The Regulations issued pursuant to the Investment Law stipulate that non-Jordanians may invest up to 100% in the share capital of any project in Jordan with the exception of investment in the following sectors, in which case investment is limited to 50% of the project's share capital:
- construction contracting;
- trade and commercial activities;
- mining;
The Regulation stipulates that the minimum amount that is to be invested by non-Jordanians is JD. 50,000 (approximately US$ 70,000) with the exception of investments on the Amman Financial Market, where the minimum investment is set at JD. 1,000.
Projects established in Jordan in any of the following sectors are entitled to the exemptions set out in the Law:
- industry,
- agriculture,
- hotels,
- hospitals, and
- sea and rail transport.
Other sectors may be added by the Council of Ministers.
Eligible projects are granted the following exemptions:
- capital assets required for setting up a project are exempt from import fees, customs duties, sales tax and all other fees and taxes due on capital assets other than municipality fees and duties;
- spare parts required for the project, up to 15% of the total value of capital assets, are exempt from the same fees, duties and taxes as discussed above; and
- capital assets required for the expansion or development of any existing project are exempt from the same fees, duties and taxes as discussed above, provided that such expansion or development results in at least a 25% increase in the project's capacity.
Eligible projects are also entitled to reductions in their income tax and social services tax liabilities for a period of 10 years from the date of actual production or commencement of operations as follows:
- 25% of income tax and social services tax for projects located in development area A;
- 50% of income tax and social services tax for projects located in development area B;
- 75% of income tax and social services tax for projects located in development area C.
Projects are also granted one additional tax-exempt year for every 25% increase in their existing capacity, with a limit of four additional years.
FREE ZONES
Local and foreign investors may set up commercial or industrial activities in one of the four free zones in Jordan. The benefits of doing this are primarily that any restrictions imposed on foreign investments, such as maximum shareholdings and minimum investment requirements, do not apply to such projects.
In addition, profits generated by free zone projects are exempt from income tax and social services tax for twelve years from their commencement of operations. All goods imported into the free zones are exempt from customs duties, import fees and sales tax, while goods exported therefrom are exempt from all taxes and fees. Salaries of non-Jordanian employees in free zone projects are exempt from income tax and social services tax.
CURRENCY REGULATION
Investments by non-Jordanians must be remitted in any foreign convertible currency. The Investment Law reaffirms the right of the foreign investor to freely repatriate its capital, profits and dividends in any foreign convertible currency. Pursuant to a new regulation issued by the Central Bank of Jordan, Jordanian licensed banks are permitted to effect such transfers without the need to obtain the Central Bank's approval.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Ali Sharif Zu'bi & Sharif Ali Zu'bi Law Office - Amman, Jordan - Fax: (962) 6 634277.
