Jordan

In Jordan, employers face several tax obligations, including social security contributions, payroll tax withholding, and corporate income tax.

Social Security

• Employer Contribution: 14.25% of the employee's salary up to a monthly maximum of JOD 3,394.
• Employee Contribution: 7.5% of the employee's salary up to a monthly maximum of JOD 3,394.
• Filing Frequency: Monthly.

Payroll Tax (Individual Income Tax Withholding)

• Progressive Rates: Ranging from 5% to 30% based on employee's annual income.
  • 5% on the first JOD 5,000
  • 10% on income between JOD 5,001 and JOD 10,000
  • 15% on income between JOD 10,001 and JOD 15,000
  • 20% on income between JOD 15,001 and JOD 20,000
  • 25% on income between JOD 20,001 and JOD 1,000,000
  • 30% on income exceeding JOD 1,000,000.
• National Contribution Tax: An additional 1% tax on annual income exceeding JOD 200,000.
• Filing Deadline: April 30th of the following year.

Corporate Income Tax

• Standard Rate: 20% for most sectors.
• Varying Rates for Specific Sectors:
  • Banks: 35%
  • Electricity, Mining, Telecommunications, and certain Financial Institutions: 24%
• National Contribution Tax: An additional tax, the rate of which varies by sector. Example: 3% for Banks, 7% for mining companies.
• Filing Deadline: Four months after the end of the accounting period (calendar or fiscal year).

Other Taxes

• Value Added Tax (VAT): A general sales tax of 16% applies to most goods and services, with reduced rates (0%, 4%, 5%, and 10%) for certain items. Returns are filed bimonthly.
• Stamp Duty: 0.3% or 0.6% of the contract value, depending on the parties involved.

Information is current as of February 5, 2025, and may be subject to change.

In Jordan, employee tax deductions are calculated based on progressive tax rates and several available exemptions and deductions.

Personal Income Tax (PIT)

• Tax Rates: PIT is calculated on a progressive scale, as follows (valid as of February 2025, subject to change):

  • First JOD 5,000: 5%
  • Second JOD 5,000: 10%
  • Third JOD 5,000: 15%
  • Fourth JOD 5,000: 20%
  • Over JOD 20,000 up to JOD 1,000,000: 25%

• Exemptions: Several exemptions can reduce taxable income:

  • Personal Exemption: JOD 9,000 (for residents staying over 183 days in Jordan).
  • Family Exemption: JOD 9,000 (if family resides in Jordan for over 183 days).
  • Additional Exemptions: JOD 3,000 for medical expenses, university education, housing loan interest, rent, technical/engineering/legal services (documentation required).
  • Retirement Benefits Exemption: JOD 2,500 on monthly retirement benefits.

Social Security Contributions

• Employee Contribution: Information on employee social security contribution rates for 2025 is unavailable. As of 2024, the combined employer and employee contribution was 21.75%.

Other Deductions

• Charitable Donations: Donations to approved organizations are deductible up to 25% of taxable income.

Employer Responsibilities

• Withholding: Employers are responsible for withholding employee income tax and social security contributions.
• Remittance: Employers must remit withheld taxes and contributions to the tax authorities monthly.

Additional Information

• Tax laws and regulations are subject to change. Consult official government resources or a tax advisor for the most up-to-date information. This overview is for informational purposes and does not substitute for professional tax advice. It is current as of February 5, 2025.
• Tax returns must be filed annually. Specific deadlines can be obtained from the Jordanian tax authorities.
• Additional taxes, such as property tax, may also apply.

In Jordan, the General Sales Tax (GST), similar to VAT, is levied on most goods and services.

GST Rates and Exemptions

• Standard Rate: 16% applies to most goods and services.
• Reduced Rates: Specific goods and services are subject to reduced rates, such as 8% on certain foodstuffs and 4% on select agricultural products, and 10% on livestock and cheese. A special rate of 24% applies to certain telecommunications services related to digital services.
• Zero Rate: Exports, free zones (e.g. Aqaba Special Economic Zone, Zarqa Free Zone), development areas, and specific international services.
• Exemptions: Bread, water (under 5 liters), tea, sugar, gold, money, electricity, air transport, education, sewage and waste disposal, and certain religious and social organization activities. Electric vehicle charging devices and batteries for hybrid EVs are also exempt. Medical expense management services are also fully exempt.

Registration Threshold

• Businesses must register for GST if their annual sales exceed JOD 30,000 (approximately €39,000). This threshold applies to both resident and non-resident businesses supplying goods or services to Jordanian consumers, including digital services. A dedicated online portal simplifies the registration process for foreign digital service providers.

Filing and Payment

• Returns: Bimonthly online filing within 30 days after the two-month period. For example, returns for January-February are due by March 30.
• Payments: GST payments are due at the time of filing the return. Businesses with over JOD 1 million gross income in the prior tax period must also submit two advance payments: 40% of the estimated tax, due within 30 days of the end of each half of the tax period.

Invoicing Requirements

GST-compliant invoices must include:

• Business name and address
• GST registration number
• Invoice date and sequential number
• Buyer's name, address, and GST registration number (if registered)
• GST amount and rate per item
• Total amount including GST and currency used

Electronic Invoicing (JoFotara)

• Phase 1 (Ongoing): Registration is open for businesses. B2G transactions are now exclusively conducted through the JoFotara portal.
• Phase 2 (Effective April 1, 2025): All invoices for deductible tax expenses must be electronically issued through the JoFotara system or a compatible integrated platform. Original and tax-compliant invoices are now mandatory for all goods and services to be considered deductible tax expenses.

Other Taxes Relevant to Employers

• Payroll Tax: Progressive rates apply to employee wages.
• Social Security Contributions: Both employers and employees contribute to social security.
• Customs Duties: Levied on certain imported goods based on type and origin, as per the Harmonised Commodity Description and Coding System (HS Nomenclature).
• Excise Tax: Applies to specific goods like tobacco, alcohol, vehicles, fuel, and lubricants.

This information is for general guidance only and is current as of February 5, 2025. It's essential to consult with tax professionals for specific advice. Regulations can change, so staying updated is crucial.

Jordan offers various tax incentives to stimulate economic growth and attract investments. These incentives are primarily focused on specific sectors and zones and include exemptions, reductions, and credits.

Corporate Tax Incentives

• Development and Free Zones: Companies operating in designated development or free zones can benefit from significant tax reductions. These reductions vary based on the specific zone and the nature of the business activity.

  • Aqaba Special Economic Zone (ASEZA): Provides a reduced income tax rate of 5% for most sectors, excluding banks, insurance, and land transport services. Additionally, imports (excluding vehicles) are exempt from customs duties, and there are exemptions from social service tax, building and land taxes, and share and quota distribution tax. A 7% sales tax is levied on specific goods (including alcohol and tobacco) and catering, hotel, and tourist car services, while exports are zero-rated.

  • Other Development and Free Zones: Offer varying levels of tax reductions and exemptions depending on the specific zone and industry.

• Sector-Specific Incentives: Certain sectors, such as pharmaceuticals, clothing manufacturing, and other industrial companies, may benefit from reduced corporate income tax rates. Tax liability reductions over five years are being introduced for the industrial sector. Details are pending government instructions.

• Strategic Projects: Large-scale projects meeting specific criteria (over JOD 5 million investment or employing more than 250 Jordanians) can benefit from a seven-year Stability Clause, protecting them against adverse effects of future legislative changes.

• Less Developed Areas: Additional incentives are provided to encourage investment in less developed regions of Jordan.

Individual Tax Incentives

• Personal and Family Exemptions: Personal and family exemptions are available to reduce taxable income. Additional exemptions are granted for medical expenses, education, housing loan interest, and rent, provided supporting documentation is maintained.

• Special Needs Exemption: An additional exemption is granted for individuals with special needs.

Green Initiatives

• Exemptions for Green Technologies: Jordan provides exemptions from customs duties and general sales tax for specified renewable energy and energy efficiency technologies to promote green growth.

Application Procedures

The application procedures for specific incentives may vary. Investors should consult with the relevant authorities, such as the Ministry of Investment or the Aqaba Special Economic Zone Authority, for detailed information on eligibility criteria and application requirements.

General Tax Information

• Corporate Income Tax: The standard corporate income tax rate ranges from 20% to 21%, with specific rates applying to certain sectors such as banking, telecommunications, and insurance. A national contribution tax, ranging from 1% to 7%, is added to corporate income tax.

• Individual Income Tax: Individual income tax rates are progressive, ranging from 5% to 30%. A 1% national contribution tax applies to taxable income exceeding JOD 200,000.

• Value Added Tax (VAT): The standard VAT rate is 16%. Some goods and services may be exempt or subject to a reduced rate.

Note:* Tax regulations and incentives can change. It is important to consult with tax professionals or relevant authorities for the most up-to-date information. This information is current as of February 5, 2025.*