Jordan's Income Tax Law No. 34 of 2014 imposes three different rates on legal persons depending on the nature of their activity: 20% for most legal persons, 24% for specific sectors such as telecom, electricity, mining, insurance and financial intermediation, and 35% for banks.
The General Rate of 20%
Article 11 of the Law provides that tax is collected on a legal person's taxable income at 20% for all legal persons, except for the categories covered by the 24% and 35% rates described below.
The 24% Rate for Specific Sectors
A rate of 24% applies to each dinar of taxable income of basic telecommunications companies, electricity distribution and generation companies, basic materials mining companies, insurance companies, reinsurance companies, financial intermediation companies, financial companies, and legal persons carrying out financial leasing activities.
The 35% Rate for Banks
Banks are subject to a rate of 35% on their taxable income, the highest income tax rate the Law prescribes for any sector.
The Additional National Contribution Account
In addition to the rates above, the Law establishes at the Income and Sales Tax Department an account called the National Contribution Account to service public debt, funded by additional percentages deducted from taxable income, including: 3% of the taxable income of banks and electricity distribution and generation companies, 7% of the taxable income of basic materials mining companies, 4% of the taxable income of financial intermediation companies, financial companies and financial leasing companies, and 2% of the taxable income of basic telecommunications, insurance and reinsurance companies. A further 1% is deducted from the taxable income of other legal persons, and 1% as well from an individual's taxable income exceeding 200000 dinars.
Minimum Tax for Non-Compliant General and Limited Partnerships
The Law provides that where general partnerships and simple limited partnerships registered in the Kingdom that carry on a taxable activity or investment fail to organize their records and financial statements in accordance with the Companies Law and submit them to the Department, the minimum tax due from them may not be less than five hundred dinars per year.
Relief From Double Taxation Between a Parent and Its Subsidiary
The Law also addresses the case of a company that wholly or partly owns not less than 10% of the capital of another company: the owning company's profits from that shareholding may not be taxed at a rate exceeding 10% of its share of those profits. This provision limits the double taxation of the same profits as they pass from a subsidiary to its parent company.
Legal References
- Income Tax Law No. 34 of 2014 — Article 11(b) (income tax rates on legal persons by sector).
- Income Tax Law No. 34 of 2014 — Article 11(f) (National Contribution Account).
- Income Tax Law No. 34 of 2014 — Article 11(h) (minimum tax for non-compliant general and limited partnerships).
- Income Tax Law No. 34 of 2014 — Article 11(i) (relief from double taxation between a parent and a subsidiary).
For questions about your specific situation, you can ask the Jordan Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.