Jordan's General Sales Tax Law No. 6 of 1994 sets the general tax rate at 16% of the value of an imported or sold good, or of the consideration for a supplied service. This rate applies to every sale or import of a good or service within the tax zone unless a special provision states otherwise.
What Is Subject to the General Tax?
The general tax applies to the sale of any good or service, or both, within the tax zone, as well as to the import of any good or service into the tax zone, unless that sale or import is not subject to tax or is exempt under the Law. The 16% rate is calculated on the real value of the good or service, meaning the price the buyer is obligated to pay for it, or on the customs value plus duties in the case of an import.
The Special Tax on Specific Goods
In addition to the general tax, the sale or import of goods listed in Schedule (1) attached to the Law is subject to a special tax, whose amount, rate, and category are set by a separate system issued for that purpose. This special tax is imposed once, either when the good is imported or when it is first put into circulation or sold for the first time if produced locally, and its value is added to the good's real value before the general tax is calculated on it.
The Difference Between the General Rate, the Zero Rate, and Exemption
A 16% rate does not mean every good or service is necessarily subject to it. The Law provides for calculating the tax at a rate or amount of zero on certain goods and services listed in a separate schedule, and it fully exempts other goods and services under another schedule. Each of these two cases has its own detailed conditions that differ from being subject to the general rate, and neither should be assumed without checking the applicable text.
Who Actually Bears the General Tax?
The registered seller or importer is responsible for collecting the general tax, declaring it, and remitting it to the Department, but its actual burden passes to the final buyer, since the tax is added to the price of the good or service so that the agreed price becomes inclusive of it from the date it takes effect, whether or not the good or service has a mandatory price or a fixed profit margin.
Illustrative Example of Calculating the General Tax
Illustrative example using hypothetical figures: if a good subject to the general tax is valued at 100 dinars, the general tax due on it at the 16% rate equals 16 dinars, added to the value of the good upon sale, passing to the buyer within the final price paid.
Legal References
- General Sales Tax Law No. 6 of 1994 — Article 6/A (general tax rate)
- General Sales Tax Law No. 6 of 1994 — Article 4/B (scope of the general tax)
- General Sales Tax Law No. 6 of 1994 — Article 6/B (special tax)
- General Sales Tax Law No. 6 of 1994 — Article 17 (adding the tax to the price)
For questions about your specific situation, you can ask the Jordan Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.