In Jordan, when an employer pays a taxable monthly salary or wage, it must withhold tax from the amount exceeding the employee's exemptions under monthly brackets starting at 5% for each 416 dinars and rising to 30% for amounts exceeding 83,333 dinars a month, in addition to withholding 9% from end-of-service gratuity after the prescribed deductions.
Monthly Withholding Brackets on Salary
The income tax withholding instructions provide that when an employer pays a taxable monthly salary or wage to an employee, in addition to any non-monthly amount such as an annual bonus or housing allowance exceeding 1/12 of the total exemptions due to the employee, the employer must withhold tax on that excess as follows:
- 5% on each dinar of the first 416 dinars.
- 10% on each dinar of the next 416 dinars.
- 15% on each dinar of the next 416 dinars.
- 20% on each dinar of the next 416 dinars.
- 25% on each dinar of the following amounts up to 83,333 dinars.
- 30% on each dinar of the amount exceeding 83,333 dinars.
These monthly brackets are, in essence, the same brackets in Article 11 of the Income Tax Law (5% to 30%) divided over twelve months, since a monthly amount of 416 dinars is roughly 1/12 of the annual five-thousand-dinar slice for each bracket.
The National Contribution Withholding on Higher Salaries
In addition to the withholding above, the employer must withhold, for the National Contribution Account, 1% of each dinar of monthly salary exceeding 16,666 dinars.
Withholding on Non-Employee Payments and End-of-Service Gratuity
The employer is also required, when paying any taxable amount to a resident person other than its employees, including travel allowances and board of directors' remuneration, to withhold 5% of the amount paid.
When paying end-of-service gratuity, the employer first deducts the full gratuity for the employee's service before 1/1/2010, 50% of the gratuity for service from 1/1/2010 to 31/12/2014, and 15,000 dinars of the gratuity for service from 1/1/2015 onward, then withholds 9% of the amount remaining after these deductions.
The Family Status Certificate and the Employer's Obligations
When first employed, an employee must submit to the employer an organized certificate, in the form approved by the Department, stating the employee's family status, and must inform the employer of any change to it. The employer, for its part, must keep a special register containing the names of its employees, their salaries, family status, the exemptions due to them, and their tax withholdings.
Legal References
- Instructions No. 1 of 2021 - Amended Income Tax Withholding Instructions — Article 3 (monthly salary withholding brackets, the national contribution, and withholding on non-employees).
- Instructions No. 1 of 2021 - Amended Income Tax Withholding Instructions — Article 4 (withholding tax on end-of-service gratuity).
- Instructions No. 1 of 2021 - Amended Income Tax Withholding Instructions — Articles 5 and 6 (the family status certificate and the employer's register).
For questions about your specific situation, you can ask the Jordan Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.