will be forced to move their headquarters out of the Kingdom if a proposed income tax law is endorsed.
They said the increase in electricity prices this week and the government’s intention to increase IT companies’ income tax from 14 per cent to 25 per cent will be “disastrous”, making Jordan no longer an ICT hub.

“The situation is worrying and intolerable,” Fadi Qutaishat, vice president for sales and marketing at Globitel, said at a gathering of ICT firms on Thursday to discuss the latest issues and challenges facing the sector.
“The solution will be for all IT companies to act together and move their offices from Jordan to avoid the possible increase in income tax and other rising costs,” Qutaishat said.
“If the income tax law is endorsed, we should move outside Jordan,” he said, urging other IT companies to follow suit.
Abed Shamlawi, CEO of the ICT Association of Jordan (int@j), said a group of IT firms is already thinking of relocating their headquarters.
MenaITech CEO Bashar Hawamdeh agreed with Shamlawi, urging IT companies to take action.
“We should all maintain a strong position in rejecting the proposed rise in income tax. The situation of IT companies is already difficult,” he said.

The Jordanian government is facing a yearly huge deficit in its budget and a high debt compared to its GDP. I understand the government needs to find more revenues to close the budget, but not this way. ICT makes 14% of Jordan’s GDP, if IT companies leave Jordan it will be disastrous for the economy as a whole, income and sales taxes revenues will decrease and we will face 10,000s of unemployment force walking the street. To make matters worse, Jordan will lose its potential of becoming the Silicon Valley of the Arab world. And we will see less startups and investments made in Jordan where they will be going to safer more tax friendly places but more expensive in salaries such as Dubai. This mean less good paying jobs and less tax revenues to the government.

The Jordanian government should look at the interest of the ICT sector and the future of the country instead of a short term fixes to its budget deficit.
#image credit.

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