Two Tax acts constitute the legal framework of the Taxation system of the Kingdom of Jordan; the Income Tax Act No. 34 of 2014 and the General Value Added Tax Act No. 29 of 2009. These two regulate taxes on proceeds and returns of persons and legal organizations (income and corporate income tax) as of January 2015. They are carried out by the Income and Sales Tax Department (ISTD) in the Ministry of Finance. Compare to other countries, tax deduction does not apply to income earned worldwide. However, according to the Tax law, all income from Jordanian sources will be charged for taxes, regardless of the residency status of an individual or entity. A foreign business with its registered office in the country is deemed a resident and thus is subject to taxes on the income made within the state.
Types of Taxes
There are two major forms of taxes charged in the Kingdom: corporate income tax and personal income tax.
Corporate Income Tax
The corporate income tax rates are applied based on the business activities from which the taxpayers make money. The normal tax rate is 20%, with rates varying from 14% to 35% for numerous sectors and divisions of a business. 35% for banks, 24% for telecommunications, insurance and reinsurance firms, financial intermediation firms, businesses that produce and dispense electricity, corporations involved in mining activities, and 20% for other companies. Local companies are charged corporate tax rates on their global income except such income is obtained from sources gotten from and linked to Jordanian deposits and reserves. In this case, such income would be charged at a rate of 10%. For a subsidiary of a foreign company based in the Kingdom, the gross income is also charged at a fixed rate of 10%.
| Industry | Rate (%) |
| Banks and companies generating and distributing electricity | 3 |
| Companies mining raw materials activities | 7 |
| Financial intermediation and brokerage firms, currency exchange companies, juristic persons involve in financial leasing activities | 4 |
| Telecommunications companies, insurance, and reinsurance companies other companies | 2 1 |
Income tax
From 2019, the following income tax rates apply to income tax. According to the Income Tax Act, income tax rates are levied at progressive rates of 5% to 30%.
| Taxable income (JOD*) | PIT rate (%) |
| The first 5,000 | 5 |
| The second 5,000 | 10 |
| The third 5,000 | 15 |
| The fourth 5,000 | 20 |
| Over 20,000 and up to 1,000,000 | 25 |
| The remaining balance | 30 |
Other types of Taxes
There are other types of taxes and they are:
Local Income Tax
Any amount exceeding JOD 200,000 of the annual taxable income for persons is subjected to 1% as a national contribution tax.
Consumption taxes
This is a type of special turnover tax charged on specific goods and services such as cement, tobacco products, wine, cars, beer, fuel, etc.
Property tax
This tax is paid annually with a rate set by the municipality depending on the location and size of the land and for buildings, on the annual rental value.
Transfer property taxes
The transfer of property is subjected to a 9% rate.
Stamp duty
A stamp duty of 0.3% or 0.6% is levied depending on the worth of the signed contracts.
Social security contributions
Social Security taxes are deducted from both an employer and the employee at a rate of 14.25% and 7.5% respectively.
Value Added Tax
The following transactions are subjected to a general sales tax of 16%, akin to value-added tax (VAT):
- Selling of goods, services, or both.
- Importation of services or goods outside the nation or from free zone areas and markets within.
A zero rate applies to the exportation of goods and services outside the state, to free zones and markets, to the Aqaba Special Economic Zone (ASEZ), and to developing areas. Bread, water less than five liters in volume, tea, sugar, gold, cash, and electricity are exempt from VAT.
