Jordan legal and accounting and tax considerations in 2024

1. Companies in Jordan are subject to a corporate tax rate of 14% on their earnings. Tax returns must be filed and paid by April the 30^th. Failure to do so may be sanctioned by a fine of up to 80% of the amount due;
2. Standard VAT rate in Jordan is 16%. All businesses with sales over US$42,000 must also register for a VAT number and file corporate VAT returns every two months;
3. Jordanian companies can carry forward their business losses indefinitely. Carryback of losses is not allowed;
4. Dividends distributed to both resident and foreign parent companies are exempt from both i) corporate tax and ii) withholding tax;
5. Capital gains earned through the sale of shares and other securities are full tax exempted, provided they are not realized by a bank or another financial institution;
6. Interest and royalties paid to a non-resident are subject to a 7% withholding tax, unless reduced by a tax treaty;
7. Salary distributed to i) non-resident directors and ii) non-resident managers are subject to a 7% withholding tax, unless reduced by a tax treaty;
8. Owners of Jordan real estate must pay property tax at a 15% rate over all received rental income;
9. Employers are required to pay social security contributions representing 12.5% of their employees’ gross salary. The maximum contribution is however annually capped at US$850 per employee. Employee-paid social contributions must also be withdrawn, at a rate of 6.5% of the employee’s net salary;
10. Employers must furthermore withdraw payroll tax, levied at rates of up to 14%, from their employees’ gross salaries;
11. Jordan has signed double taxation avoidance agreements with 35 countries including Canada, France, India, Indonesia, Malaysia, Qatar and the United Kingdom;
12. All Jordanian companies, including offshore companies, are required to i) have their annual financial statements audited by a certified accountant and ii) file them with the Companies Registrar by April the 30th;
13. Healy Consultants will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparing financial accounting records and iv) preparing forecasts, budgets and performing sensitivity analysis;
14. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

• Legal and compliance

  • In accordance with Jordan law, each entity must obtain a tax identification number (TIN) and register for VAT at the Companies Registry;
  • In accordance with Jordan Company Law, the issued share capital of US$70,650 must be deposited to the company bank account before the company is fully registered. To optimize engagement efficiency and minimize delays, Healy Consultants is happy to deposit these funds on behalf of our clients;
  • It is compulsory for every Jordan company to appoint i) an independent local law firm and ii) a local audit firm. To minimize complexity, Healy Consultants recommends our Client to appoint Healy Consultants affiliate legal firm. Annually, our Client will pay this law firm an annual fee of US$4500. On your behalf, we will try to negotiate this fee downwards depending on the size of our Client business and local sales trading volume;
  • Unfortunately, all shareholder and director information must be officially translated into Arabic, notarized and attested by the Jordan embassy in their country of origin. Most of our Clients request we translate all Arabic company documents into English and vice versa. There is an additional cost for this service;

• Company regulation

  • All companies must maintain a registered office address in Jordan at all times. At incorporation, they will be required to secure a 12 month lease agreement as evidence of compliance with such regulation;
  • The Articles of association of Jordan companies are available for public viewing and comprise i) company’s name, objectives, headquarters ii) names, nationalities, addresses of the shareholders and directors iii) the amount of paid up share capital;
  • A Jordan LLC is required to transfer 10% of net profits each year to a legal reserve, until such reserve reaches a level of 50% of the paid up share capital;
  • All companies should always keep records of their accounts and financial statements, as the Ministry of Finance has the right i) to conduct a corporate tax audit for up to 4 years and ii) to request the company to pay additional taxes;
  • Joint venture agreements must be registered with the Jordanian Ministry of Trade and Industry, if they lead to the creation of a separate business entity;
  • All companies must also file with the Companies Registrar a copy of the Minutes for i) the mandatory annual shareholders’ meeting and ii) all other shareholders’ meetings, no later than 10 days after these meetings.

• Staff regulations

  • All employment contracts must be translated into Arabic. Non Arabic speaking employees must also be provided with a contract copy in a language they understand;
  • In accordance with the Jordanian Labor Code, the probation period cannot exceed 3 months for all employees;
  • The minimum wage is fixed at US$230 per month;
  • The standard working week is i) fixed at 48 hours of work and ii) lasts from Saturday to Thursday, with 1 rest day on Friday;
  • All employees are entitled to i) at least 14 days of paid annual holidays ii) 7 days of national holidays and iii) 14 days of sick leave;
  • Employers may suspend their employees’ employment contract in case of i) a reduction of the workload and ii) replacement or stoppage of the production line, provided the Jordanian Ministry of Labor has been previously notified;
  • In case of labor conflicts, the Minister of Labor may appoint one or more Ministry officials to serve as conciliation officers and to carry out mediation for the settlement of collective labor disputes;
  • All dismissed employees must be provided with a 1 month notice, except when the dismissal is justified by gross misconduct.

• Other business regulations

  • Jordan is a member of the World Intellectual Property Organization, which allows i) foreign businesses to apply for a patent or a trademark and ii) give them same intellectual property protection conferred to Jordan nationals;
  • Jordan has acceded to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention). Therefore, arbitration awards made in countries that are party to this convention should be enforceable in Jordan according to the provisions of the convention;
  • In Jordan there are different ways to settle a dispute. The most common way to settle a business dispute in Jordan involves referring the dispute to the Jordanian courts. As the 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 dispute will be arbitrated;
  • Jordanian Anti-corruption Law punishes businessmen convicted of bribing public officers by i) up to 4 months of imprisonment and ii) a fine of up to US$7,000, but this regulation is rarely enforced.