Regulation of 2016 on the Exemption of Export Profits of Goods and Services from Income Tax governs export profit exemption in Jordan, but it clearly distinguishes between two very different situations: the exemption of profits from exporting locally-originated goods, which ended on 31/12/2016, and the exemption of profits from exporting specified services, which continues until 31/12/2033 as the Regulation provides.
The Exemption for Exporting Goods: No Longer in Effect
Article 3 of the Regulation provides that the net income realized by a taxpayer from exporting locally-originated goods outside the Kingdom was fully exempt from tax only until 31/12/2016, meaning this particular exemption for goods exports is limited to a period expressly set out in the Regulation itself.
The Exemption for Exporting Specified Services Until 2033
By contrast, Article 4 of the Regulation provides for the full exemption of net income realized by a taxpayer from exporting specified services until 31/12/2033, including: computer services, economic feasibility study services, legal, engineering, accounting and audit consultancy services, information technology services, services provided over the internet to clients outside the Kingdom, outsourcing services, and television and film production services, among others.
The Regulation requires, for the exemption of these services' profits, that the services be prepared within the Kingdom and exported outside it.
Exceptions to the Export Exemption
The Regulation excludes from its exemptions profits from exporting goods resulting from the mining of basic materials, and profits from exporting goods and services covered by trade protocols and bilateral payment and settlement agreements concluded by the Government. For the purposes of this exemption, selling goods and services to free markets, development zones, free zones, and the Aqaba Special Economic Zone is also not considered an export.
The Documentation Requirement and the Bar on Carrying Forward Export Losses
The Regulation requires specific documents to grant the export exemption, including a certificate of origin issued by the competent authority proving that the exported goods are of local origin, an invoice or sale contract for the exported goods or services, and customs data for exported goods. Conversely, a taxpayer may not deduct or carry forward any loss realized from the export of goods and services activity, since the profits of that activity are already exempt from tax.
Legal References
- Regulation of 2016 on the Exemption of Export Profits of Goods and Services from Income Tax — Article 3 (end of the goods export exemption on 31/12/2016).
- Regulation of 2016 on the Exemption of Export Profits of Goods and Services from Income Tax — Article 4 (exemption of specified services exports until 31/12/2033).
- Regulation of 2016 on the Exemption of Export Profits of Goods and Services from Income Tax — Article 7 (exceptions to the exemption).
- Regulation of 2016 on the Exemption of Export Profits of Goods and Services from Income Tax — Articles 6 and 8 (required documents and the bar on carrying forward export losses).
For questions about your specific situation, you can ask the Jordan Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.