Cost of Doing Business

Exemptions

• The Investment Promotion Law offers exemptions to: Industry, the agricultural sector, hotels, hospitals, convention and exhibition centers, leisure and recreation compounds, maritime transport and railways, pipeline transportation and distribution services, amongst others.
• The law defines three development areas for which projects falling within receive income tax and custom exemptions for up to 10 years as follows:
  - 25% exemption for zone (A)
  - 50% exemption for zone (B)
  - 75% exemption for zone (C)
• Industrial projects established within the Industrial Estates are granted two years of the start of production from both income and social affairs taxes.
• The projects established within Free Zones Corporation are granted exemptions from both income and social affairs taxes.
• Additional tax exemptions may be granted to projects for expansion, modernization, or development purposes, provided that the outcome of such measures results in increasing projects capacity by at least 25% this is for a four year period since operation of project.
• Capital goods are exempted from duties and taxes if delivered within three years of project approval.

Imported spare parts, related to specific projects, are exempted from duties and taxes, provided that their value does not exceed 15% of the fixed assets requiring spare parts.

Income Tax (Personal)

Exemptions:

• An amount of $1410 per year per person as a personal exemption.
• An amount of $1410 for the taxpayer’s spouse and $705 for each one of their dependent children, as well as an amount of $282 for each other legal dependent provided they are residents in the Kingdom.
• 50% of the first $16920 and 25% of the remaining income from salaries (under certain conditions in the law).
• An amount of $2820 per year as rent allowance for residents
• An amount of $2820 for educational purposes, for personal use or dependents
• An amount of $14100 in Jordan or $21150 outside Jordan for medical expenses (under certain conditions in the law).
• Amounts paid as non-refundable payments for life and health insurance.
  Rates:
  Rates deducted should be as follows from the taxable income:
  - 5% for the first $2820
  - 10% for the following $5640
  - 20% for the following $11280
  - 25% for the remaining amount

Income Tax (Corporate)

Exemptions (amongst others):

• Two years exemption from income and social services tax for companies operation in the industrial estates
• The income of the non-profit companies registered in the Kingdom
• Profits of re-insurance companies derived from contracts signed with operation insurance companies
• 25% from profits gained from dealing with stocks and bonds
• Profits of the non-operating foreign companies in the Kingdom
• The income earned from patents of copyrights or rewards
• Income derived from concessions or government contracts
• Income accrued from land invested in agriculture, gardening, or aforrestation
  Rates:
  Rates deducted from taxable income are as follows:
  - 15% for Metallurgy, industry, hotels, hospitals, transportation, constructional contracting
  - 35% for banks, and financial companies
  - 25% for insurance companies, exchange and inter-mediation companies, telecommunications as well as services and trade companies and any other legal entity

Jordan has signed double taxation agreements with the following countries: Egypt, Yemen, Tunisia, Kuwait, Bahrain, Algeria, Syria, France, Romania, Turkey, Poland, India, Indonesia, Malaysia, Canada, and the United Kingdom.

Jordan has signed, but not yet ratified double taxation agreements with the following countries: Pakistan, Italy, the Netherlands, Czech Republic, South Korea, Lebanon, Qatar, Iran, Bulgaria, Sudan, Malta, and Serbia and Montenegro.

Sales Tax:

Sales tax is divided into two types:

1. A general tax of 16% imposed on the supply or import of taxable goods and services.
2. A special tax chargeable to select goods and services at advalorem or specific rates (tobacco, alcohol & cars).

Customs Duties:

There is only one rate in the custom tariff, which is the duty. Commodities imported to Jordan are classified as:

• Raw materials
• Semi-manufactured Products
• Manufactured Products

These commodities are subject to five rates: (zero, 5, 10, 20, 30%) with the exceptions of tobacco, manufactured tobacco and alcohol beverages which are subject to duty rates in the range (50% - 180%). All industrial inputs are exempted from custom duties.

Aqaba Special Economic Zone (ASEZ)

• 5% flat tax on Net Business Income, except banking, insurance, and land transport services which are subject to prevailing Jordanian Income Tax
• Exemption from Sales Tax on the final consumption of all goods and services except for:
  - A 7% sales tax limited to the final consumption of selected goods
  - A 7% sales tax on hotel and restaurant services
  - A special tax on alcohol and tobacco
  - No social services tax
  - No annual land and building taxes on utilized property

Duty Free Imports:

• Exemption from custom duties and sales tax / VAT on all imports to the ASEZ (except for cars).