DOING BUSINESS IN JORDAN IN 2017
Since 2003, Healy Consultants Group PLC has assisted our Clients with business registration in Jordan. Our services include i) Jordan business registration ii) government license registration iii) Jordan corporate bank account opening services iv) employee recruitment v) employee visa strategies and vi) office rental solutions.
|Summary||Tax resident LLC||Tax exempt LLC||Regional Office||Fast business setup solution||Free zone LLC||Public limited company||LLP||Representative office||Branch office|
|Best use of company?||All purposes||Trading/holding||Middle East headquarters||Close a customer deal now||Manufacturing and export trading||To secure public funding||Professional services||Marketing & research||Specific projects|
|How soon can you invoice Clients\sign sales contracts?||10 weeks||3 months||3 months||2 weeks||10 weeks||4 months||10 weeks||3 months||4 months|
|How soon can you hire staff?||10 weeks||3 months||3 months||2 weeks||10 weeks||4 months||10 weeks||3 months||4 months|
|How soon can you sign a lease agreement?||1 month||6 weeks||6 weeks||2 weeks||1 month||10 weeks||1 month||6 weeks||10 weeks|
|How long to supply corporate bank account numbers?||6 weeks||2 months||2 months||2 weeks||6 weeks||3 months||6 weeks||2 months||3 months|
|How long to supply company registration numbers?||8 weeks||10 weeks||10 weeks||2 weeks||8 weeks||14 weeks||8 weeks||10 weeks||14 weeks|
|Corporate tax rate on annual net profits?||20%||0%||0%||20%||5% - 20%||20%||0%||0%||20%|
|Limited liability entity?||Yes||Yes||No||Yes||Yes||Yes||Yes||No||No|
|Government grants available?||Yes||No||No||Yes||Yes||Yes||Yes||No||Yes|
|Resident director\manager\legal representative required?||No||No||No||No||No||No||No||Yes||Yes|
|Minimum paid up share capital?||US$21,140||US$21,140||None||US$21,140||US$150,000||US$141,000||US$1||None||None|
|Corporate bank account location?||HSBC||Arab Bank||Bank Al Etihad||Citibank||HSBC||SCB||Bank of Jordan||Arab Bank||Citibank|
|VAT payable on sales to local customers?||16%||No local sales||No local sales||16%||0% - 16%||16%||16%||0%||16%|
|Average total business set up engagement costs?||US$34,595||US$31,845||US$24,595||US$48,595||US$32,595||US$38,595||US$38,595||US$31,395||US$38,595|
|Average total engagement period?||10 weeks||3 months||3 months||4 months||4 months||4 months||10 weeks||3 months||4 months|
|Accounting and tax considerations||Tax resident LLC||Tax exempt LLC||Regional Office||Fast business setup solution||Free zone LLC||Public limited company||LLP||Representative office||Branch office|
|Statutory corporate tax payable?||20%||0%||0%||20%||5% - 20%||20%||0%||0%||20%|
|Legally tax exempt if properly structured?||No||Yes||Yes||No||No||No||Yes||Yes||No|
|Must file an annual company tax return?||Yes||Yes||No||Yes||Yes||Yes||Yes||No||Yes|
|Must file annual financial statements?||Yes||Yes||No||Yes||Yes||Yes||Yes||No||Yes|
|Must appoint an auditor?||Yes||Yes||No||Yes||Yes||Yes||No||No||Yes|
|Access to double taxation treaties?||Yes||No||No||Yes||Yes||Yes||Yes||No||Yes|
|Withholding tax on payments to foreign shareholders?||10%||0%||0%||10%||10%||10%||10%||0%||0%|
|Company Registration||Tax resident LLC||Tax exempt LLC||Regional Office||Fast business setup solution||Free zone LLC||Public limited company||LLP||Representative office||Branch office|
|Resident director/manager/ legal representative required?||No||No||No||No||No||No||No||Yes||Yes|
|Minimum number of directors/managers?||2||2||1||2||2||3||1||1||1|
|Minimum number of shareholders/partners?||1||1||Parent company||1||1||2||2||Parent company||Parent company|
|Maximum shareholding for foreigners?||100%||100%||100%||100%||100%||100%||100%||100%||100%|
|Minimum statutory paid up share capital?||US$21,140||US$21,140||None||US$21,140||US$150,000||US$141,000||US$1||None||None|
|Shelf companies available?||Yes||No||No||Yes||Yes||No||No||No||No|
|Time to incorporate a new entity?||1 month||6 weeks||2 months||2 weeks||1 month||3 months||1 month||2 months||3 months|
|Can easily convert to a PLC?||Yes||Yes||No||Yes||Yes||Yes||No||No||No|
|Can have preference shareholders?||Yes||Yes||No||Yes||Yes||Yes||Yes||No||No|
|Business Considerations||Tax resident LLC||Tax exempt LLC||Regional Office||Fast business setup solution||Free zone LLC||Public limited company||LLP||Representative office||Branch office|
|Can secure trade finance?||Yes||No||No||Yes||Yes||Yes||Yes||No||Yes|
|Good entity for trademark registration?||Yes||Yes||No||Yes||Yes||Yes||Yes||No||No|
|Can secure an import and export license?||Yes||No sales in Jordan||No sales in Jordan||Yes||Yes||Yes||Yes||No||Yes|
|Expatriate to local staff ratio?||No||No||Yes||No||Yes||No||No||Yes||No|
|Each foreign director needs a personal income tax number?||Yes||No||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Group HQ tax incentives available?||No||Yes||No||No||No||No||No||No||No|
|Can bid for Government contracts?||Yes||No||No||No||Yes||Yes||No||No||Yes|
|Government approval required for foreign owners?||Yes|
|Sponsorship by a local citizen required?||No|
|Our Client needs to travel to Jordan for business set up?||No|
|Temporary physical office solutions available?||Yes|
|You need a local resident as bank signatory?||No|
|Can be wholly foreign owned?||Yes|
|The entity will likely be regulated by?||Ministry of Industry and Trade|
|Security deposit to be kept with Government?||No|
|Monthly VAT reporting to the Government?||No (every 2 months)|
|Must sign an office lease agreement during incorporation?||No|
|shareholders & directors documents to be attested\translated?||Yes|
|Maximum number of staff allowed?||No|
|Can secure residence visa for business owner?||Yes|
|Public registrar including directors and shareholders?||Yes|
|Other useful information|
|What will be included in my customer sales invoice?||Click here|
|This country has signed free trade agreements?||Yes|
|This country is a member of WIPO/TRIPS?||Yes|
|This country is a member of the ICSID?||Yes|
|Average custom duties suffered?||9%|
|Government foreign investment approval required?||Yes|
|Average monthly office rental? (US$ per sq m)||US$48|
|Minimum statutory monthly salary?||US$310|
|Average monthly US$ salary for local skilled employees?||US$2,838|
|US$ deposit interest rate? (1 year average)||1%|
|Overseas remittance currency controls?||None|
|Multi-currency bank accounts available?||Yes|
|Corporate visa debit cards available?||Yes|
|Quality of e-banking platform?||Good|
|Crowd funding available in this country?||Yes|
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Advantages and disadvantages
Advantages of Jordan company registration
- A Jordan limited liability company can be incorporated within 8 weeks with 1 director and 1 shareholder, who can be of any nationality and place of residence. However, our foreign Clients will require a minimum paid-up share capital of US$70,650 but will not need to travel to Jordan to complete the engagement;
- Our U.S. Clients often choose Jordan to expand their business in the Middle East because:
- They can create a business with virtually no restrictions in Jordan, as the US-Jordan free trade agreement allows them to own 100% of a company in all but seven sectors in Jordan, without the need for a local partner;
- Because this agreement also allows free trade for almost all types of products and services, USA multinationals are also allowed to re-export their products free of custom duties to the United States;
- Due to the historical, special relationship between the two countries, American citizens feel safe in Jordan because locals are generally amicable towards US nationals, unlike those of other neighbour Arab countries;
- The USA provides annual aid approximating US$700 million and maintains military presence in the country;
- Despite the Arab Spring of 2012 and the turmoil in the Middle East since 1948, Jordan has remained a politically stable country compared to its neighbours, never involved into a war with Israel since 1967;
- Because Jordan is ranked the 42nd safest country in the world, it will also be safer for employees to service from Jordan more dangerous neighbouring countries such as i) Iraq ii) Syria iii) Lebanon and iv) Egypt;
- Because Jordan is ranked by the WEF as the 33rd best country worldwide for the burden of government regulation over businesses, running a Jordan subsidiary also involves a limited amount of red tape;
- The above is why USA multinationals like Coca Cola, Adidas, Macy’s and many others USA garment retailers set their manufacturing operations up in Jordan.
- Our Clients will also pay low tax on the earnings of their Jordan subsidiary, because:
- Jordanian businesses enjoy a low corporate tax rate of only 14% and there is no capital gains tax on the sale of shares or assets;
- Entrepreneurs setting up a business involved in i) tourism ii) manufacturing and iii) agriculture activities enjoy reduced rates of corporate tax of up to 3.5% for 10 years, thanks to the Jordan Investment Promotion Law;
- Producers of renewable energies are exempted from corporate tax during up to 10 years;
- Jordan boasts 12 free trade zones offering great tax incentives such as i) reduced corporate tax rates of 5% ii) full exemption from VAT iii) exemption from all custom duties on all imported products required for the company’s operations and iv) no social security contributions and payroll tax on foreign employees’ salaries;
- For all reasons listed above, Jordan is ranked as the 35th best country in the world for total taxation over businesses, which only represents an average of 29% of their annual earnings.
- Our Clients setting up a business in Jordan will be able to easily export their products abroad because:
- Exporting products from Jordan is less expensive than from neighbouring countries because i) shipping costs approximate US$800 per container (25% below the Middle East average) and ii) the country boasts excellent road infrastructure;
- Amman’s international airport has been renovated in 2013 and is now able to accommodate i) up to 7 million passengers per year and ii) cargo freight directly to major consumer markets including i) Saudi Arabia ii) Doha iii) Turkey iv) the UK v) the USA and v) Belgium;
- While Jordan has only 1 seaport located in Aqaba, it boasts i) world class facilities ii) affordable rates to charge/discharge goods and iii) an excellent location on the Red sea, allowing easy access to both Middle Eastern, Asian and European consumer markets;
- Because of Jordan’s impressive network of free trade agreements, our Clients setting up a manufacturing business in Jordan will also be allowed to re-export most products free of custom duties to the i) United States ii) Saudi Arabia, the UAE and other Gulf countries iii) Turkey iv) the EU v) Australia and vi) Singapore.
- Jordan offers a legally tax exempt offshore company, because:
- Registering a Jordan offshore company is easy, as it only requires i) US$1 of share capital ii) 1 shareholder and iii) 1 director, who can be of any nationality and place of residence for most business activities;
- Offshore companies will be allowed to open a non-resident bank account in Jordan with benefits including i) no restriction on the amount of foreign currency held ii) no ceiling on transfers abroad and iii) no Central Bank commission fees on transfers abroad;
- Our Clients registering an offshore business in Jordan usually do so in order to reduce taxation on foreign-sourced earnings, as this business entity enjoys 100% exemption from i) corporate tax and other taxes levied on corporate earnings and ii) no Jordan withholding tax when remitting earnings to our Client’s parent company;
- Using a Jordan offshore company as a tax optimization vehicle also allow our Clients to pay lower taxes outside of Jordan, thanks to the country’s double taxation avoidance agreements with 35 countries including Canada, France, India, Indonesia, Malaysia, Qatar and the United Kingdom.
Disadvantages of Jordan company registration
- The Jordanian consumer market may not be attractive to multinationals because i) the population is low at 6 million compared to other GCC countries and ii) Jordanians have a low annual purchasing power of only US$5,500 per person, the 5th lowest in the Middle East and iii) Jordan is a fragile, open economy, very sensitive to the health of the USA, EU and Middle East economies;
- Multinationals face some business set up challenges including:
- Unfortunately, certain business sectors still require a local joint venture partner which must hold at least 51% of the company’s share capital. Examples of restricted business sectors include i) advertising ii) tour operator services iii) restaurants and cafes and iv) retail trade. However, Healy Consultants will find a legal work-around solution to this foreign investment challenge;
- Before company registration is approved by the Government, our Clients’ must supply a paid up share capital certificate of at least US$70,650;
- All shareholder and director supporting documents required for company incorporation must be translated into Arabic and some of them even legalized in the Jordan embassy in our Clients’ country of origin.
- With high unemployment of 12% in Jordan and dissatisfaction amongst Jordanian youth, our Clients find it difficult to secure work visas for their foreign employees, because:
- Employers are forbidden to hire foreign workers including i) engineers ii) accountants iii) drivers iv) clerks and secretaries and v) warehouse workers;
- For all other industries, employers are still required to show evidence that no Jordanian fit for the position can be found, before being allowed to apply for a work visa;
- Employers are also i) required to deposit a bond of up to US$420 per foreign worker and ii) are responsible for any wrong doing by their foreign employee;
- To alleviate dissent over local youth unemployment, the Jordanian government sometimes stops issuing work permits to foreigners without giving notice to local businesses.
- Multinationals may feel their investments in Jordan may not be secure, because:
- Before allowing a civil case to be heard in a local Court, Jordanian corporate law requires businessmen to find an amicable solution to most business disputes for a 6 month period;
- Courts are painfully slow in Jordan. Once a lawsuit has been filed, it takes on average 2 years to resolve a dispute. Insolvency proceedings also last an average of 3 years;
- Because Jordanian Courts tend to favor Jordanian companies over foreign ones, Healy Consultants recommends our Clients to place a clause in their customer contracts specifying how certain types of disputes will be resolved through international arbitration;
- Our Clients should be particularly careful when drafting their company’s M&AA in Jordan to prevent equity loss when news share are being issued. In such event, local regulations indeed neither guarantee i) the need for their prior approval nor ii) their right to be priority buyers;
- For all the reasons listed above, Jordan is ranked as the 14th worst country in the world for investor protection and compares unfavorably to most other Middle Eastern countries including i) Saudi Arabia ii) the UAE and iii) Bahrain.
- While Jordan is a stable country, our Clients will still exposed to many regional risks, including:
- The Islamic State (ISIS) in Irak has publicly announced its will to expand to Jordan. While US military prevents this threat, terrorist attacks and small scale infighting may take place in the northern part of the country;
- Further escalation of the Palestinian conflict may force the Jordanian government to adopt sanctions against Israel or face instability. Over half of the population of Jordan is indeed Palestinian or of Palestinian ascend;
- Over 600,000 Syrian refugees are currently hosted by Jordan but banned from working and disregarded by some Jordanians, a situation which may cause riots and other security problems.
- Immediately after legal company incorporation, our Client must i) secure and certify by the Greater Amman Municipality a 12 months lease agreement for office premises in Amman. ii) appoint a local legal firm and pay them an estimated annual fee of US$4,500 iii) appoint a local independent audit firm and iv) conduct the mandatory post incorporation registrations in Jordan. Examples of post incorporation registrations are: a) securing a Chamber of Commerce’s Certificate, b) secure Municipal approval for office premises c) obtain a Municipal License and d) only when our Client has chosen their first employee, Healy Consultants can assist our Client register for social security.
Best uses for a Jordan company
- Jordan is a good and low-cost manufacturing base in the Middle East because:
- Our Clients will benefit from low manufacturing costs thanks to Jordan’s i) low labour costs, with monthly average wages approximating US$560 per month ii) low industrial space costs, costing as little as US$1 per square meter iii) generous government subsidies to foreigners buying real estate in free trade zones and iv) electricity costs, approximating US$0.80 per KWh;
- Because Jordan has a young population of which 70% are under the age of 30 and with a 90% literacy rate, businesses also benefit from skilled and talented human capital;
- While garment is still the core industry in Jordan, the Government’s National Energy Strategy is creating business opportunities for companies involved into the manufacturing of i) solar panels ii) wind turbines iii) solar energy water heaters iv) energy efficient lighting equipment and v) other products using renewable energy;
- Multinationals setting up a factory in Jordan will be able to use the latest technologies and equipment. Machinery and supplies imported for the setup of a manufacturing company will indeed be exempted from custom duties;
- For all the reasons above, it is cheaper for a multinational to supply the Middle Eastern markets from Jordan than to set up a subsidiary in Saudi Arabia or another expensive Middle Eastern country.
- Jordan is a good and low-cost manufacturing base in the Middle East because:
- Time to incorporate: Five weeks
- Cost to set up: US$34,595
- Minimum capital: US$1
- Physical office required: Yes
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: Yes
- Corporate tax rate: 14 – 20%
- Corporate tax base: Territorial
- Shelf companies: No
- Main company type: WLL
Frequently asked questions
What are the cost and timeframe required to open a local company in Jordan?
How many documents do we need to attest?If the company’s shareholders and directors are all individuals, the sole document to be attested is a Power of Attorney (POA). This POA will allow Healy Consultants to register the company on our Client’s behalf.
If corporate shareholders are also involved, the Jordan authorities will require our Client to provide certified attested copies of the following documents: i) the certificate of incorporation, ii) the memorandum and articles of association, iii) the list of directors and shareholders a iv) POA and v) a Board of resolution.
To complete the attestation process, our Client will sign and legalize the documents at the nearest Embassy of Jordan and courier the same to Healy Consultants’ office. Upon receipt, we will translate them into Arabic and re-attest them locally at the Ministry of Foreign Affairs in Jordan.
What are the steps to Jordan company set up?In order to complete the registration of a Jordan company, Healy Consultants will firstly assist you to open a capital account, to be used to inject the minimum paid up capital of the company. Our team will thereafter secure a certificate of deposit and submit the same together with the attested corporate documents to the Jordan Companies Registrar. After the company is fully registered, we will assist our Client to convert the capital account into a trading account and then register the company for tax and VAT with the local tax authority.
The whole process takes approximately 3 months. Your business will be thereafter be legally allowed to trade with its customers. See also this page for a detailed account of the steps to complete a Jordan engagement.
Do I need to appoint a resident director or manager in Amman?A local director is not required. However, branches and representative offices of a foreign company both require the appointment of a resident manager. Foreigners can be appointed as resident managers, provided they have a valid work permit in Jordan.
If required, Healy Consultants will be pleased to provide our Client a professional passive resident manager for an annual fee. See this page for further details on such service.
How easy is to employ foreign employees in Jordan?It is challenging to get work permits in Jordan because the Jordan Government protects and favours Jordanian nationals. In addition, Jordanian Corporate Laws require that the number of Jordanian employees in a Non-Operating Foreign Company in the Kingdom should not be less than half of the overall number of the Company employees.
Do I need to deposit share capital before the company is fully registered?Yes, foreign investors are required to have an issued share capital equivalent to US$70,650 (JOD50,000) per foreign shareholder. Out of this amount, at least US$70,650 must be injected into a corporate bank account in Jordan before company registration is complete. In other words, a company in Jordan registered by two foreign shareholders requires a share capital of US$141,300 (JOD100,000) and US$70,650 is to be paid up before company registration.
The Investment Commission is currently reconsidering to lower down minimum capital requirement.
What is the advantage of making Jordan the Middle East headquarters for our Client’s business?Some multi-nationals set up offices in Jordan as a representative office to be the Middle East Headquarters. This type of entity is called Regional office. The four main advantages of this type of entity are as follows:
- Exemption from income tax and social services tax for profits generated outside the Kingdom;
- Exemption from registration with the Chamber of Commerce including payment of fees;
- Exemption to pay income tax and social services tax from salaries of non-Jordanian employees working in the regional office;
- Permission to import commercial samples and exemption to pay customs duties or import taxes.
A regional office is prohibited from conducting commercial operations in the Kingdom and subject to a foreign manpower quota set at less than 50% of its total workforce.