Jordan Tax & Business Guide - Deloitte

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Basic facts
Population 5.9m Inflation 6.2% (2006)*
Main languages Arabic, English GDP per head US$2,410*
Currency Jordanian dinar (JOD) GDP growth 6.3% (2006)*
Economic communities WTO, Free Trade Agreement with US and Association Agreement with EU
GDP sources 3.9% agriculture, 31.6% industry, 64.5% services
*Economist Intelligence Unit estimates.
Political environment

The Hashemite Kingdom of Jordan is a constitutional monarchy. The king, Abdullah II ibn Hussein al-Hashemi, presides over foreign policy and sets the countryÌs strategic direction. He also appoints the prime minister, who in turn selects the cabinet members, with the kingÌs close supervision. The cabinet operates under the scrutiny of the Chamber of Deputies (lower house of parliament), which is directly elected.

The next legislative election is due by September 2007.
Foreign trade and investment
Exports US$5.2bn (2006)* Imports US$10.2bn (2006)*
*Economist Intelligence Unit estimates.

Leading export markets: The US, Iraq and India.

Major exports: Chemicals, phosphates, potash, food, manufacturing and textiles.

The US-Jordan Free Trade Agreement has boosted JordanÌs exports of textiles and apparel.

Key reforms have been undertaken in the information technology (IT), pharmaceutical, tourism and services sectors.

The Aqaba port and surrounding area is a special economic zone (SEZ), in which investors are entitled to special incentives.
Business and financing
Business forms Offshore company, general partnership, limited partnership, non-operating foreign company, operating foreign company, joint venture

Other forms of business organisation include the private shareholding company with limited liability, public shareholding company, holding company and joint investment company.

A foreign entity can set up a non-operating company in Jordan (that is, a regional or representative office), but it is not permitted to undertake any commercial activities in Jordan. Commercial activities may be undertaken by an operating foreign company, for instance a branch of a foreign company, which is usually registered to carry out a specific contract.

The capital city of Amman is the financial centre.
Labour environment
Unemployment rate 13.5% (2006) Minimum wage JOD 95 (monthly)

Labour unions exist, primarily in major industries such as phosphate and cement production, oil refining, and in the banking and financial sectors. Unions play a role in negotiating wages and other benefits for their members.

Permission to employ foreigners must be obtained from the Ministry of Labour before they enter Jordan or before they commence work.
Taxation
Corporate tax
Main rate 25%

Resident companies are taxable on income sourced in Jordan. The tax rate is 25%, but the rate for banks and financial institutions is 35%. A lower 15% rate applies to income from certain activities, including construction, transport and metallurgy.
Individual tax
Progressive rates to 25%

Resident and non-resident individuals are taxed only on income sourced in Jordan. Individual income tax is charged at progressive rates up to 25%.

The income of general partnerships is apportioned between the partners and is added to their income for tax assessment purposes.

Dividends received from resident companies are not subject to tax.
Capital gains
Generally not taxed

Capital gains derived by companies from the disposition of immovable property are not taxable, and 75% of dividends and 50% of capital gains realised on the sale of shares and bonds are exempt for entities other than financial institutions. Gains derived by individuals on the sale of immovable property, bonds and shares are not subject to tax.
Indirect tax
Sales tax standard rate 16%

The 16% sales tax applies to supplies of manufacturers, importers and suppliers of services. Exports are zero-rated. A higher rate applies to certain luxury items such as cars, video cameras, dishwashers, microwave ovens, perfume and tobacco. Exemptions include some basic foodstuffs, fertilisers, crops, fruit, seeds, books and newspapers, asphalt, cement and certain locally manufactured products.

Businesses with an annual taxable turnover of more than JOD 30,000 must register for purposes of the sales tax.
Tax administration and compliance
Tax year Corporations: accounting period; Individuals: calendar year

Companies must file a tax return within four months of the end of the accounting period, and tax is payable with the return. In certain cases, tax may be paid by instalments. A discount of up to 6% may be given for early payment of tax.

Wages and salaries are subject to withholding of tax at source. Individual tax returns are due by April 30th following the end of the tax year, and any tax due is payable with the return.
Additional tax information
Withholding taxes Dividends 0%, Interest and Royalties 10%. Rates may be reduced by the provisions of an applicable income tax treaty.
Tax treaties Jordan has concluded more than 14 tax treaties.
Dividends Dividends paid are not subject to distribution tax.
Revenue protection There is no transfer-pricing or anti-tax-haven (CFC) legislation.
Groups There is no provision for group taxation.
Incentives Industrial projects; infrastructure; hotels.
Other taxes Customs duties, Departure tax, Municipal tax on real property, Stamp duty.