Jordan: Tax Highlights 2018
Find a way to calculate your taxes and release your tax reports in a neat easy way!
In a challenging world, a country’s tax regime is always a strategic factor and key point for any business considering moving into new markets.
How do tax rates affect individuals and economy?
On one hand, tax rate cuts may encourage individuals to work, save, and invest.
On the other hand, if the tax cuts are not financed by instant and fast spending cuts, they will likely also result in an increased federal budget deficit, which in the long-term will reduce national savings and raise interest rates.
How does the current tax system work in Jordan and how is it affecting the economy?
In the present tax system in Jordan, Income tax is payable by residents and non-residents on salaries earned from any employment in Jordan.
According to the PKF Worldwide Taxation Guide, “Any income incurred in or from the Hashemite Kingdome of Jordan for any person regardless of the place of payment shall be subject to income tax”. Hence, one of the key tax points in Jordan is that domestic companies are subject to income tax on worldwide income, although income from the export of goods is exempt until 31 December 2018. In addition, foreign companies are subject to tax on income from Jordanian sources.
Furthermore, the tax year in Jordan runs from January to December and this is flexible for individual taxpayers as it may depend on when they were first registered to pay tax in the country.
As for capitals, all gains related thereto are not taxed in Jordan. Consequently, the income is classed only as personal income and taxed at the standard rate. A property tax is payable.
VAT, the rate of which is 16% (subject to appraisal when applied to some luxury items) is applied to many goods except for those that are considered basic necessities such as foodstuffs and some utilities.
Revenues from the Personal Income Tax Rate (which stands at 20% up to June 2018) are an important source of income for the government of Jordan.
In addition, some other tax rates and data are given according to the following statistics (updated in June 2018):
Corporate Tax Rate 20%
Sales Tax Rate 16%
Social Security Rate 22.75%
Social Security Rate for Companies 15.25%
Social Security Rate for Employees 7.50%
What are the changes the government is trying to implement on the tax system?
On May 22nd 2018, the Jordanian Cabinet approved a new draft law (“Proposed Law”) amending the Income Tax Law no. (34), which will be subject to further amendment after Ramadan. If ratified, the Proposed Law is likely to come into force by January 1st 2019, with executive regulations expected to be issued in due course.
The key changes and outcomes to this Proposed Law are mainly:
- Increase to the corporate income tax rates in most industry sectors
- Exemption from corporate income tax for venture capital funds
- 15% capital gains tax on the sale of unlisted Jordanian shares
- Introduction of thin capitalization rules on related party debt
How can you calculate your Income Taxes in Jordan?
If you have a small to medium sized businesses struggling with growth and taxation procedure, POSRocket is ready to help you.
It is the first of its kind cloud-based point-of-sale platform that provides customers with a POS platform consisting of a software and a hardware component.
Hence, you will get an exact and precise tax calculation along with neat reports in the easiest possible ways with POSRocket.