Jordan's Income Tax Law requires anyone paying specific types of income to withhold tax at source and remit it to the Income and Sales Tax Department, at rates that vary by the nature of the income: 5% on the fees of most free professions, 5% or 7% on deposit interest, 15% on prizes and lottery winnings, and 10% on payments to non-residents.
5% Withholding on Free-Profession Fees
Article 12 of the Law provides for withholding 5% from any amounts paid by a resident legal person as fees or wages to any resident person among doctors, lawyers, engineers, auditors, experts, consultants, insurance and reinsurance agents and brokers, arbitrators, brokers, commission agents and intermediaries, financial intermediaries, and commission freight brokers, and others determined by executive instructions.
Withholding on Bank Deposit Interest
Income realized from deposit interest, commissions, and profits of deposits participating in the investment of banks and non-interest-based financial companies, paid to any person by banks and financial companies in the Kingdom, is subject to withholding at 5% for a natural person and 7% for a legal person, and these withheld amounts are considered a final tax for a natural person and for a non-resident legal person.
Withholding on Prizes, Lottery Winnings, and Payments to Non-Residents
Income from prize and lottery winnings whose amount or value exceeds one thousand dinars is subject to a 15% withholding considered a final tax. The Law also requires any person who accrues or pays non-exempt income to a non-resident, directly or through an intermediary, to withhold 10% of that income on the date of accrual or payment, whichever is earlier, and to provide the Department and the beneficiary with a statement of that withholding.
Is the Withholding Final or an Advance Payment?
The Law provides that income subject to withholding at source is not included in the taxpayer's gross income where the withheld amount is a final tax; in other cases, the withheld amounts are treated as an advance payment against the tax due, credited during the tax period in which they were paid or any later period, provided this does not exceed four years following the tax period in which they were required to be remitted to the Department.
The Remittance Deadline to the Department
The Law requires the person obligated to withhold to remit the withheld and collected amounts to the Income and Sales Tax Department within thirty days from the date of payment, and if withholding and remittance are not carried out, the amounts are collected as if they were tax due from that person, effective from the date set for their remittance.
Legal References
- Income Tax Law No. 34 of 2014 — Article 12(a) (withholding on professional fees, deposit interest, and prizes).
- Income Tax Law No. 34 of 2014 — Article 12(b)-(e) (withholding on payments to non-residents, the nature of the withholding, and the remittance deadline).
For questions about your specific situation, you can ask the Jordan Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.