Jordan

Tax Guide

2013
FOREWORD

Foreword
A country’s tax regime is always a key factor for any business considering moving
into new markets. What is the corporate tax rate? Are there any incentives for
overseas businesses? Are there double tax treaties in place? How will foreign source
income be taxed?

Since 1994, the PKF network of independent member firms, administered by PKF
International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide
international businesses with the answers to these key tax questions. This handy
reference guide provides clients and professional practitioners with comprehensive
tax and business information for over 90 countries throughout the world.

As you will appreciate, the production of the WWTG is a huge team effort and I
would like to thank all tax experts within PFK member firms who gave up their time
to contribute the vital information on their country’s taxes that forms the heart of this
publication.

I hope that the combination of the WWTG and assistance from your local PKF
member firm will provide you with the advice you need to make the right decisions
for your international business.

Richard Sackin
Chairman, PKF International Tax Committee
Eisner Amper LLP
richard.sackin@eisneramper.com

PKF Worldwide Tax Guide 2013 I

 IMPORTANT DISCLAIMER

This publication should not be regarded as offering a complete explanation of the

taxation matters that are contained within this publication.
This publication has been sold or distributed on the express terms and understanding
that the publishers and the authors are not responsible for the results of any actions
Disclaimer

which are undertaken on the basis of the information which is contained within this
publication, nor for any error in, or omission from, this publication.

The publishers and the authors expressly disclaim all and any liability and
responsibility to any person, entity or corporation who acts or fails to act as a
consequence of any reliance upon the whole or any part of the contents of this
publication.

Accordingly no person, entity or corporation should act or rely upon any matter or
information as contained or implied within this publication without first obtaining
advice from an appropriately qualified professional person or firm of advisors, and
ensuring that such advice specifically relates to their particular circumstances.

PKF International is a network of legally independent member firms administered by

PKF International Limited (PKFI). Neither PKFI nor the member firms of the network
generally accept any responsibility or liability for the actions or inactions on the part
of any individual member firm or firms.

II PKF Worldwide Tax Guide 2013

PREFACE

The PKF Worldwide Tax Guide 2013 (WWTG) is an annual publication that provides an
overview of the taxation and business regulation regimes of the world’s most significant
trading countries. In compiling this publication, member firms of the PKF network have
based their summaries on information current on 1 January 2013, while also noting
imminent changes where necessary.

On a country-by-country basis, each summary addresses the major taxes applicable to

business; how taxable income is determined; sundry other related taxation and business
issues; and the country’s personal tax regime. The final section of each country summary
sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the
payment of dividends, interest, royalties and other related payments.

Preface
While the WWTG should not to be regarded as offering a complete explanation of the
taxation issues in each country, we hope readers will use the publication as their first
point of reference and then use the services of their local PKF member firm to provide
specific information and advice.

In addition to the printed version of the WWTG, individual country taxation guides are
available in PDF format which can be downloaded from the PKF website at www.pkf.com

PKF INTERNATIONAL LIMITED

MAY 2013

©PKF INTERNATIONAL LIMITED

ALL RIGHTS RESERVED
USE APPROVED WITH ATTRIBUTION

PKF Worldwide Tax Guide 2013 III

 ABOUT PKF INTERNATIONAL LIMITED

PKF International Limited (PKFI) administers the PKF network of legally independent
member firms. There are around 300 member firms and correspondents in 440
locations in around 125 countries providing accounting and business advisory services.
PKFI member firms employ around 2,270 partners and more than 22,000 staff.
PKFI is the 11th largest global accountancy network and its member firms have $2.68
billion aggregate fee income (year end June 2012). The network is a member of the
Forum of Firms, an organisation dedicated to consistent and high quality standards of
financial reporting and auditing practices worldwide.

Services provided by member firms include:

Assurance & Advisory

Insolvency – Corporate & Personal
Financial Planning/Wealth management
Taxation
Introduction

Corporate Finance
Forensic Accounting
Management Consultancy
Hotel Consultancy
IT Consultancy

PKF member firms are organised into five geographical regions covering Africa; Latin
America; Asia Pacific; Europe, the Middle East & India (EMEI); and North America &
the Caribbean. Each region elects representatives to the board of PKF International
Limited which administers the network. While the member firms remain separate and
independent, international tax, corporate finance, professional standards, audit, hotel
consultancy and business development committees work together to improve quality
standards, develop initiatives and share knowledge and best practice cross the network.

Please visit www.pkf.com for more information.

IV PKF Worldwide Tax Guide 2013

STRUCTURE OF COUNTRY DESCRIPTIONS

A. TAXES PAYABLE

FEDERAL TAXES AND LEVIES

COMPANY TAX
CAPITAL GAINS TAX
BRANCH PROFITS TAX
SALES TAX/VALUE ADDED TAX
FRINGE BENEFITS TAX
LOCAL TAXES
OTHER TAXES

B. DETERMINATION OF TAXABLE INCOME

CAPITAL ALLOWANCES
DEPRECIATION
STOCK/INVENTORY
CAPITAL GAINS AND LOSSES
DIVIDENDS
INTEREST DEDUCTIONS
LOSSES

Structure
FOREIGN SOURCED INCOME
INCENTIVES

C. FOREIGN TAX RELIEF

D. CORPORATE GROUPS

E. RELATED PARTY TRANSACTIONS

F. WITHHOLDING TAX

G. EXCHANGE CONTROL

H. PERSONAL TAX

I. TREATY AND NON-TREATY WITHHOLDING TAX RATES

PKF Worldwide Tax Guide 2013 V

 INTERNATIONAL TIME ZONES

AT 12 NOON, GREENWICH MEAN TIME, THE STANDARD TIME

ELSEWHERE IS:
A Guernsey. . . . . . . . . . . . . . . . . 12 noon
Algeria . . . . . . . . . . . . . . . . . . . . 1 pm Guyana. . . . . . . . . . . . . . . . . . . . 7 am
Angola . . . . . . . . . . . . . . . . . . . . 1 pm
Argentina . . . . . . . . . . . . . . . . . . 9 am H
Australia - Hong Kong . . . . . . . . . . . . . . . . . 8 pm
Melbourne. . . . . . . . . . . . . 10 pm Hungary . . . . . . . . . . . . . . . . . . . 1 pm
Sydney . . . . . . . . . . . . . . . 10 pm
Adelaide . . . . . . . . . . . . . 9.30 pm I
Perth. . . . . . . . . . . . . . . . . . 8 pm India . . . . . . . . . . . . . . . . . . . . 5.30 pm
Austria . . . . . . . . . . . . . . . . . . . . 1 pm Indonesia. . . . . . . . . . . . . . . . . . .7 pm
Ireland. . . . . . . . . . . . . . . . . . . 12 noon
B Isle of Man . . . . . . . . . . . . . . . 12 noon
Bahamas. . . . . . . . . . . . . . . . . . . 7 am Israel. . . . . . . . . . . . . . . . . . . . . . 2 pm
Bahrain. . . . . . . . . . . . . . . . . . . . 3 pm Italy . . . . . . . . . . . . . . . . . . . . . . 1 pm
Belgium. . . . . . . . . . . . . . . . . . . . 1 pm
Belize. . . . . . . . . . . . . . . . . . . . . 6 am J
Bermuda. . . . . . . . . . . . . . . . . . . 8 am Jamaica . . . . . . . . . . . . . . . . . . . 7 am
Time Zones

Brazil. . . . . . . . . . . . . . . . . . . . . . 7 am Japan. . . . . . . . . . . . . . . . . . . . . 9 pm
British Virgin Islands. . . . . . . . . . . 8 am Jordan . . . . . . . . . . . . . . . . . . . . 2 pm

K
C
Kenya. . . . . . . . . . . . . . . . . . . . . 3 pm
Canada -
Toronto. . . . . . . . . . . . . . . . 7 am
L
Winnipeg. . . . . . . . . . . . . . . 6 am
Latvia. . . . . . . . . . . . . . . . . . . . . 2 pm
Calgary. . . . . . . . . . . . . . . . 5 am
Lebanon. . . . . . . . . . . . . . . . . . . 2 pm
Vancouver. . . . . . . . . . . . . . 4 am
Luxembourg . . . . . . . . . . . . . . . . 1 pm
Cayman Islands. . . . . . . . . . . . . . 7 am
Chile . . . . . . . . . . . . . . . . . . . . . . 8 am
M
China - Beijing. . . . . . . . . . . . . . 10 pm
Malaysia. . . . . . . . . . . . . . . . . . . 8 pm
Colombia. . . . . . . . . . . . . . . . . . . 7 am
Malta . . . . . . . . . . . . . . . . . . . . . 1 pm
Cyprus . . . . . . . . . . . . . . . . . . . . 2 pm
Mexico . . . . . . . . . . . . . . . . . . . . 6 am
Czech Republic. . . . . . . . . . . . . . 1 pm Morocco. . . . . . . . . . . . . . . . . 12 noon

D N
Denmark. . . . . . . . . . . . . . . . . . . 1 pm Namibia. . . . . . . . . . . . . . . . . . . .2 pm
Dominican Republic. . . . . . . . . . . 7 am Netherlands (The). . . . . . . . . . . . . 1 pm
New Zealand. . . . . . . . . . . 12 midnight
E Nigeria . . . . . . . . . . . . . . . . . . . . 1 pm
Ecuador. . . . . . . . . . . . . . . . . . . . 7 am Norway. . . . . . . . . . . . . . . . . . . . 1 pm
Egypt . . . . . . . . . . . . . . . . . . . . . 2 pm
El Salvador . . . . . . . . . . . . . . . . . 6 am O
Estonia. . . . . . . . . . . . . . . . . . . . 2 pm Oman. . . . . . . . . . . . . . . . . . . . . 4 pm

F P
Fiji . . . . . . . . . . . . . . . . . 12 midnight Panama. . . . . . . . . . . . . . . . . . . . 7 am
Finland. . . . . . . . . . . . . . . . . . . . 2 pm Papua New Guinea. . . . . . . . . . .10 pm
France. . . . . . . . . . . . . . . . . . . . .1 pm Peru . . . . . . . . . . . . . . . . . . . . . . 7 am
Philippines. . . . . . . . . . . . . . . . . . 8 pm
G Poland. . . . . . . . . . . . . . . . . . . . .1 pm
Gambia (The). . . . . . . . . . . . . . 12 noon Portugal . . . . . . . . . . . . . . . . . . . 1 pm
Germany. . . . . . . . . . . . . . . . . . . 1 pm Q
Ghana. . . . . . . . . . . . . . . . . . . 12 noon Qatar. . . . . . . . . . . . . . . . . . . . . . 8 am
Greece . . . . . . . . . . . . . . . . . . . . 2 pm
Grenada . . . . . . . . . . . . . . . . . . . 8 am R
Guatemala. . . . . . . . . . . . . . . . . . 6 am Romania. . . . . . . . . . . . . . . . . . . 2 pm

VI PKF Worldwide Tax Guide 2013

Russia -
Moscow . . . . . . . . . . . . . . . 3 pm
St Petersburg. . . . . . . . . . . . 3 pm

S
Singapore. . . . . . . . . . . . . . . . . . 7 pm
Slovak Republic. . . . . . . . . . . . . . 1 pm
Slovenia . . . . . . . . . . . . . . . . . . . 1 pm
South Africa. . . . . . . . . . . . . . . . . 2 pm
Spain . . . . . . . . . . . . . . . . . . . . . 1 pm
Sweden. . . . . . . . . . . . . . . . . . . . 1 pm
Switzerland. . . . . . . . . . . . . . . . . 1 pm

T
Taiwan . . . . . . . . . . . . . . . . . . . . 8 pm
Thailand . . . . . . . . . . . . . . . . . . . 8 pm
Tunisia . . . . . . . . . . . . . . . . . . 12 noon
Turkey. . . . . . . . . . . . . . . . . . . . . 2 pm
Turks and Caicos Islands . . . . . . . 7 am

Time Zones
Uganda. . . . . . . . . . . . . . . . . . . . 3 pm
Ukraine. . . . . . . . . . . . . . . . . . . . 2 pm
United Arab Emirates. . . . . . . . . . 4 pm
United Kingdom. . . . . . . (GMT) 12 noon
United States of America -
New York City. . . . . . . . . . . . 7 am
Washington, D.C.. . . . . . . . . 7 am
Chicago. . . . . . . . . . . . . . . . 6 am
Houston. . . . . . . . . . . . . . . . 6 am
Denver . . . . . . . . . . . . . . . . 5 am
Los Angeles. . . . . . . . . . . . . 4 am
San Francisco. . . . . . . . . . . 4 am
Uruguay . . . . . . . . . . . . . . . . . . . 9 am

V
Venezuela. . . . . . . . . . . . . . . . . . 8 am

Z
Zimbabwe. . . . . . . . . . . . . . . . . . 2 pm

PKF Worldwide Tax Guide 2013 VII

 Jordan

JORDAN

Currency: Jordanian Dinar Dial Code To: 962 Dial Code Out: 00
(JOD)

Member Firm:
City: Name: Contact Information:
Amman Mohammad Khattab +962 6 5621 322/6/9
mkhattab@pkf.jo

A. TAXES PAYABLE

FEDERAL TAXES AND LEVIES

The Jordanian Tax year is a calendar year starting on 1 January until the 31
December of each year.

COMPANY TAX
Domestic companies are subject to income tax on all its sources of income wherever
arising.

Foreign working branches (companies) are subject to income tax only on their income
from Jordanian sources.

Export sales of goods are only income tax exempted until 31 December 2015, the
taxpayer should maintain regular audited accounting records with a separate cost
centre for export activities.

Export sales of some services are exempted including accounting services, computer
services and feasibility studies services.

Dividends received from domestic companies are exempt from tax.

Company tax is levied as follows:

Rate
Domestic companies and foreign operating branches:
Banks 30%
Communication companies, Financial companies, Exchange 24%
companies, Insurance companies and Financial lease business
Other than 14%

FOREIGN NON-OPERATING COMPANIES

Foreign non-operating companies are exempted from income tax only if the income
incurred from activities is undertaken outside the Kingdom.
.
SECURITIES TRANSACTION TAX
Security Transaction Tax is not applicable in Jordan.

CAPITAL GAINS TAX

Capital gains are taxed at the appropriate corporation tax rate if the assets are
subject to depreciation rules.

TONNAGE TAX FOR SHIPPING INDUSTRY

Tonnage Tax for Shipping Industries is not applicable in Jordan.

DIVIDEND DISTRIBUTION TAX

Profits from stocks and dividends distributed by a resident to another resident are
exempted, except profits of mutual investment, funds of banks and financial companies.

BRANCH PROFITS TAX

20% of foreign branches’ net income of a Jordanian company shall be taxed after
deducting the foreign income tax, for the Jordanian companies’ branches operating
outside the kingdom as declared in their final accounts and which are certified by an
external auditor. In all cases, the net amount resulting from applying this percentage shall
be considered as taxable income for the company and shall be subject to income tax of
30%.

SALES TAXES/VALUE ADDED TAX (VAT)

Sales Tax is levied on the sale of goods and services, transfer of right to use goods and
when goods are used for the taxpayer purposes, VAT is collected at each stage of the

PKF Worldwide Tax Guide 2013 1

Jordan

supply chain and the tax burden falls on the ultimate consumer.

The rates of sales tax are:

• 16% as a general rate for goods and services
• 4% for specified agricultural products, fruits, meat, vegetables and live animals
• zero rate for a list of specified products like energy-saving products and
pharmaceutical industry inputs.

A state government initiative to promote industrial growth provides sales tax exemption
and defers the payment of the tax payable on goods and services at importation.

Export sales and trading within qualified Free Zones are sales tax exempted
transactions in Jordan.

FRINGE BENEFITS TAX

There is no separate fringe benefits tax. Benefits provided by employers to their employees
are subject to income tax, computed in the prescribed manner. Employers are obliged to
withhold payable income tax on all benefits provided to employees on their behalf. If the
company adopts provident funds or insurance plans, employers are required to contribute.

LOCAL TAXES
STAMP DUTY
Stamp duty of 0.6% is payable on all transactions with governmental and publicly
traded corporations.

LAND AND PROPERTY TAX

No tax is levied on land property except for improvement taxes. However, real estate
property is subject to tax at a variable rate between 2% to 5% of a credited value.

OTHER TAXES
CUSTOMS DUTY
Customs duty is payable on goods imported into Jordan. The rates of basic customs
duty may reach up to 30% depending on the governmental strategy.

RESEARCH AND DEVELOPMENT

Research and development expenses can be deducted whenever it occurs.

WEALTH TAX
Wealth tax is not applicable in Jordan.

GIFT TAX
Income from prizes or lottery which has a value or amount paid that exceeds 1,000
JOD is subject to 10% withholding tax. The withheld tax shall be considered a final
tax.

B. DETERMINATION OF TAXABLE INCOME

Any income incurred in or from the Hashemite Kingdome of Jordan for any person
regardless of the place of payment shall be subject to income tax. Generally, to be
deductible, an expenditure must be assigned to generate taxable income. Some
expenses require a special treatment.

Non-resident taxpayers pay tax only on Jordanian earned income.

The assessment year is the period of 12 months from 1 January until 31 December.
Income earned in the period of 12 months or less immediately preceding the
assessment year is taxed in the assessment year.

DEPRECIATION
Depreciation allowance is available as per the following rates depending on the
nature of asset:

Buildings (depending upon its nature) 2% to 10%

Furniture and fixtures 10% to 15%
Plant and machinery 10% to 25%
Intangible Assets (patents, trademarks, According to IFRS
know-how, licences, copyrights, etc)
Ships 20%

2 PKF Worldwide Tax Guide 2013

 Jordan

Assets used for less than 180 days in the year of acquisition are entitled to half of
the normal depreciation allowance. Depreciation is not set off against current year’s
income can be carried forward for set off against any future income for unlimited
period.

STOCK/INVENTORY
The valuation of closing stock is normally done on the basis of cost or market value,
whichever is lower. The accepted valuation methods include FIFO, weighted average
cost or other valuation methods in accordance with IFRS. The valuation basis is to be
consistently followed.

INTEREST DEDUCTIONS
Interest paid on the borrowings used for business purposes is tax deductible as mentioned
below. For new businesses, interest incurred prior to commencement of commercial
production is to be capitalised. Interest paid for financing any company is not deductible.

Interest paid by taxpayer other than banks, financial companies and financial leasing
companies provided that the deduction shall not exceed the total debt to the higher of paid
in capital and the average equity as follows:

Tax period Ratio

2010 6:1
2011 5:1
2012 4:1
2013 and later 3:1

Interest paid by banks, financial companies and financial leasing companies is wholly
deductible.

MAINTENANCE DEDUCTIONS
Assets actual maintenance amount spent within the tax period is deductible provided
that it does not exceed 5% of its value. If it exceeds 5% from assets value, the
exceeded amount shall be added to the assets balance for depreciation purposes.

EXPENDITURE INCURRED FOR EXEMPT INCOME

Expenditure incurred in earning an exempted income from tax is not tax deductible. In
regards to the exempted income from trading in dividends, stocks, bonds, equity loan,
treasury bonds, mutual investment funds and currencies, the non-deductible amount
shall be 25% of the exempted income. In all cases, the non-deductible amount
should not exceed the allowable expenses.

LOSSES
Business losses can be set off against any other income in the same assessment
year and against business profits in subsequent assessment years subject to certain
conditions.

Losses of foreign branches of Jordanian companies carried forward can be set off
against income of foreign branches only. There are no provisions for carrying losses
backward.

Export losses cannot be carried forward.

MINIMUM ALTERNATE TAX (MAT)

MAT is not applied in Jordan.

FOREIGN SOURCED INCOME

20% of income from foreign branches of a Jordanian company is taxable after
deducting the assigned foreign tax.

Any income for a resident person from sources outside of the Hashemite Kingdom of
Jordan shall be subject to tax, provided that it originates from money or deposits from
inside the Kingdom.

Income for a non-Jordanian resident fiscal person is exempt from income tax if this
income incurred outside of Jordan.

INCENTIVES
In addition to the incentives which are available for export sales of goods, the

PKF Worldwide Tax Guide 2013 3

Jordan

investment Promotion Board Law provides tax and customs exemptions on certain
new projects.

In case of an undertaking located in a Special Economic Zone, the tax incentives for
the first ten years are normally 75%.

Input sales tax for export sales is refundable.

FOREIGN EXCHANGE EARNINGS

Foreign exchange earnings are only taxable for companies.

C. FOREIGN TAX RELIEF

UNILATERAL TAX CREDIT WHERE THERE IS NO TAX TREATY

Where a resident of Jordan has paid tax in any country with which Jordan does not
have a tax treaty, credit is not available for such tax payment in Jordan.

TAX CREDIT UNDER TAX TREATIES

Jordan has entered into tax treaties with several countries. Under applicable tax
treaty, Jordanian residents paying taxes in other countries can claim credit in Jordan
for foreign tax payments as mentioned in each treaty.

D. CORPORATE GROUPS

There are no provisions in Jordan for consolidation of accounts for tax purposes or
provisions for group taxation.

E. RELATED PARTY TRANSACTIONS

Related party transactions are required to be reported separately and the tax
authorities are given power to consider whether transactions are at an arm’s
length. Where prices paid for the purchase of goods or services are excessive or
unreasonable, the assessing officer can disallow a deduction for the excess portion.

F. WITHHOLDING TAX

Income of service compensation paid by a legal resident person to a resident person

shall be subject to withholding of tax at source by the person who pays it at the rate
5%.

Income from royalties and any other non-exempted income paid by a resident to a
non-resident person directly or indirectly is subject to withholding tax at the rate of
7% and the withheld amount shall be considered a final tax.

Rent compensations are subject to 5% withholding tax if the lessee is not a physical
person (company).

G. EXCHANGE CONTROL

There are no exchange control rules in Jordan.

H. PERSONAL TAX

Jordanians and other non-Jordanians resident individuals are subject to the same
rules and taxes are assessed on income in or from Jordan. Taxable income is the
gross income less the following deductions (exemptions):

Individuals deduction 12,000 JOD for the taxpayer

Spouse & dependents 12,000 JOD for the dependents regardless of their number

Note: There are no deductions for companies.

Tax Rates for individuals:

Taxable income (JOD) Rate

Up to 12,000 7%
Above 12,000 14%

A non-Jordanian resident pays tax only on income from Jordanian sources of income.
Income from stocks and dividends distributed by a resident is considered an exempt
income for individuals.

4 PKF Worldwide Tax Guide 2013

 Jordan

I. TREATY AND NON-TREATY WITHHOLDING TAX RATES

Under the Jordanian domestic laws, the withholding tax rates for non-treaty countries
are as follows:

Non-treaty countries Rates

Dividends 0%
Interest 7%
Royalty 7%
Fees for technical services 7% (add 16% sales tax)

In nearly all cases, the double tax agreements between Jordan and the overseas
territories do not reduce the rates of withholding tax applicable to those listed above.

PKF Worldwide Tax Guide 2013 5

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