A taxpayer's sales tax registration is cancelled by a decision of the Director General of the Income and Sales Tax Department if it is established that the taxpayer no longer sells taxable goods or services, or if the taxpayer applies to cancel their own registration because they are no longer required to be registered under the Law.
Grounds for Deregistration
The Law provides that a taxpayer's registration is cancelled by a decision of the Director in either of the following cases:
- If it is established that the taxpayer no longer sells taxable goods or services under the provisions of the Law.
- If the taxpayer applies to cancel their registration because they have become no longer required to be registered under the Law, with the cancellation taking effect at the end of the tax period during which the application was submitted.
Treatment of Goods on Hand at Deregistration
Tax is due on all taxable goods in a person's possession when their registration is cancelled, calculated on the basis of the good's prevailing market price or its cost price on the date of deregistration, whichever is lower. A person whose registration has been cancelled must file a final tax return and pay the tax and any other amounts due to the Department by the deadline set for them.
Exemption From Registration for Fully Zero-Rated Sales
If the tax imposed on all of a taxpayer's sales of taxable goods or services is at the zero rate, the Director may, upon the taxpayer's request, decide to exempt them from registration. If any change occurs such that any part of that taxpayer's sales becomes subject to the tax at another rate, the taxpayer must apply to re-register within thirty days of the date that change occurs.
What Is the Difference Between Cancellation and Exemption From Registration?
Deregistration, which fully ends a person's status as a registered taxpayer by a decision of the Director, differs from an exemption from registration due to being fully zero-rated, which automatically keeps the possibility of re-registration open once the nature of the taxpayer's sales changes to include a rate other than zero, within a legally set deadline. In both cases, the taxpayer remains responsible for settling any tax due before the date of cancellation or exemption.
Why the Deregistration Date Matters
The deregistration date carries important consequences, most notably determining the final tax period for which a final return must be filed, and calculating the tax due on goods remaining in the taxpayer's possession at their prevailing market price or cost price, whichever is lower. It is therefore advisable to check this date carefully when planning to end a taxable activity.
Legal References
- General Sales Tax Law No. 6 of 1994 — Article 14/D
- General Sales Tax Law No. 6 of 1994 — Article 14/E
- General Sales Tax Law No. 6 of 1994 — Article 14/F
For questions about your specific situation, you can ask the Jordan Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.