One: Who is obliged to submit the statement?

1.        Every individual with one or more taxable sources of income, including those who are partners in partnership companies, limited partnership companies and limited by shares partnership companies.

2.        All employees whose income is over 5000 dinars (subject to the stipulations in the instructions # 8 for 1996).

Two: When is the statement submitted?

The statement is submitted no later than the last day of the fourth month after the end of the taxpayer’s fiscal year.

For instance the statement for the year1998 should be submitted between 1/1/1999 and 30/4/1999.

Three: To whom is the statement submitted?

The statement is submitted to the income tax directorate that originally sent out the statement.

Four: Who is the resident?

A Jordanian is a resident if he/she usually resides in the Kingdom for a period of 120 days/ year, or if he/she is at any period of time an employee of the Jordanian government or any local authority in the Kingdom.  A non-Jordanian is a resident if he/she resides in the Kingdom for one consecutive period or for interrupted periods totaling not less than 183 days/year.

Five: What are the taxable sources of income?

Tax is imposed on any income generated in the Kingdom or acquired from the sources mentioned in the first part of this statement, taking into consideration item twenty-four.

Six: What amounts of money are tax-exempted from the employment income?

In addition to exemptions stated in articles 21 and 22 of this statement, the following allowances are exempt for those who actually receive them:

1.        The cost of living and travel allowance for the employee.

2.        The cost of living allowance for the private sector employee, provided that it is spent for work-related purposes and is as much as is being spent in this regard.

3.        Travel allowance and transportation fee for the private sector employee by no more than 10% of the basic salary if the allowances are spent in the workplace with a maximum of 600 dinars/year and by no more than 20% if the allowances are spent outside the workplace with a maximum of 1200 dinars/year.

4.        Travel allowance or transportation fee paid annually to each member of a board of directors, not exceeding 600 dinars to the resident and 1200 dinars to the non-resident and up to a maximum of 1500 dinars to the resident and 2500 dinars to the non-resident whatever the number.

5.        Representational allowance (namely allocations paid to officials, government employees, public institutions and local authorities for the purpose of spending on job or position requirements).

6.        Hospitality allowance equivalent to 10% of the annual basic salary or 240 dinars/year, whichever is less.

Eight: How do you handle vacuity and key money?

The law permits the beneficiary to divide the received vacuity and key money equally over five years, and also permits the payee to amortize these amounts equally over the period of five years.

Nine: What are export incentives?

1.        Based on the stipulations of Article (3/C) of the Income Tax Law and according to the Cabinet decision dated 7/6/1994, 100% of the net profits realized from export have been exempt as of 1994.  The exempted amount is calculated according to the following formula: Net Sales Revenue from exports X Net Profits realized from the income generated by that export category = Total Net Sales.  The fertilizer, phosphate and potash industries are exempted from this formula established in accordance with trade protocols and agreements of payment and repayment of foreign debts and their interests are excluded from this incentive.

2.        As of 1994, the Cabinet decided to exempt 100% of the income that is generated from computer services, economic feasibility studies, and legal, engineering, accounting and auditing consultations that are prepared in the Kingdom for export.

Ten: What amounts are deducted from the total income in order to realize the net income?

The law permits the deduction of expenses disbursed for the purpose of generating income, such as interests, wages and salaries paid to employees, taxes and fees (excluding income tax and social services tax), contributions to the social security fund or the retirement fund or the provident fund, outstanding debts, maintenance expenses, depreciation, and publicity expenses.  These include expenses of previous years that were not defined or final then, as well as expenses of the previous four years that were not deducted due to error and omission.

Eleven: How do you handle establishment and pre-operation expenses?

The law permits the deduction of these expenses and has allowed the taxpayer to amortize them over a period set by the taxpayer himself, provided that it does not exceed five years beginning when profits are realized.

Twelve: How do you handle training and hospitality expenses?

The full amount of training, marketing, research and development expenses disbursed and incurred for the purpose of generating gross income in a particular year can be deducted if the disbursement of these expenses was the sole responsibility of the taxpayer, but cannot be deducted if the disbursement of these expenses was the responsibility of the main center for which the taxpayer is a branch in the Kingdom, or the responsibility of the manufacturing company.  In addition, actual expenses of employees’ travel for work purposes and their meals in the workplace can also be deducted.  Installments and expenses incurred by the taxpayer to provide medical treatment, life insurance, insurance against work-related injuries or death can also be deducted.

Thirteen: What are the legal restrictions to granting exemptions related to family support and university education?

A.        The law stipulates that support of one family member shall not be granted to more than one taxpayer.

B.        If more than one taxpayer supports the education of a student who does not benefit from a scholarship, then all taxpayers shall share the exemption.

Fourteen: Is the deduction of personal expenses and special home expenses permitted?

The law does not permit the deduction of such expenses.

Fifteen: Are medical treatment expenses deductible?

Amounts of money paid by the resident on his/ her own behalf or on behalf of anyone he/she legally supports are deductible as follows:

1.        The expenses for a surgical operation as well as a hospital stay in one of the Kingdom’s hospitals.

2.        The expenses for the treatment of chronic diseases, with a maximum of 5000 dinars in the Kingdom and 10000 dinars outside the Kingdom.

3.        The expenses for a surgical operation that was performed outside the Kingdom under emergency procedures or was inoperable in the Kingdom, for a maximum of 5000 dinars.

Sixteen: How do you handle the buildings and lands tax paid on rented property?

Buildings and lands tax paid on a rented building or land can deducted if a net income was generated from it, provided that the permitted clearance amount does not exceed the payable tax.

Seventeen: How do you handle income generated from rented property?

1.        10% of the rent (after the deduction of expenses and depreciation) generated from renting property in the Greater Amman areas is exempted, and 30% is exempted in all other areas.

2.        2% of the property’s original cost balance as of 1/1/1996 is deducted.  The balance is determined by calculating the difference between the original cost of the building and its age from the time of its construction until 31/12/1995 multiplied by the annual depreciation rates, that were previously adopted under the tax laws for old buildings that allowed buildings to be amortized according to its type.

3.        The rent value of a building occupied by its owner is exempt if he/she is a “legal” entity or if he/she is using it as a free residence for his/ her employees.

4.        The rent value of a building occupied by its owner is exempt if he/she is a “natural” entity or his/ her son, his/ her brother, or any of his/ her descendents is a free residence.

Eighteen: When is the deduction of paid salaries and wages not permitted?

The law prohibits disbursing salaries and wages unless taxes have been deducted and paid to the Income Tax Department.

Nineteen: How do you handle loss?

In order to deduct or carry forward loss, you must have kept legal and correct records.  If so, the determined loss can be deducted or carried forward over any six years within the limits of the taxable per annum income.

Twenty: Did the law provide a tax reduction for those who submit their statements on time?

The law provides the taxpayer, who submits an accurate statement and who pays the acknowledged tax at a date no later than the last day of the fourth month after the end of the fiscal year, the right to deduct 6% of this tax, if payment took place during the year covered by the statement or in the first month after the end of that year; the right to deduct 4% if payment took place in the second month after the end of that same year; and the right to deduct 2% if payment took place in the third month after the end of this year.  The reduction itself is granted on any amounts paid on account or deducted and then paid (with the knowledge that the reduction is not granted for amounts that exceed the payable tax).

Example: If you close your accounts on December 31, then what you pay in the following three months, January, February and March, is subject to the above-mentioned reduction.  Similarly, if you close your accounts in March, you would be granted the same reduction if payment took place over the following three months, and so on and so forth.  (Note that the reduction takes place after performing the clearance of the buildings and lands tax).

Twenty-One: What is the penalty for not submitting the statement?

A delay fine is imposed on those who are obliged to submit a statement (see instructions # 1 for 1998) at a percentage of 2% of the payable tax for every month of delay and with a maximum of 24% (see the second item).

Twenty-Two: Who is subject to the legal obligation stipulated in article (37) of the law of paying the tax on account?

The legal obligation applies to every person who fails to submit his/ her statement within the stipulated period of time (see the second item).  This person must then pay the equivalent of 50% of the final estimated tax on account of the payable tax for that year, and 20% of the estimated tax if there was no final tax estimate.

Twenty-Three: Is there a penalty for submitting an incorrect statement?

The law stipulates that if proved by a court verdict that a person is guilty of such a crime, he/she shall be imprisoned for a period of up to one year or levied a large fine and made to pay double the amount of the tax value shortage.

Twenty-Four: What is the income that is generated outside the Kingdom and is subject to tax in the Kingdom?

Interests, commissions, financial investment dividends, profits from trading in currencies, precious metals and bank notes that are realized outside the Kingdom by any Jordanian or resident of his/ her own money and deposits in the Kingdom are subject to tax.

Twenty-Five: How do you calculate tax on taxable income?

Note: If you find difficulty in understanding the schedule, contact the Income Tax Department to get the payable tax on your income over the telephone. .

If your taxable income is exactly 2000 dinars, your tax is 100 dinars.

If your taxable income is exactly 4000 dinars, your tax is 300 dinars.

If your taxable income is exactly 8000 dinars, your tax is 900 dinars.

If your taxable income is exactly 12000 dinars, your tax is 1700 dinars.

If your taxable income is exactly 16000 dinars, your tax is 2700 dinars.

If your taxable income is less than 2000 dinars, your tax is 50 fils for every dinar.

If your taxable income is between 2000–4000 dinars, your tax is 100 dinars+100 fils for every dinar over and above 2000 dinars.

If your taxable income is between 4000–8000 dinars, your tax is 300 dinars+150 fils for every dinar over and above 4000 dinars.

If your taxable income is between 8000–12000 dinars, your tax is 900 dinars+200 fils for every dinar over and above 8000 dinars.

If your taxable income is between 12000–16000 dinars, your tax is 1700 dinars+250 fils for every dinar over and above 12000 dinars.

If your taxable income is more than 16000 dinars, your tax is 2700 dinars + 300 fils for every dinar over and above 16000 dinars.