Income tax in Jordan applies to any income arising in or derived from the Kingdom by any person, regardless of where it is paid, including income from business activity, interest, royalties, the sale of goods, and real-estate rental, among others, while the Income Tax Law exempts specific items such as property owned by the King and share-dividend profits, and the first million dinars of an individual's agricultural sales.
Sources of Taxable Income
Article 3 of the Income Tax Law provides that income is subject to tax in Jordan regardless of its source once it is realized in the Kingdom; paragraph (a) of that article states that any income arising in or derived from the Kingdom by any person is subject to tax regardless of the place of payment, including the income items listed in that article.
The same article also provides that the net income realized by a resident person from any source outside the Kingdom, provided it arose from funds or deposits from the Kingdom, is considered taxable income and is taxed at a flat rate of 10% without allowing any deduction from it for any reason.
Exemption of Agricultural Activity
Article 5 of the Law exempts the first one million dinars of an individual's sales arising from agricultural activity within the Kingdom, and the first fifty thousand dinars of a legal person's net income arising within the Kingdom from agricultural activity.
Key Items of Income Exempt From Tax
Article 4 of the Law lists a long set of income items exempt from tax, most notably:
- Property owned by the King, and the income of official public departments, public institutions and municipalities from within the Kingdom, except for their income from rent, key money and goodwill payments, and profit from any investment activity.
- Capital gains realized within the Kingdom, except for gains realized on assets subject to the depreciation rules and gains from the sale of shares in a legal person.
- Profits from shares distributed by limited liability companies, simple limited partnerships, general partnerships, and public and private shareholding companies resident in the Kingdom, except for distributions to banks, basic telecommunications companies, basic materials mining companies, insurance and reinsurance companies, financial intermediation companies and financial leasing companies.
Exemptions Related to Pensions and Disability, and the Treatment of Prize and Lottery Winnings
The Law exempts the first 2500 dinars of total monthly pension income, including disability pensions, and an amount of 2000 dinars for each person with a permanent and continuing disability. Income from prize and lottery winnings, by contrast, is included by Article 3 among the sources of taxable income where its amount or value exceeds one thousand dinars.
Exclusion of Flat-Rate Income From These Exemptions
Article 4 provides that, subject to the exception for double-taxation treaties, the exemptions in this article do not apply to income taxed at the flat rate under paragraph (c) of Article 3, meaning the foreign income of a resident taxed at the 10% rate mentioned above.
Legal References
- Income Tax Law No. 34 of 2014 — Article 3(a) and (c) (sources of taxable income and foreign income taxed at 10%).
- Income Tax Law No. 34 of 2014 — Article 4 (items of income exempt from tax).
- Income Tax Law No. 34 of 2014 — Article 5 (exemption of agricultural activity).
For questions about your specific situation, you can ask the Jordan Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.