The General Sales Tax Law provides for calculating the tax at a rate or amount of zero on specific categories of goods and services, while fully exempting other categories from the tax. Each case has a distinct legal basis and conditions that differ from being subject to the general rate.
Goods and Services Subject to the Zero Rate
The general tax and the special tax, as applicable, are calculated at a rate or amount of zero on the sale or import of any of the following:
- Goods listed in Schedule (2) attached to the Law.
- Goods and services sold to free zones, free cities, and free markets, or exported outside the Kingdom.
- Goods and services sold to the exempt entities under Article (21) of the Law and in accordance with its provisions.
Goods and Services Exempt From the Tax
Goods and services listed in Schedule (3) attached to the Law are exempt from the general tax. However, if a good or service listed in Schedule (2) or (3) attached to the Law is sold together with, or linked to, another good or service subject to the tax, its sale becomes subject to the general tax.
Exemptions for Specific Entities
Under Article (21) of the Law, purchases and imports of goods and services by His Majesty the King are exempt from the tax, as are goods and services imported or purchased locally by non-honorary embassies, legations, and consulates for their own use, and by non-Jordanian, non-honorary members of the diplomatic and consular corps accredited to the Kingdom — all subject to the Minister of Foreign Affairs' recommendations and to reciprocity — in addition to goods and services imported or purchased locally by international and regional organizations operating in the Kingdom and their non-Jordanian employees who enjoy diplomatic status.
Other Exemptions Do Not Apply
Notwithstanding any tax exemptions that may be provided in other laws, such exemptions do not apply to the General Sales Tax unless expressly stated in the General Sales Tax Law itself; relying on an exemption found in another law is therefore not enough to justify not collecting or not paying this tax. One must always verify that the intended exemption is specifically found within the text of this Law or its attached schedules before treating any good or service as exempt or zero-rated.
Why the Distinction Matters in Practice
The distinction between the zero rate and full exemption carries an important practical effect: a seller subject to the zero rate retains their status as a taxpayer subject to the Law's provisions, including their right to deduct input tax, unlike cases of full exemption, where the treatment of input tax may differ depending on the nature of the activity and the entity benefiting from the exemption.
Legal References
- General Sales Tax Law No. 6 of 1994 — Article 7
- General Sales Tax Law No. 6 of 1994 — Article 21
- General Sales Tax Law No. 6 of 1994 — Article 24
For questions about your specific situation, you can ask the Jordan Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.