Jordan Personal Income Tax

Jordanian nationals and foreign individuals working in Jordan are subject to tax in Jordan on their income earned in, or derived from, Jordan, regardless of their residency status.

An individual is considered a resident of Jordan for tax purposes if he or she resides in Jordan for a period of at least 183 consecu­tive or non-consecutive days per calendar year. Residents may claim personal allowances.

Income subject to tax

Ordinary income. Income tax is assessed on all income earned by residents and nonresidents of Jordan from taxable activities per­formed in Jordan, including employment income and rental income. The income tax is levied at the graduated rates set forth in Rates.

Interest income. Interest income is subject to tax at a rate of 5%. Banks are required to withhold at source the tax from the interest.

Other income: Net income realized by a resident of Jordan from foreign sources is taxable in Jordan at a rate of 10% if such income is generated from Jordanian monies or deposits.

Capital gains. In general, capital gains, including those derived from the sale of shares and land (but excluding goodwill), are not taxed in Jordan. How ever, if the individual has business income, certain costs relating to dividends or capital gains on investments in shares are disallowed. Gains on depreciable assets, within cer­tain specified limits, are subject to tax at the rates described in Rates.

Deductions

Personal and family allowances. The following allowances are granted:

  • Personal allowance: JOD12,000
  • Dependents allowance: Additional JOD12,000 (cap of allow­ances for each household is JOD24,000)
  • Additional allowances up to JOD4,000 for payments of medical expenses, educational expenses, rent, home loan interest or morabaha (interest paid by banks applying Islamic banking principles), technical services, engineering services and legal services

Business deductions. In general, business expenses incurred in generating income are deductible. However, certain limitations apply.

Rates. Ordinary income earned by individuals in Jordan is sub­ject to tax at the following graduated tax rates.

Annual taxable income

Exceeding    Not exceeding                                     Rate

JOD                       JOD                                                %

0                            10,000                                           7

10,000                  20,000                                             14

20,000                   —                                                 20

For payments made by resident taxpayers to nonresidents for tax­able activities in Jordan, taxpayers must withhold 10% of gross payments and remit this withholding tax to the tax authorities within 30 days after the due date or payment date, whichever is earlier. This tax is final.

For payments made by resident taxpayers to individual service providers and resident professionals, such as engineers, auditors or lawyers, taxpayers must withhold 5% of gross payments and remit this withholding tax to the tax authorities within 30 days after the due date or payment date, whichever is earlier.

Relief for losses. Taxpayers may carry forward losses up to five years to offset profits if the losses are supported by proper accounting records, are acknowledged by the tax assessor and relate to taxable sources of income.

Other taxes

Jordan does not levy net worth tax, inheritance tax or gift tax.

Social security

Social security contributions are levied at a rate of 21% on gross salary except overtime. The employer’s share is 13.75%, and the employee’s share is 7.25%. The social security system provides retirement and death benefits as well as certain benefits for work-related injuries.

Tax filing and payment procedures

The tax year is the calendar year. Tax returns must be filed in Arabic using a prescribed form within four months after the end of each fiscal year. The total amount of tax due must be paid at the time of filing.

Married individuals are taxed jointly or separately, at the taxpay­ers’ election, on all types of taxable income.

Double tax relief

Because foreign-source income is not taxed in Jordan, no double tax relief is available.

  • Temporary visas

All visitors must obtain entry visas to visit Jordan.

The following temporary visas are available to foreign nationals who want to enter Jordan:

  • Transit visa, which is valid for a maximum of 48 hours.
  • Business visit visa, which is granted to foreign nationals who intend to attend meetings and training courses in Jordan. The visa is valid for one to three months and may be renewed once.
  • Student visa, which is valid for the period that the foreign national is attending an educational institution in Jordan.
  • Medical visa, which is valid for the time required to complete the medical treatment.
  • Tourist visa, which is valid for three months.

Nationals of Australia, Canada, the European Union and the United States may obtain a business visit visa and a tourist visa on entry. Other nationalities are required to obtain the approval of the Ministry of Interior before entry.

In general, these visas may be applied for either in the foreign national’s home country or in Jordan. Temporary visas may be renewed once for three additional months.

Work and residency permits

Individuals of all nationalities must apply for work and residency permits if they want to work in Jordan, with a priority given to Arab nationals. Work and residency permits are issued with the approval of the Ministry of Labor and the Ministry of Interior.

An applicant may not begin working in Jordan before obtaining work and residency permits. Work and residency permits may not be transferred from one employer to another; therefore, if an employee changes employers, the previous work and residency permits must be canceled, and the employee must apply for new work and residency permits.

The work and residency permits are valid for one year and may be renewed on an annual basis.

As a prerequisite to obtain work and residency permits, the Ministry of Labor requires the employer to submit a bank letter of guarantee to the order of the Ministry of Labor for each expa­triate employee seeking work and residency permits in Jordan.

Under the Jordanian Labor Law, certain occupations are exclu­sively reserved to Jordanians and may not be filled by non-Jordanians, such as those in the fields of medicine, engineer­ing, accounting and administration, as well as clerical work, such as data entry and secretarial work, warehousing, hairdressing, teaching, and mechanical and car repair type of work.

Foreign investors may engage in almost any type of economic activity. In general, Jordan does not impose limitations on foreign investments. Except for certain sectors, including construction and trade, in which foreign ownership may not exceed 50%, non-Jordanians may have full ownership in any economic project in Jordan. Full ownership by a foreign investor is permitted in the following sectors:

  • Agriculture
  • Hotels
  • Health care
  • Mining
  • Industrial
  • Telecommunications

Family members

The spouse of a foreign national who has a work permit in Jordan does not automatically receive the same type of work permit as the spouse holding the work permit. He or she must file indepen­dently of the primary work-permit holder if he or she also wants to work in Jordan.