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Jordan - Taxation

The tax year in Jordan runs from January to December although this is flexible for individual taxpayers and may depend when they were first registered to pay tax in the country. Both residents and non-residents will only pay taxes on the money that they earn in Jordan, which helps to make the country an attractive prospect to those who wish to retire, as the pensions they earn in their home country are not subject to Jordanian taxes. A resident is classed as an individual that spends more than 183 days in the country during the tax year.

There are a number of tax treaties in place that ensures that expats in Jordan are not charged for their Jordanian income in their home country too. A worker who spends time in the country working for a non-Jordanian company may also find that they can work without having their salary taxed. The employer will be able to advise further on this but if you are ensure of your employer’s status in Jordan you can check with the local tax office.

Capital gains are not taxed in Jordan, and the income is classed only as personal income and taxed at the standard rate. A property tax is payable. This is 14% of the estimated annual rental value of the property, and it is applied whether or not the property is lived in by the tenant or the owner. There are no inheritance taxes or wealth taxes applied, which means that Jordan is becoming increasingly popular with wealthier people. Dividends from shares are not taxed as long as the company withholds the tax before the payment is made to the individual. Royalties and other fees are taxable at 10% and Jordan does have a gift tax which is taxable at the same rate.

An individual can earn 12,000 Jordanian Dinars before they have to pay tax and those with a family can earn twice that amount. Tax rates range from 7% to 14% depending upon the level of salary earned. There is a PAYE system, where the employer will deduct tax and social security contributions and make those payments on the worker’s behalf. Self employed workers will need to submit a tax return to the Income Tax and Sales Tax Department.

Those who are self employed will find that they are able to claim some work related expenses as a deduction on their tax return. Items such as protective clothing, tools and other essentials for work are considered to be a legitimate expense. Deductions can be made for a spouse, dependent children, other dependents, healthcare expenses, education expenses and mortgage expenses. If your employer deducts your tax from your salary then these deductions can be taken into consideration.

VAT is applied to many goods except for those that are considered basic necessities such as foodstuffs and some utilities. The standard VAT rate is 16% although a higher rate may be applied to some luxury items. Many imported items have VAT applied to them or a sales tax, which can make the prices of some items seem high.

If a worker has to submit a tax return then this must be done by the end of April following the year the tax is for, and payment of taxes calculated must be made at the same time. Every week of a delayed payment incurs a fine of 0.4% of the amount due. There are also fines if the amount due has been miscalculated, so it is a good idea to enlist the services of an accountant to ensure that the information you are supplying to the tax office is correct. In contrast there are discounts if the amount due is paid early.

The website of the tax office is online in both Arabic and English and information on the tax return system and how to complete the forms can be downloaded from there. Information on your own tax status can be obtained once you are registered with the tax office and have a user name and password for the site.

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