In the course of measures being adopted for economic reform and the promotion of investment in Jordan, new amendments to the Income Tax Law were passed during the last part of 1995. The amendments, which have become effective as of 1 January 1996, thus, not applying to income earned in 1995, include some significant increases in tax exemptions and deductions and provide for new and significantly reduced corporate tax rates. The new rates vary depending on the type of activity of the company. Applicable corporate tax rates, which apply to both local and foreign entities resident in Jordan, are as follows:

15% on companies operating in the following sectors:-

  • Mining
  • Manufacturing
  • Hotels
  • Hospitals
  • Transportation; provided that the capital of the company is at least JD 1 million (approximately $ 1.41 million).
  • Construction Contracting; provided that the capital of the company is at least JD 1 million.

35% on companies operating in the following sectors:-

  • Banking
  • Insurance, except for life insurance companies which are subject to a tax estimated at 10% of the total value of premiums due to the company.
  • Finance; provided that the tax payable by companies in this sector and in the sectors of banking and insurance is not less than 25% of the company's net annual income before any allocations are made.
  • Currency Exchange
  • Brokerage

25% on all other companies.

Taxable income is arrived at by deducting business expenses from gross income. Business expenses are all costs and expenses incurred to generate gross income, subject to certain limitations and exceptions provided for in the Law. Among the business expenses which may not be deducted are capital losses, losses or expenses which may be reimbursed under an insurance policy or a contract of compensation, reserves and provisions. Fixed assets may be depreciated using the straight line method in accordance with the depreciation rates established by the Income Tax Department.

Withholding Tax

Payments made to non-residents, whether directly or indirectly, are also subject to a tax at the rate of 10% of the amount of the payment, which must be withheld by the company and paid to the Income Tax Department. Interest and royalties paid to foreign affiliates are also subject to this withholding tax.

Dividend Tax

A tax at the rate of 10% is also be levied upon the distribution of dividends. In respect of foreign companies operating in Jordan through a branch, remittance by the branch to the company's headquarters of a project's profits is deemed as payment of dividends for the purposes of the tax law.

This article is prepared for the general information of interested persons. It should not be acted upon in any specific situation without appropriate legal advice.

For more information regarding this article or any of the matters discussed herein, please contact Thamer A. Obeidat at Telephone (962 6) 672222, Facsimile (962 6) 699222 or E-mail