Over the past decade, Jordan’s business environment has experienced significant and rapid changes in terms of both its complexity and competitiveness in global markets. Increased demand for qualified labour, coupled with growing international competition for resources, have forced Jordanian businesses to remain flexible and become more resourceful.

The government has worked diligently at implementing a raft of different measures to support local businesses and promote investment in the kingdom, while at the same time maintaining a balance with its need to generate the tax revenues that form a large percentage of its annual budget. With relatively well-developed basic infrastructure and business-friendly facilities, Jordan’s economy makes an attractive investment proposition, which the government is working to strengthen through investment promotion laws that aim to maintain a certain amount of tax revenue while at the same time providing the additional edge sought by investors and business owners alike.

Corporate Income Tax

Jordan’s income tax regime is set out in the Income Tax Law No. 28 of 2009, which became effective in 2010. However, a new law was enacted in December 2014 and came into effect on January 1, 2015. According to Article 3 of the law, corporate income tax (CIT) is levied on corporate entities and foreign branches with respect to taxable profit in Jordan on all income earned in, or derived from Jordan, irrespective of where the payment is made, and on income generated from investing Jordanian capital outside of the kingdom.

There is no definition of permanent establishment in the country; however, for CIT purposes, the legislature has made a clear distinction between a resident and a non-resident juridical person, whereby the latter is not liable for CIT in the kingdom. However, non-residents are liable for 10% withholding tax. Article 2 of the Income Tax Law indicates that if a company is legally registered in Jordan, it would be deemed a resident juridical person in Jordan and would therefore be required to comply with the applicable tax laws and regulations in the country.

Rates Of Corporate Income Tax

CIT rates for resident corporations vary from 14% to 35%, depending on the type of activity performed by the business. The CIT rates for specific economic sectors are broken down as follows:

  • Banking: 35%;
  • Insurance, telecommunications, stockbrokers, finance companies, currency exchange companies and leasing companies: 24%;
  • Industrial sector: 14%;
  • All other sectors: 20%; and
  • The agriculture sector is exempt from tax.

Administration & Filing

All business expenses incurred to generate income are eligible for deduction with certain limitations and exceptions.

The tax year for corporations corresponds to their accounting financial year, while for individuals it is the calendar year. Tax returns must be filed by all taxpayers on a prescribed form, in Arabic, within four months after the end of each tax year.

The tax return requires disclosures relating to the individual or corporation’s income, expenses, exemptions and tax payable, including details of goods and services supplied and payroll incurred for the year. The total amount of tax due must be paid at the time of filing to avoid penalties. Further, the tax authority has the right to conduct an income tax audit for up to four previous years and to charge the company any additional taxes it finds to be owed that were not previously declared or paid.

The tax regulations allow for payment for the year’s taxes on a set payment schedule, where payments made during the year are made on account.

Taxpayers whose gross income exceeds JD1m ($1.4m) are required to make an estimated tax payment by the end of the sixth month during the year. If the taxpayer’s half-yearly financial statements are ready, the estimated tax payment should be 40% of the half-yearly taxable income; however, if the taxpayer’s half-yearly financial statements are not ready, the tax payment is determined to be 40% of the preceding year’s CIT liability.


Dividends income is exempt from tax, except for dividends received by banks and financial institutions from mutual investment funds. An amount equal to 25% of the exempt dividend income is added back to taxable income as long as the total income does not exceed total allowable cost.


Interest paid by banks to depositors, except for interest on local interbank deposits, is subject to a 5% withholding tax. The withholding is considered to be a payment on account for resident companies and a final tax for resident and non-resident individuals and non-resident companies.

Deposit interest generated in Jordan by non-operating banks and financial companies from banks and financial companies operating in the kingdom are exempt from income tax.

Withholding Taxes

Withholding tax (WHT) on interest can be summarised as follows:

  • Interest paid from registered banks in Jordan to non-resident banks and non-resident finance companies for deposits that are held in Jordan is not subject to WHT in the kingdom;
  • Interest paid from registered banks in Jordan to non-residents (other than non-resident banks and non-resident finance firms), whereby such interest was earned by the non-residents for deposits that are held in Jordan is subject to a 5% WHT;
  • WHT on taxable income paid or accrued to non-resident parties has increased to 10% instead of 7%;
  • Interest paid from residents to non-residents on loans is subject to WHT and general sales tax at 10% and 16%, respectively;
  • Any other type of interest paid from resident parties (other than banks) to non-residents is subject to WHT and general sales tax at 10% and 16%, respectively;
  • The WHT rate on services provided by certain resident parties remains at 5%;
  • WHT at a rate of 5% on rent paid by companies to individuals has been cancelled;
  • The deducted WHT should be remitted to the Income and Sales Tax Department (ISTD) within 30 days of the date of payment or invoice date, whichever is earlier;
  • Income from interest on deposits is subject to the WHT at the rate of 5%. These WHT amounts are considered a final tax for non-resident non-natural persons and individuals; excluded from the provisions of this subparagraph is the interest on deposits incurred by foreign banks;
  • Late payment is subject to late payment penalties at 0.4% at the beginning of each week or part of it;
  • Moreover, in case of failure to pay or remit the tax on the specified dates an additional penalty of JD200 ($281) to JD500 ($703) will apply; and
  • Winnings from prizes and lottery that exceed JD1000 ($1407) are subject to the WHT at the rate of 15% and the withheld amount shall be considered as a final tax.

Tax Treaties

Jordan has double tax treaties in force with the following countries: Algeria, Bahrain, Bulgaria, Croatia, Canada, Czech Republic, Egypt, France, India, Indonesia, Iraq, Kuwait, Korea, Lebanon, Libya, Malaysia, Malta, Morocco, the Netherlands, Qatar, Pakistan, Poland, Romania, Sudan, Syria, Tunisia, Turkey, the UK, Ukraine and Yemen.

In addition, the kingdom has entered into tax treaties that relate primarily to the transportation sector with Austria, Belgium, Cyprus, Denmark, Italy, Pakistan, Spain and the US. Furthermore, the kingdom is currently negotiating double tax treaties with Serbia, Montenegro and the UAE.

Tax Depreciation

Depreciation treatment is not addressed under the Income Tax Law No. 28 for the year 2009. A new law pertaining to depreciation rates has been drafted but is not yet effective. Until specific instructions are issued by the authorities, taxpayers should continue to apply the prior tax law’s depreciation provisions.

The ISTD is responsible for establishing the statutory maximum depreciation rates for various fixed assets. If the rates used for accounting purposes are greater than the prescribed rates, the excess is disallowed, but may be used for tax purposes at a later date. The maximum straight-line depreciation rates range from 2% to 25%, with property at the low end of the scale and equipment at the high end.

Alternatively, the taxpayer may choose to use the accelerated depreciation method, whereby twice the straight-line rate will be applied (except for buildings). However, machinery, equipment and other fixed assets that are imported on a temporary-entry basis do not qualify for accelerated depreciation. Used assets are depreciated at the statutory rates, calculated on purchase price.

Relief For Losses

Taxpayers are allowed to carry forward unabsorbed losses to offset against the profits of the five subsequent years.

Personal Income Tax

Individuals, whether resident or non-resident in Jordan, are taxed based on income earned in the kingdom from all taxable activities, including income from employment, business (either as sole proprietors or as partners), rental income and directors’ fees. Jordan does not currently tax foreign-source income.

The following tax rates apply for resident and non-resident employees:

  • 7% on the first JD10,000 ($14,071);
  • 14% on the second JD10,000 ($14,071); and
  • 20% on any amount exceeding JD20,000 ($28,142). Income from employment includes salaries and other employer-paid benefits, such as rent and school fees.

However, the following benefits do constitute taxable income to the employee:

  • Occasional meals given to employees at work;
  • Accommodation given to the employees for work purposes; and
  • Uniforms and equipment necessary for work.


The following amounts are available as personal exemptions from individuals’ income before arriving at taxable income:

  • Personal exemption of JD12,000 ($16,885);
  • Dependents exemption of JD12,000 ($16,885), irrespective of number of dependents; and
  • Additional exemption up to JD4000 ($5628) for medical expenses, educational, rent, home loans, interest (“morabaha”), technical services, engineering services, and legal services.
  • A household is exempt from tax up to JD28,000 ($39,398). A resident non-Jordanian employee is treated as a Jordanian employee with a personal exemption of JD12,000 ($16,885) and an additional JD12,000 ($16,885) if the employee’s dependents are also residents.

A non-resident foreigner who has dependents residing in Jordan may still claim the JD12,000 ($16,885) exemption in respect of dependents.

Tax Breaks For Donations

Any amount paid during the year as a donation to the government or its armed forces, public institutions or local authorities is deductible from the net income for the year.

  • Donation to any governmental department, public or official institutions, or municipalities may be deducted at 100% (not to exceed net income); and
  • Donations paid to non-governmental entities that the Council of Ministers has preapproved, such as religious, charitable, and humanitarian organisations, may be deducted up to 25% of taxable income after deducting donations to government departments, official institutions or municipalities.

Exempt Income

The following items of income are exempt from the income tax:

  • Non-operating foreign companies’ (representative offices) income;
  • Dividend income and gains from trading in stocks earned inside the kingdom;
  • Compensation paid by insurance companies, other than reimbursement payments for the loss of income from business activity or employment;
  • Capital gains, other than revenues from assets subject to depreciation;
  • First JD5000 ($7035) of end-of-service compensation related after January 1, 2010;
  • First JD3500 ($4924) of monthly pension salary paid to a resident person;
  • Revenues generated by re-insurance companies operating in the kingdom;
  • Income generated by non-Jordanian resident investors from non-Jordanian sources such as investing foreign capital in Jordan, and the repatriation of such investments outside the kingdom;
  • Income from agricultural activities;
  • Income of any religious, charitable, cultural, educational, sporting, or health institutions, and income of non-profit organisations.

Personal Income Tax Filing Requirements

Undefined the employee’s monthly tax return form should be filed in Arabic with the ISTD, along with a submission of the employee’s withheld income taxes, within 30 days following the end of the month to avoid late payment penalties of 0.4% of the amount due at the beginning of each week. An annual employee listing for all taxable companies should be filed in Arabic. This should include employees’ names, salaries, benefits, income tax and welfare tax deduction and should be filed with the ISTD within one month after the end of the year.

Miscellaneous Taxes

Jordan does not levy net worth tax, inheritance tax or gift tax. Other significant taxes levied by the government include a general sales tax, employer and employee social security contributions, and WHT on imports and on payments to non-resident service providers.

Social Security

The parliament and senate have issued an amendment to the Social Security Law that increases the monthly social security contribution from 18.75% to 21.75%, with the increase to be implemented over four consecutive stages starting from January 2014 as follows:

  • The employees’ monthly contribution will rise from 6.5% to 7.5%: The employees’ share of the increase in social security contribution will be introduced in four consecutive stages with an increase of 0.25% at each stage, the first stage being effective from January 2014. The current employees’ monthly social security contribution is 7%; and
  • The employer’s monthly contribution will rise from 12.25% to 14.25%: The employer’s share of the increase in social security contribution will be introduced in four consecutive stages with an increase of 0.5% at each stage, with the first stage being effective from January 2014. The employer’s monthly social security contribution is now 13.25%.

General & Special Sales Tax

Jordan’s general sales tax law is set out in Law No. 29 of 2009, which provides for two types of taxes: general sales tax (GST) and special sales tax (SST).

GST and SST are generally applicable on any entity or individual (i.e., taxable person) registered or required to be registered for GST and SST purposes. In Jordan, GST and SST are imposed on the following transactions, unless specifically under the GST Law:

  • The supply of taxable goods or services made by a taxable person; and
  • The importation of taxable goods or services made by a taxable person.

Registration For GST Purposes

A taxable person is required to register for GST by the earlier of the following dates:

  • On the following commencement of a new business that makes supplies if the taxable turnover during the 12 months following the commencement date appears likely to exceed the threshold;
  • At the end of any month if taxable turnover during the preceding 12 consecutive months has reached the threshold; and
  • At the end of any month if it appears that the person’s taxable turnover during the 12 consecutive months ending with the subsequent month may reach the threshold. The threshold referred to above for registration with the ISTD for GST purposes is as follows:
  • JD10,000 ($14,071) for manufacturers producing goods subject to GST;
  • JD50,000 ($70,355) for suppliers of goods other than those subject to GST; and
  • JD30,000 ($42,213) for service suppliers. If a taxable person carries out more than one of the business activities mentioned above, the minimum limit is the applicable registration threshold.

If a taxable person fails to register for GST purposes, a penalty of two to three times the output tax plus a criminal penalty equivalent to JD200 ($281) will be imposed if the registration is more than 60 days from the date on which the business should have been registered.

However, if the date of registration is less than 60 days from the date on which the business should have been registered, a penalty amounting to JD100 ($141) will be imposed.

GST & SST Rates 

GST is applied in Jordan to the supply and importation of goods and services, as well as on interest payments on loans from non-residents at a flat rate of 16%. For certain goods, such as tea, dairy products and live animals, the rate of GST is reduced to 4%. In addition to the standard GST rate, certain goods and services are subject to SST based on their weight, size or unit of packaging. The goods to which this tax applies comprise mainly alcoholic beverages, cigarettes and motor vehicles. SST is imposed at various percentage rates and in fixed amounts as set out in regulation No. 80 of 2001.

Filing GST & SST Return

The taxpayer should file a GST return every two months with the ISTD within 30 days following the two-month period.

The GST tax return should reflect the GST amounts paid on the taxpayer’s inputs and the GST received on its outputs for every two-month period. SST returns, on the other hand, are to be filed on a monthly basis within 30 days following the month of payment.

If the GST and/or SST return is not submitted within the statutory time limit, a penalty of at least JD100 ($141) will be imposed, which will be capped at a maximum of JD500 ($703). Furthermore, additional penalties of 0.4% on any difference between the tax return as filed and the tax assessment as determined by the ISTD will be imposed on each last week.

GST On Imported Services

Imported services are subject to GST at a rate equal to 16%. This tax is not recoverable and will be suffered as a cost by the non-resident party suffering the tax. In addition, as explained above, such services will be subject to WHT at a rate of 7%. In other words, imported services are subject to a total tax rate of 23%.

Importers of services shall pay the tax due in any of the following cases on the following timelines, at whichever date is earlier:

  • Within one month of the date when the payment for the imported service or any part thereof is made, limited to the amount related to that part;
  • When the means that includes the service is released from Customs; and
  • During a period of six months from the date when the service or any part thereof was received, limited to the amount related to the part.

If the GST imported services filing is not made within 30 days of invoice date or payment date, whichever is earlier, penalties ranging between a minimum of JD100 ($141) and up to a maximum of JD500 ($703) will be imposed. Any late payment made will give rise to penalties equivalent to 0.4% of tax liable on each late week based on any difference between the tax return as filed and tax assessment, up to 200% of the amount due. A company may be able to reduce this tax by importing such service, where possible, from the headquarters to its branch in Jordan, since head office charges are exempt from GST imposed on imported services, and therefore attract only a 7% withholding tax to the payments.

Recovery Of GST

A taxable entity may recover the input tax (the GST imposed on goods and services supplied to the taxable entity, purchased or imported by the entity for business purposes).

Input tax is generally recovered by being deducted from output tax (the GST imposed on goods and services sold by the taxable entity). Non-resident businesses are not allowed to recover GST on goods and services purchased in Jordan.

Other Penalties

According to GST Law, a person who commits any of the criminal tax fraud offences shall be liable for a civil compensation penalty to the ISTD of not less than twice and not more than three times the tax due, as well as a criminal penalty of not less than JD200 ($281) and not more than JD1000 ($1407). In case of recurrence of the offence, the criminal penalty imposed shall be doubled. If the offence recurs within one year thereafter, the court may impose criminal fines at their highest limit that is equivalent to 200%, or a term of imprisonment for a period not less than three months and not exceeding six months, or both.

Investment Incentives

Jordan has set up a number of development zones in order to encourage development in export-oriented industries. The Aqaba Special Economic Zone Authority (ASEZA) was the first development zone in Jordan. Other zones are located at Zarqa, the Sahab industrial estate and Irbid. Incentives provided to encourage investments are the following:

  • Companies registered in development are subject to a reduced tax rate of 5%;
  • Companies registered in free zones are exempt from tax; and
  • Non-Jordanians employed in free zones and development zones are exempt from tax.

Article 5 of Law No. 30 of the Investment Law 2014 provides for the reduction of at least 30% of the current tax rate (i.e., 14% tax rate for companies subject to 20% tax rate) for companies operating in underdeveloped areas in the kingdom. This includes companies involved in the activities:

  • Agricultural activities;
  • Hospitals and specialised health care clinics;
  • Hotels and touristic companies;
  • Entertainment and touristic centres;
  • Telecommunication centres ;
  • Scientific research centres and laboratories;
  • Media productions;
  • Showrooms and convention centres;
  • Transportation, distribution or extraction of water and oil and gas through pipelines; and
  • Air and marine transport and tramways.