Shadow Economy and Tax Reform Debate
The shadow economy in Jordan is a significant financial and economic challenge, accounting for approximately 26.9% of the gross domestic product in 2023. This results in substantial tax revenue losses estimated at around 1.4 billion dinars annually. As it operates unofficially, the phenomenon harms competition, weakens incentives for formal investment, reduces worker protections, and diminishes the accuracy of economic data. Authorities are pursuing tax reforms that include a national invoicing system to enhance transparency and reduce tax evasion. These reforms aim to simplify registration processes, provide incentives for transitioning to the formal sector, link social protection to proper registration, and expand the tax base without increasing the burden on compliant taxpayers.
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