4 February 2015: Jordan – Tax and Social Security Updates

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21st January 2015
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12th September 2017

Compandben’s International HR Services -

Compandben’s Jordan Employment Service Partners -

JORDAN’s new Income Tax Law (No 34) for the year 2014, which entered into force effectively January 1st 2015, was published in the official Gazette on 31st December 2014 edition No 5320. See below for an overview of the major changes.

• Payroll / Personal Income Tax Rates:

Taxable Income *

Rate

First 10,000

7%

Second 10,000

14%

Above

20%

In addition, please note that native persons (individuals / employees) shall be entitled to personal exemptions as follows:

- Personal exemption of JOD 12,000. (Provided that he stays in Jordan for more than 183 days during the calendar year whether continuous or interrupted.)

- Family Exemption of JOD 12,000. (Provided that his family stays in Jordan for more than 183 days during the calendar year whether continuous or interrupted.)

- Additional Personal and family exemption of JOD 4,000 on Medical Expenses, University Education Expenses and Interests paid on Housing Loans, Housing rent, technical services, engineering services, legal services provided that supporting documents and invoices are available and to be granted on a case by case basis after reviewing the related supporting documents by the Income Tax Department.

- Exemption in the amount of JOD 3,500 in relation to the monthly Retirement Benefits instead of JOD 4,000 under the old Law.

• Withholding tax of non- Resident services providers has been increased to be 10% instead of 7%. • Withholding tax 5% on real estate rent has been abolished.

o Effectively 1st Jan 2015 specifies certain service providers to be subject to 5% retention. Those service providers are: Doctors, Lawyers, Engineers, Certified Public Accountants, Experts, consultants, Insurance Agents, Custom Clearing Agents, Arbitrators, speculators, Agents and brokers for commission, financial brokers, freight forwarders. Any other persons will be determined according to the related regulations which will be issued for this purpose by the Minister of Finance.

• Withholding tax on in cash and in kind prizes and Jordanian Lottery in excess of JOD 1000 per each prize has been increased to be 15% instead of 10%. • In-kind and in-cash dividends are not subject to withholding tax whether paid to a resident to non-resident party.

Social Security Updates:

According to Law No (1) of 2014, social security rates will be increased in 2015, 2016, and 2017. The increase will be 0.25% on employee share and 0.50% on employer share yearly. This will be fixed after 2017 when employee share will be 7.5% and employer share will be 14.25%.

Year

Employee

Employer

2015

7%

13.25%

2016

7.25%

13.75%

2017

7.5%

14.25%

 
Should you need further information or clarification, please do not hesitate to contact us: Contact Compandben or visit Compandben Main Website – Jordan Payroll & PEO Services

John Tinsley

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