Tax System

The New Tax Law
Treaties for the Prevention of Double Taxation

Taxation can be considered as one of the most sensitive areas for the government and investors. It is important for the government because it is a primary source of domestic revenues and this fact should not be ignored by policy makers. As for investors, taxes can be an impediment to the success of businesses and can reduce profits. Thus, a successful tax system should strike a balance between its importance as a source of domestic revenues and its role in encouraging more investment.

The main Jordanian law dealing with taxes is the Income Tax Law, No. 57 of 1985. Several amendments have been issued since the law’s inception. In a major development, the Income Tax Law was amended in 2001 to help bridge the gap between men and women earners. Article 13 of the new Income Tax Law grants equal exemptions to women and men by raising the non-taxable income applicable to women to JD 1000, similar to that of men.

According to law, income arising or deemed to be arising in Jordan shall be subject to tax. In order to determine a taxpayer's taxable income, all expenses wholly and exclusively made or incurred in the production of income during the year shall be deducted. Company expenditures on training, marketing, and research and development are tax exempt. Moreover, profits from the export of goods and services are totally exempted, with the exception of exports of phosphate, potash, fertilizers and other exports that are governed by trade protocols.

Under the current law, taxpayers may determine their own fiscal year. Tax returns are to be filed with the Tax Department within four months after the end of the fiscal year. Taxpayers who pay their tax liability within the first month following the close of their fiscal year are entitled to a 6 percent discount on their taxes. Similarly, a 4 percent discount and 2 percent discount are available to taxpayers who pay their taxes during the second or third month, respectively, after the close of their fiscal year.

There are different types of taxes that affect people and businesses in Jordan. The table below briefly highlights the tax structure in Jordan.

The New Tax Law

In 2010, a new income tax law has been issued by which nearly 85% of employees wages in the public and private sectors were exempted from income tax for those whose wages don't exceed 12,000 JD's/ year / person and 24,000 JD's for the main provider (for example: head of family) regardless of the number of family numbers.

The tax percentages is 7% on any amount exceeds the first 12,000 and 14% on anything above that.

As for the income corporate tax, the amount is as follows:

30% on banks and financial companies.

24% on communication companies, mediation and financial exchange.

14% on rest types of companies including industrial and commercial.

Treaties For The Prevention Of Double Taxation

Arab Countries: Algeria, Bahrain, Egypt, Kuwait, Lebanon, Morocco, Oman, Syria, Tunisia, and Yemen.

Non-Arab Countries: Azerbaijan, Bulgaria, Canada, Croatia, France, Holland, India, Indonesia, Iran, Malaysia, Pakistan,  Poland, Romania, South Korea, Turkey, United Kingdom and Ukraine.

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