JORDAN - Income tax updates
On 2 December 2018, the Jordanian Government issued the Income tax law No.38 of 2018 This amends the income Tax law No.34 of 2014, and its provisions are effective from 1 January 2019.
Corporate income tax (CIT)
CIT is levied on corporate entities and foreign branches with respect to taxable profits 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.
CIT rates for resident entities vary from 10% to 35%, depending on the type of activity performed by the business. The CIT rates for specific economic sectors are broken down as follows:
- 35% for banks
- 24% for telecommunication companies, electricity distribution and generation companies, basic mining material companies, insurance companies, reinsurance companies, financial intermediaries, financial companies, and legal persons undertaking financial leasing activities
- 15% for the Industrial sector except pharmaceutical and clothing
- 10% for pharmaceutical and clothing activities
- 20% for all other sectors.
A new tax (the National Solidarity Account) is charged on corporate entities and foreign branches with respect to taxable profit in Jordan at the following rates:
- 3% for banks and electricity distribution and generation companies
- 7% for basic material mining companies
- 4% for financial intermediaries, financial companies, and legal persons undertaking financial leasing activities
- 2% for telecommunications companies, insurance companies, and reinsurance companies
- 1% for all other legal persons
- 1% for a natural person’s taxable income exceeding JOD 200,000.
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.
The following tax rates apply for resident and non-resident employees:
- 5% on the first JOD 5,000;
- 10% on the next JOD 5,000;
- 15% on the next JOD 5,000;
- 20% on the next JOD 5,000;
- 25% on each following dinar, up to JOD 1,000,000; and
- 30% on each dinar of the taxpayer’s taxable income exceeding JOD 1,000,000.
The following amounts are available as personal exemptions from individuals’ income before arriving at taxable income:
- Personal exemption of JOD 10,000
- Dependents exemption of JOD 10,000, irrespective of number of dependants; and
- Additional exemption up to JOD 3,000 for medical expenses, educational, rent, and home loans.
A household is exempt from tax up to JOD 23,000. A resident non-Jordanian employee is treated as a Jordanian employee with a personal exemption of JOD 10,000 and an additional JOD 10,000 if the employee’s dependants are also residents.
A non-resident foreigner who has dependants residing in Jordan may still claim the JOD 10,000 exemption in respect of dependants.