Jordan has concluded bilateral treaties with a number of countries to avoid double taxation and prevent tax evasion with respect to taxes on income, and Jordan's Income Tax Law provides that income covered by such treaties is treated under their provisions, to the extent they provide, instead of the general tax-deduction rules.

How does the Income Tax Law address double taxation?

The Income Tax Law provides that income covered by double-taxation-prevention agreements concluded by the Government is exempt from tax to the extent these agreements provide. Among the deductible expenses, the law also allows deducting foreign income tax paid on a taxpayer's income sourced outside the Kingdom and taxed there, where no double taxation treaty exists; where such a treaty exists, the double-taxation-avoidance methods set out in the treaty apply instead of the general deduction rule.

Examples of treaties Jordan has signed

Jordan's legislation library contains the texts of several double taxation treaties the Kingdom has concluded, including the agreement with the Government of the Republic of Cyprus on the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the agreement with the Swiss Federal Council for the avoidance of double taxation with respect to taxes on income, the agreement with the Government of the Hong Kong Special Administrative Region of the People's Republic of China for the elimination of double taxation, the agreement with the Government of the Republic of Rwanda for the elimination of double taxation on income, and the agreement with the Government of the Republic of Belarus for the elimination of double taxation with respect to taxes on income.

The double-taxation elimination method: the Cyprus example

The treaty concluded with Cyprus adopts the credit method for eliminating double taxation: it provides that, subject to the provisions of Cypriot tax law regarding relief for foreign tax, credit is allowed for tax paid under Jordanian law and in accordance with this agreement against Cypriot tax payable in respect of any item of income arising in Jordan, provided such credit does not exceed that part of the Cypriot tax, computed before the credit is given, that is attributable to that item of income.

Why do these treaties matter to taxpayers?

These treaties benefit taxpayers with cross-border income by avoiding having the same income taxed twice, once in Jordan and once in the other contracting state, since the treaty determines which state has the right to tax each type of income and provides a mechanism to eliminate double taxation where both states retain a taxing right, as in the credit model adopted in the Cyprus treaty.

Legal References

For questions about your specific situation, you can ask the Jordan Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.