Business entities in Jordan
Healy Consultants will assist our Clients with incorporating the optimal corporate structure for their company. There are several ways of doing business in Jordan, the most common being the setting up of a limited liability company. However, Healy Consultants recommends our foreign Clients to setup a public limited company because this will give their business a marketing edge for a similar incorporation cost. Foreign entrepreneurs may also incorporate an offshore company, a branch office or a representative office in Jordan.
The Jordan limited liability company (WLL)
- A limited liability company in Jordan can be incorporated with a single shareholder, with prior agreement from the Companies’ Registrar Commissioner. While shareholders can be of any nationality, foreigners i) must make a minimum share capital contribution of US$70,650 and ii) will be required to enter in a joint venture agreement with a Jordanian partner, if investing in restricted sectors;
- The Jordanian LLC will be managed by at least 1 director, who can be of any nationality and place of residence. The company will also be required to i) have its annual financial statements audited by a licensed audit firm and ii) to file them with the Jordanian Companies Registrar before April the 30th.
The Jordan public limited company (LTD)
- A Jordanian public limited company requires only i) 1 shareholder, with prior agreement from Companies Registrar Commissioner and ii) a paid up share capital of at least US$100,000. Foreigners are allowed to setup a PLC in Jordan but i) must pay up at least US$70,650 to the company’s share capital and ii) will be required to form a joint venture with a Jordan national, if investing in restricted sectors;
- Public limited companies are not required to list in Jordan. To do so, a PLC must i) increase its authorized share capital to US$700,000, of which at least 25% must be publicly traded and ii) appoint a board of at least 3 directors, half of whom must be independent from the company. If needed, Healy Consultants will be pleased to assist our Clients with listing their company on the Amman stock exchange.
The Jordan offshore company (non-operating foreign company)
- The Jordan offshore company is only allowed to conduct operations and sign contracts with entities based outside of Jordan and can only be registered by foreign corporations and individuals. This business entity is henceforth commonly used by foreign entrepreneurs as i) an operating headquarters for their Middle East operations and/or ii) to receive foreign-sourced income, as such company is allowed to open a non-resident corporate account in Jordan;
- Setup of a Jordan offshore company only requires to enter in a lease agreement in Jordan. If employees are hired, 50% of them must be Jordanians. While Jordan offshore companies still must file audited financial statements, they do not pay i) corporate tax and ii) payroll tax and social security contributions on foreign employees’ salaries;
- Our Clients setting up an offshore company 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 such earnings to our Client’s parent company;
- Incorporating a Jordanian 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;
- 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.
The Jordan branch office (operating foreign company)
- Jordanian company law stipulates that foreign companies can open branch offices in Jordan, provided i) they can demonstrate such opening is necessary for the execution of a contract with a Jordan customer and ii) the branch office will neither conduct operations nor commercial activities in sectors restricted to foreign ownership;
- The Jordan branch office must also i) appoint a resident representative and ii) file audited financial statements with the Companies Registrar, which must be previously published in two daily Jordanian newspapers;
- Incorporating a branch office in Jordan is complicated procedures, as such company must i) prove that establishing a branch office is necessary for the execution of a contract in Jordan ii) appoint a resident director iii) publish its audited annual financial statements in 2 daily newspapers and iv) renew its registration license every two years.
The Jordan representative office
While the Jordan representative office can be 100% foreign owned, it is not allowed to pursue production-related or commercial activities in Jordan. Consequently, this entity can only engage in i) market research and ii) promoting the business of the parent company. The representative office is also required to enter into a lease agreement in Jordan.
Table of comparison between Jordan entities
|LLC||PLC||Offshore company||Branch||Rep office|
|Also known as:||WLL||LTD||Non-operating foreign company||Operating foreign company||Non-operating foreign company|
|How long to set the company up?||8 weeks||12 weeks||8 weeks||15 weeks||8 weeks|
|How long to open company bank account?||4 weeks||4 weeks||5 weeks||4 weeks||4 weeks|
|Authorities pre-approval needed to incorporate the company with a single shareholder?||Yes||Yes||No||No||No|
|Wholly foreign owned?||Yes||Yes||Yes||Yes||Yes|
|Minimum share capital for Jordanians?||US$1||US$100,000||US$1||US$1||US$1|
|Minimum share capital contribution for foreigners?||US$70,650||US$70,650||US$1||US$1||US$1|
|File annual tax return?||Yes||Yes||Yes||Yes||Yes|
|Corporate bank account options?||HSBC||Arab Bank||Citibank||Societe Generale||Standard Chartered|
|Does our Client need to travel?||No||No||No||No||No|
|Resident director required?||No||No||No||Yes||No|
|Minimum directors allowed?||1||1||1||1||1|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes||Yes|
|Individual shareholders allowed?||Yes||Yes||No||No||No|
|Corporate director(s) allowed?||No||No||No||No||No|
|Jordan corporate tax rate?||14%||14%||0%||14%||0%|
|Annual financial statements required?||Yes||Yes||Yes||Yes||Yes|
|Statutory audit required?||Yes||Yes||Yes||Yes||No|
|Allowed to issue sales invoices in Jordan?||Yes||Yes||No||Yes||No|
|Allowed to sign contracts with Jordan entities?||Yes||Yes||No||Yes||No|
|Allowed to import and export goods?||Yes||Yes||No||Yes||No|
|Can rent an office in Jordan?||Yes||Yes||Yes||Yes||Yes|
|Can buy Jordan property?||Yes||Yes||No||Yes||No|
|Can own equity in other Jordan companies?||Yes||Yes||No||Yes||No|
|Total Jordan business setup costs in Yr. 1||US$32,595||US$38,595||US$31,395||US$38,595||US$31,395|
|Subsequent annual costs (excl. accounting and tax fee)||US$12,320||US$12,320||US$9,750||US$12,320||US$9,750|
|Sample engagement fee invoice|