Jordan has a relatively simple tax system that includes both direct and indirect taxes. The Jordanian taxation system is administered by the Income and Sales Tax Department.
Double Taxation Agreements
Jordan has signed double taxation agreements with several countries, including the United States, Canada, and most of the EU member states. These agreements aim to avoid double taxation on income earned in both Jordan and the other country. They also provide relief from withholding taxes on dividends, interest, and royalties.
Main Taxes for Expats
Income Tax
Expats in Jordan are subject to the same income tax rules as Jordanian residents. Income tax is calculated based on the amount of taxable income earned during the tax year, which runs from January 1st to December 31st. The income tax rates for 2023 are as follows:
- Up to JOD 10,000 is taxed at 7%.
- The amount between JOD 10,001 and JOD 20,000 is taxed at 14%.
- The amount between JOD 20,001 and JOD 30,000 is taxed at 20%.
- The amount above JOD 30,000 is taxed at 28%.
Expats may also be entitled to claim certain tax deductions and credits, such as the Personal Allowance and the Dependent Allowance. These deductions and credits reduce the amount of income tax payable.
Social Security Tax
Social Security Tax is a tax on earnings paid to the Social Security Corporation. The Social Security Tax rate is 14.25% for employees and 22.5% for employers.
Sales Tax
Sales Tax is a tax on the sale of goods and services in Jordan. The standard rate of Sales Tax is 16%. However, there are reduced rates of Sales Tax for certain goods and services, such as food, medicines, and education.
Special Tax Breaks for Expats
Tax Exemptions for Foreigners
Expats who are employed by a foreign entity or who work in a free zone may be eligible for certain tax exemptions in Jordan. These exemptions include an exemption from income tax for the first five years of their employment.
Filing a Tax Return in Jordan
Expats who are considered resident in Jordan for tax purposes are required to file a tax return each year. The tax return must be filed by April 30th of the following year.
Expats can file their tax returns online using the Income and Sales Tax Department’s website. To do so, they need to obtain a username and password, which can be obtained by visiting one of the tax department offices in person.
When filing a tax return, expats need to provide details of their income, deductions, and credits for the relevant tax year. If they have any foreign income or assets, they may also need to declare them on their tax return. It’s important to note that Jordan operates on a self-assessment system, which means that taxpayers are responsible for accurately reporting their income and paying the correct amount of tax.
Tax Exit Procedures
Expats who are leaving Jordan to move abroad need to follow certain tax exit procedures. Firstly, they need to notify the Income and Sales Tax Department of their departure and provide details of their new address abroad. They should also settle any outstanding tax liabilities before leaving Jordan.
If an expat is considered non-resident for tax purposes, they are only liable for Jordanian income tax on income earned in Jordan. However, they may still be liable for Jordanian tax on any income or gains that arise from Jordanian sources, such as rental income or capital gains from the sale of a Jordanian property.
Expats who have paid tax in Jordan may be entitled to claim a refund of some of the tax they have paid. To do so, they need to file a tax return for the relevant tax year and claim the refund through the normal tax refund process.
The taxation system in Jordan is relatively simple compared to other countries in the region. Expats in Jordan need to be aware of the main taxes that apply to them, such as income tax, Social Security Tax, and Sales Tax, as well as any special tax breaks that may be available. They also need to ensure they file their tax returns on time and follow the tax exit procedures if they are leaving Jordan to move abroad. By understanding the Jordanian tax system, expats can ensure they are complying with their tax obligations and maximizing any tax benefits available to them.
FAQs
Expats in Jordan are subject to the same income tax rules as Jordanian residents. Income tax is calculated based on the amount of taxable income earned during the tax year, which runs from January 1st to December 31st. The income tax rates for 2023 are as follows: Up to JOD 10,000 is taxed at 7%.
What taxes do expats have to pay? ›
Filing taxes as a U.S. expat
Even if you are a U.S. citizen living and working outside of the United States for one or more years, you still likely need to file a U.S. tax return. The United States subjects your worldwide income to U.S. income tax, regardless of where you live.
What is the 16% tax in Jordan? ›
The Standard Sales Tax rate in Jordan is 16%. However, some telecoms services related to digital services in other countries also attract the Special Tax rate of 24%. Any providers liable to GST may register with Income and Sales Tax Department on the new platform.
What is the tax burden in Jordan? ›
The Personal Income Tax Rate in Jordan stands at 30 percent. Personal Income Tax Rate in Jordan averaged 23.38 percent from 2004 until 2024, reaching an all time high of 30.00 percent in 2019 and a record low of 14.00 percent in 2011. source: Jordan Tax Service.
How much is inheritance tax in Jordan? ›
To the best of our knowledge, Jordan does not have specific inheritance, estate, or gift taxes. The taxability of these items are based on the kind of consideration received by the taxpayer and the relationship between the grantor and the recipient of these items.
Do expats pay taxes in two countries? ›
Who Is Subject to Double Taxation? Most expats are taxed by both the US and the country they reside in, resulting in double taxation. The US is one of the only countries in the world that taxes citizens regardless of where they live and work.
How to avoid double taxation on foreign income? ›
United States citizens who live abroad can exempt themselves from paying taxes on the income they earn in other countries if they qualify for the Foreign-Earned Income Exemption, allowing them to avoid double taxation.
Do foreigners pay tax in Jordan? ›
In contrast to other countries, Jordan does not tax income earned worldwide, but, pursuant to Art. 3 Jordan Income Tax Law, all income of residents and non-residents from Jordanian sources. Any foreign company with its registered office in Jordan is considered resident and is taxable on the income generated in Jordan.
Does Jordan have tax treaty with us? ›
Unfortunately, the United States does not have a tax treaty with Jordan. This situation often raises concerns among U.S. expatriates and businesses operating in Jordan due to the potential for double taxation.
Is Jordan income tax free? ›
Most income of individuals is subject to tax. The rates of tax on the annual taxable income of individuals are progressive and range from 5% to 30%. An additional 1% national contribution tax applies for individuals on income exceeding JOD 200,000.
Luckily, few formalities need to be observed when departing Jordan: A departure tax of 10 JDs ($15) is paid at any border crossings except the airports.
Is Jordan an affluent country? ›
Economic overview. Jordan is classified by the UN as a "Upper-middle-income country." According to the Heritage Foundation's Index of Economic Freedom, Jordan has the third freest economy in the Middle East and North Africa, behind only Bahrain and Qatar, and the 32nd freest in the world.
What is Social Security tax in Jordan? ›
Jordan's new social security rate in 2024 remains at 21.75% – made up of 14.25% employer contribution and 7.5% employee contribution and has been in place since 2017.
Is there capital gains tax in Jordan? ›
Capital gains generated from inside the Kingdom are exempt, except those realised from depreciable assets and gains from the sale of specific types of shares called 'Housas' on legal persons.
What is the tax exemption in Jordan? ›
Personal exemptions
To determine taxable income, the following exemptions are deducted from the gross income of a resident individual: JOD 10,000 for the year 2019 and JOD 9,000 for the year 2020 and the following years for the taxpayer.
What is the property transfer tax in Jordan? ›
It is levied on the transfer of property at a rate of 9%, which includes a registration fee of 5% and a property tax of 4%. Property tax is levied by the municipality depending on the location and size of the property annually.
Do expats pay Social Security taxes? ›
In general, U.S. social security and Medicare taxes continue to apply to wages for services you perform as an employee outside of the United States if one of the following applies: You are working for an American employer which includes: The U.S. Government or any of its instrumentalities.
Do I have to pay state taxes as an expat? ›
In California, as in most states, residents are taxed on all income no matter where it was earned or where the property is located. Those living abroad who are considered residents of California will have to file California taxes for expats.
What is the exemption for expats income tax? ›
The Foreign Earned Income Exclusion, or FEIE, is also known as Form 2555 by the IRS. This expat benefit allows you to avoid double taxation by excluding up to a certain amount of foreign earned income from your US taxes. In 2024, for the 2023 tax year, you can exclude up to $120,000 of foreign earned income.
What taxes do retired expats pay? ›
As a U.S. citizen, moving overseas does not relieve you of your U.S. tax obligations. You may still be required to file an annual income tax return with the IRS, especially if you're drawing Social Security or taking retirement account distributions.
