When calculating the tax balance due before paying it to the Department, a registered person is entitled to deduct from the tax due on their sales the general tax they previously bore on their purchases or imports of goods and services during their registration period, except for what is listed in Schedule (4) attached to the General Sales Tax Law.
What May Be Deducted as Input Tax?
The Law provides that, when calculating the tax balance due before paying it to the Department, a registered person may deduct from the tax due on their sales the following:
- General or special tax they previously accounted for or paid on returns from their sales.
- General tax they previously accounted for or paid on their deferred-payment sales that became bad debts.
- General tax they previously bore on their purchases or imports of goods and services during their registration period, except for what is listed in Schedule (4) attached to the Law.
- General tax they bore before registration on goods in their possession at the time of registration.
- Special tax they previously bore on goods used in producing other goods subject to the special tax.
Goods Excluded From the Right to Deduct
General tax on goods and services listed in Schedule (4) attached to the Law may not be deducted, since the Law expressly excludes this schedule from the deduction right it provides, regardless of whether those goods or services were actually used in the registered person's taxable activity. A registered person should therefore check, before calculating the deductible tax balance, whether their purchases or imports fall within this schedule, to avoid deducting tax the Law does not permit them to deduct.
What Happens If the Input Tax Balance Accumulates?
If the balance of deductible general input tax has been paid for a period exceeding two months without being deducted from the general tax due to the Department during that period, the registered person is entitled to apply for a refund of that balance under the executive instructions issued for this purpose, rather than leaving it pending indefinitely.
Illustrative Example
Illustrative example using hypothetical figures: if the general tax due on a registered person's sales during a tax period is 150 dinars, and they had borne 50 dinars in general tax on their purchases of taxable goods during the same period, they deduct 50 dinars from the tax balance due, leaving only 100 dinars payable to the Department.
Legal References
- General Sales Tax Law No. 6 of 1994 — Article 19
- General Sales Tax Law No. 6 of 1994 — Article 20/C
For questions about your specific situation, you can ask the Jordan Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.