Jordan payroll and tax overview

Jordan is a Middle Eastern country bordered by Israel to the west, Syria to the north, and by Iraq and Saudi Arabia to the east and southeast respectively. Jordan’s location at the crossroads of Asia and Africa, and its proximity to Europe, have made it a historically important trading nation, while the discovery of natural shale-oil reserves has attracted foreign investment interests. Jordan is an emerging market economy driven by relatively liberal economic policies and a skilled workforce: in 2019, the country’s GDP reached around $44 billion with a 2% rate of growth. While the oil industry plays a significant role, Jordan’s economic profile is diverse and important industries include mining, manufacturing, pharmaceuticals, financial services, telecoms, and information technology. Jordan’s tourism industry is also growing in importance buoyed by a rich landscape of archaeological and cultural attractions that bring in millions of visitors every year. Jordan has free trade agreements with the EU, the United States, Canada, Singapore, Malaysia, and other countries across the Middle East, and has membership of the UN, the Greater Arab Free Trade Agreement, and the Euro-Mediterranean free trade area. In 2019, the World Bank ranked Jordan 75 on its Ease of Doing Business Survey.

Registering a Company and Establishing an Entity in Jordan

Companies in Jordan must register for taxes (including corporate tax, income tax, and VAT) by completing the application form and submitting it to the relevant one-stop-shop counter of the Companies Registry. The company obtains a unique Tax Identification Number (TIN).

There are two types of operating companies in Jordan:

• A limited period whereupon such companies are awarded tenders and carry out their business in Jordan for a period limited to the duration of a contract. The registration of such companies shall cease upon completion of their business in Jordan.
• Companies operating permanently in Jordan under a license granted by the authorities.

Registering a company is mandatory for operating the business in Jordan and the documents required for the registration are as follows:

• A copy of the Articles and Memorandum of Association of the company.
• The official documents certifying that the company has obtained the approval of the competent Jordanian authorities to perform its business.
• A list of the names of members of the Board of Directors of the company, the management committee or the shareholders and their respective nationalities, in addition to the names of the authorized signatories of the company.
• A copy of the power of attorney by virtue of which a foreign company authorized a person resident in Jordan to carry out its activities and receive service letters/notifications on its behalf.
• The financial statement for the last fiscal year of the company (head office) certified by a licensed auditor.
• Any other data or information that the controller of companies deems necessary.
• The application form for registration must be signed by the person authorized to register the company before the controller of companies, or any person authorized in writing, or public notary.
• All documents should be legalized by the Jordanian Embassy/consulate, the ministry of foreign affairs in the company's country of origin, and the Jordanian ministry of foreign affairs. All documents should also be translated into Arabic and legalized by a public notary in Jordan.

Business Banking in Jordan

It is not mandatory to make employee salary payments from an in-country bank account; however, it is mandatory to make third-party authority payments from an in-country bank account.

Banks are open from 08:30 to 13:00, and some have recently introduced afternoon hours from 16:00 to 18:00.

Working Week and Working Hours in Jordan

Friday is the weekly holiday when government offices, banks and most offices are closed. Most businesses and banks have a half-day on Thursday, and some businesses and banks take Sunday as a half-day or a complete holiday.

Government departments are open from 08:00 to 14:00 daily except Friday.

The maximum working hours are forty-eight during a six-day week. The seventh day is a paid weekly holiday. Additional hours will be considered as overtime and qualify for compensation of 25% over the regular wage. Except in the event of an emergency, an increase in daily work hours is subject to approval by the Minister of Labour.

Basic Facts about Jordan

General Information

Full Name: Hashemite Kingdom

Population: 10.1 million (World Bank, 2019)

Capital: Amman

Major Languages: Arabic

Currency: Jordanian dinar (JOD)

Main Industries: Clothing, Phosphate Mining, Fertilizers, Pharmaceuticals, Petroleum Refining, Cement, Potash, Inorganic Chemicals, Light Manufacturing, Tourism

GNI Per Capita: US $4,299 (World Data Atlas, 2019)

Internet Domain: .jo

International Dialling Code: +962

In Jordan, non-residents are taxed on their Jordan-sourced income. However, married couples are generally taxed separately but they may elect for joint taxation.

Taxable profits include:

• Interests, discounts, exchange gains and commissions
• Any obligation or annuity
• Income or rent and other profits from movable and immovable property
• Capital gains from the disposal of immovable property during the course of a business and from the disposal of property acquired on or after 01 November 1989

Income Tax in Jordan

On 1st January 2015, a new tax law was issued and states that deductions and allowances are determined at JOD 9,000 for a single person and JOD 18,000 for a family. An additional annual exemption of JOD 4,000 is available to cover medical treatment, housing loan interest, rent, education expenses and technical, engineering and legal services.

The exemption is granted on a case-by-case basis after the Income Tax Department has reviewed the related supporting documents.

For payments made by resident taxpayers to non-residents 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.

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

• 35% for banks
• 24% for telecommunications, insurance and reinsurance, electricity distribution and generation companies, basic mining material companies, financial intermediaries, financial companies, and legal persons undertaking financial leasing activities
• 20% for all other companies

Social Security in Jordan

Employers with more than five employees are required to register and contribute to the Social Security Corporation. All employees who work for the registered employer have to register with the Social Security Corporation.

Non-Jordanians are subject to the social security deductions if they are residing in Jordan and work for an entity subject to the provisions of the Social Security Law.

2021

Employee - 7.5%

Employer - 14.25%

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 that time.

New Employees in Jordan

When a new employee is hired, the employer should submit a form to the Social Security Corporation (SSC) within a maximum of 15 days from the employment start date.

The documents required to register the new starts are as follows:

• Passport (expatriates)
• Residency card (Jordanians)

Leavers in Jordan

All leavers must be reported to the Social Security Corporation (SSC) within maximum of 15 days from their last working day.

The employer must report to the SSC the ‘Leavers Contributions Form’ that includes all leavers’ details.