(e) Jordan’s income tax law is silent on whether profit distributions made by a branch to its foreign head office are subject to tax (with the exception of banks), and the matter is currently under debate. If profit distributions are taxable, it is expected that the same rates and principles applicable to payments made to nonresidents would apply. For further details, see footnote (d) above.
B. Taxes on corporate income and gains
Corporate income tax. In general, income tax is levied on corporate entities and foreign branches with respect to all income earned in, or derived from, Jordan, regardless of where the payment is made, and on income generated from investing Jordanian capital outside Jordan.
Rates of corporate tax. Corporate income tax in Jordan is imposed at flat rates. Rates for resident corporations vary from 20% to 35%, depending on the type of sector. The following are the corporate income tax rates for various sectors for the tax year ending 31 December 2024.
In addition, a tax rate of 10% applies to the net income of Jordanian companies’ foreign branches and net income realized by residents of Jordan from foreign sources, if such income is generated from Jordanian monies or deposits.
National contribution. A national contribution is imposed on taxable income of all corporate entities and foreign branches in Jordan. The national contribution rates vary from 1% to 7%, depending on the type of sector. The following are the national
for the various sectors.
The above national contribution rates also apply to payments made to nonresident juridical persons at the rate applicable to the recipient’s sector. For payments from Jordan to nonresident natural persons in excess of JOD200,000, the excess amount is subject to a national contribution at 1%.
Capital gains. Capital gains derived from the sale of depreciable assets are subject to the corporate income tax and national contribution rates as applicable to the type of activity in which
Interest payments subject to withholding tax are also subject to a national contribution at the following rates:
• Interest payments made to resident entities are subject to a national contribution at the rate applicable to the sector of the loan provider (for further details, see National contribution).
• Interest payments made to nonresident entities are subject to a national contribution at the rate applicable to the sector of the recipient entity (for further details, see National contribution).
• For interest payments made to individuals (resident or nonresident) that are in excess of JOD200,000, the excess amount is subject to a 1% national contribution.
Foreign tax relief. Foreign tax relief is granted in accordance with tax treaties signed with other countries.
C. Determination of trading income
General. All income earned in Jordan from trading or other sources, except for income exempt under Jordanian legislation, is taxable.
Business expenses incurred to generate income are generally allowable, with limitations on certain items, such as entertainment and donations. A certain percentage of entertainment expenses is deductible. Head office charges are limited to 5% of the branch’s net taxable income.
Provisions and reserves. Provisions and reserves are not allowed as tax deductions, except for insurance companies’ reserves and doubtful debts’ provisions for banks.
Tax depreciation. Regulation No. 55 of 2015 (as amended) sets out the maximum depreciation rates applicable to various fixed assets for corporate income tax purposes. If the rates used for accounting purposes are greater than the prescribed tax depreciation rates, the excess is disallowed for tax purposes. The following are some maximum straight-line depreciation rates.
Tangible assets
Industrial, ordinary and temporary buildings 2/4/10
Furniture for dwelling, sleeping and work purposes, manufactured from iron, wood and fixed plastics 5
Furniture for hospitals, tourist services, hotels and restaurants 15
Other furniture 20 Means of transport 15
Computers, appliances, machinery used in production and medical equipment 35 Other machinery and equipment 20
A taxpayer is entitled to benefit from an accelerated depreciation method up to three times the straight-line amount if the taxpayer uses the accelerated-depreciation method until the asset is fully depreciated.
Machinery, equipment and other fixed assets that are imported on a temporary-entry basis (equipment that the government allows
e-invoicing system. Failure to comply with the registration with the e-invoicing system could result in the Jordanian tax authorities imposing late penalties on the taxpayers. The Jordanian tax authorities issued detailed guides to assist affected taxpayers with the registration and integration with the e-invoicing system; however, the requirement for affected taxpayers to integrate their accounting systems and issue e-invoices in the system is still pending but expected to become mandatory soon.
F. Tax treaties
Jordan has entered into double tax treaties with Algeria, Azerbaijan, Bahrain, Bosnia and Herzegovina, Bulgaria, Canada, Croatia, the Czech Republic, Egypt, France, India, Indonesia, Iran, Italy, Korea (South), Kuwait, Lebanon, Malaysia, Malta, Morocco, the Netherlands, Pakistan, the Palestinian Authority, Poland, Qatar, Romania, Singapore, Sudan, Syria, Tunisia, Türkiye, Ukraine, the United Arab Emirates, the United Kingdom, Uzbekistan and Yemen.
In addition, Jordan has entered into tax treaties, which primarily relate to transportation, with Austria, Belgium, Cyprus, Denmark, Italy, Pakistan, Spain and the United States.
The following is a table of treaty withholding tax rates.