Amman GMT +2
EY Street address: Mail address: 300 King Abdullah II Street P.O. Box 1140 Amman 11118 Amman 11118 Jordan Jordan
Indirect tax contacts
Ali Samara +962 (6) 580-0777 ali.samara@iq.ey.com
Mohammed Freihat +962 (6) 580-0777 mohammed.freihat@jo.ey.com
Fadel Suleiman +962 (6) 580-0777 fadel.suleiman@jo.ey.com
A. At a glance
Name of the tax Sales tax [ST] (the GST law provides for two types of taxes, which are the general sales tax [GST] and the special sales tax [SST])
Local name Dareebat Al-Mabi’at
Date introduced 1 June 1994
Trading bloc membership European Free Trade Association-Jordan Free Trade Agreement Greater Arab Free Trade Agreement Aghadir Agreement
Administered by Income and Sales Tax Department (ISTD) (http://www.istd.gov.jo)
ST rates
GST rates
Standard
16% Reduced 1%, 2%, 4%, 5%, 10% Other Zero-rated (0%) and exempt
SST rates
Various (20 types of goods and one type of service are subject to percentage rates or fixed amounts)
ST number format 9999999
ST return periods
GST return periods Bimonthly
SST return periods Monthly Thresholds
Registration JOD0 to JOD75,000 depending on the type of supplies made Recovery of GST by nonresident businesses No
B. Scope of the tax
Under Jordan’s Sales Tax (ST) Law No. 6 of 1994 (as amended) (the Sales Tax Law), a standard goods and services tax (GST) rate of 16% is applicable to the following:
• Sale of goods and/or services inside Jordan
• Importation of goods and/or services from outside of Jordan or from the Free Zones, Special Zones and Development Zones
This is the general rule unless the activity or type of goods being imported into Jordan is spe cifically exempt by the Sales Tax Law or subject to a different GST rate.
C. Who is liable
For ST purposes, a taxable person is any individual or entity that imports and/or supplies taxable goods or services. There is no minimum annual threshold for a person who imports taxable goods or services for trading purposes, and the taxable person would be required to register with the Income and Sales Tax Department (ISTD) within 30 days of the first taxable import (regardless of the import value).
Suppliers of goods and services are required to register only if their taxable turnover (outside of importation activities) exceeds the following minimum annual thresholds:
• JOD75,000 for traders and manufacturers subject to GST
• JOD30,000 for service suppliers
• JOD10,000 for manufacturers of goods subject to SST
If a taxable person carries out more than one of the business activities mentioned above, the minimum limit is the applicable registration threshold.
A new business making taxable supplies is required to register for ST once it commences activities if it is estimated that its taxable turnover during the 12 months following their commencement will exceed the applicable minimum threshold.
For existing businesses, registration with the ISTD would be required at the earlier of the (i) end of the month, if taxable turnover during the preceding 12 consecutive months has reached the minimum threshold, or (ii) end of the month, if it is estimated that the person’s taxable turnover during the 11 consecutive months ending with the subsequent month may reach the minimum threshold.
Exemption from registration. A taxable person whose entire turnover is from zero-rated sales may request an exemption from registration. A taxable person whose entire turnover is from exempt sales is automatically exempt from registration.
Voluntary registration and small businesses. Persons have the option of registering voluntarily with the ISTD for ST purposes. Upon registration, the persons would be required to comply with submitting their ST filings.
Group registration. Group ST registration is not allowed in Jordan.
Non-established businesses. There is no mechanism by which a non-established business is able to register with the ISTD. Where a non-established business makes supplies within Jordan, the non-established business may need to register a legal presence. This is, however, a legal matter, and from a GST perspective, a non-established business would not be able to register for tax purposes.
Tax representatives. A taxable person can appoint a tax representative through a power of attor ney vis-à-vis the ISTD. This is the general rule on who can be a tax representative. The power of attorney requirements should be confirmed with legal counsel and are not a GST matter.
Reverse charge. Services provided by independent foreign contractors or foreign entities (i.e., non-established businesses) to resident entities (whether related or unrelated parties, i.e., a business-to-business (B2B) supply) are classified as imported services in Jordan and are subject to GST via a reverse charge. The resident entity receiving the services must apply the GST and remit it to the ISTD.
Domestic reverse charge. There are no domestic reverse charges in Jordan.
Digital economy. No special measures relating to the ST on the digital supplies of services or goods are in place in Jordan. As such, the general ST rules apply. Nonresidents that provide electronically supplied services do not need to register for ST in Jordan unless they have a physical presence in Jordan. This includes a fixed place of business and employees in the country. There are no special ST rules for e-commerce supplies, e.g., imported goods.
Online marketplaces and platforms. No special rules exist for online marketplaces and platforms in Jordan.
Registration procedures. To register a taxable person, an authorized person with a valid power of attorney should present a paper registration application in person to the ISTD, along with the following documents:
• A certified copy of the certificate of registration with the Jordanian Companies Control Department
• A certified copy of the commercial certificate issued from the authorized party
• A certified copy of the commercial name and trademark registration, if applicable
• A certified copy of the effective vocational license
• Personal identification documents for the authorized signatories
In addition to the above documents, importers are required to present a certified copy of the impor tation card. A taxable individual would also be required to present a personal identification num ber.
Please note that the process to appoint an authorized person with a valid power of attorney is a legal matter and must be confirmed with qualified Jordan legal counsel.
Deregistration. A registered person who stops supplying goods and services must deregister. If a registered person’s turnover drops below the registration threshold or becomes wholly related to zero-rated sales, the registered person may voluntarily request deregistration.
Changes to ST registration details. Taxable persons must notify the ISTD in person of any changes to their ST details within 30 days from the change.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of GST, including the zero rate.
The GT rates are:
• Standard rate: 16%
• Reduced rate: 1%, 2%, 4%, 5%, 10%
• Zero-rate: 0%
The standard rate of GT applies to all supplies of goods or services, unless a specific provision allows a reduced rate or an exemption.
Twenty types of goods and one type of service are subject to ST. ST is imposed at various per centage rates and in fixed amounts. These rates and amounts are provided in Regulation No. 80 of 2000 and Regulation No. 97 of 2016.
Certain goods and services detailed in Schedule 1 of the Sales Tax Law are subject to both GST and SST.
Examples of goods and services taxable at 0%
• Printing service for any party provided that all supplies (inks, paper and all supplies, etc.) are from the printing press itself
• Raw materials for the production of medicine
Examples of goods and services taxable at 1%
• Hygiene and disinfectants
• Gloves
• Food salt
• Pencils
• Oils and ghee
Examples of goods and services taxable at 2%
Examples of goods and services taxable at 4%
• Supplies used by the handicapped
• Veterinary medicines
• Corn
• Live animals
• Cheese
Examples of goods and services taxable at 5%
Examples of goods and services taxable at 10%
Examples of goods and services subject to ST
• Beer (including nonalcoholic beer)
• Tobacco and tobacco products
• Vehicles (cars)
Certain goods and services are exempt and are not subject to GST, and input GST is non-recov erable. Exempted goods are goods and services listed in Schedule 2 annex of the Sales Tax Law.
Examples of exempt supplies of goods and services
• Wheat
• Bread
• Electrical energy
• Firefighting vehicles
• Education/training
• Medical services
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Jordan.
E. Time of supply
ST becomes due at the time of supply, which is called the “tax point.” The tax becomes due at the earliest of the following events:
• Delivery of goods. However, the Director General of the ISTD may consider the date of the tax invoice as the tax point if it is issued periodically or at the end of a certain period following the date of delivery
• Issuance of a tax invoice.
• Receipt of the full or partial value of the goods, receipt of credit payment or any other receipt of value according to the agreed terms for payments
Tax becomes due on the supply of services at the earlier of the following events:
• When services are made or provided
• Issuance of a tax invoice
• Receipt of full or partial payment for the service
Tax is payable in the cases mentioned above by reference to the value covered by the invoice or the amount paid, whichever is higher.
However, importers of goods (customs) and services (reverse charge) must pay the 16% GST due at the earliest of the following dates:
• Within one month after the date of payment for the imported service or after the date of making a partial payment, limited to the amount paid
• When the means that include the goods (for example, compact disks and tapes) are released from Customs
• Within six months after the date on which the service or any part of the service is received, limited to the amount related to the part received
Deposits and prepayments. There are no special time of supply rules in Jordan for deposits and prepayments. As such, the general time of supply rules apply (as outlined above).
Continuous supplies of services. There are no special time of supply rules in Jordan for continuous supplies of services. As such, the general time of supply rules apply (as outlined above).
Goods sent on approval for sale or return. There are no special time of supply rules in Jordan for sup plies of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).
Reverse-charge services. There are no special time of supply rules in Jordan for supplies of reversecharge services. As such, the general time of supply rules apply (as outlined above).
Leased assets. There are no special time of supply rules in Jordan for supplies of leased assets. As such, the general time of supply rules apply (as outlined above).
Imported goods. Importers of goods must pay the tax due on the goods at the clearance stage to the Customs Department in accordance with the procedures applicable for the payment of customs duties. Clearance of these goods is not finalized until the tax due is paid in full.
A registered importer may obtain permission from the ISTD to defer the payment of the tax pay able on the importation of goods. This postponement is granted if the importer has no record of fraud or customs smuggling and has submitted all returns in the last 12 months.
F. Recovery of ST by taxable persons
Input GST (GST on purchases, including the zero rate) related to goods and/or services is recov erable. Taxable persons are required to submit the bimonthly GST return reflecting the net of the GST amounts that have been paid on inputs (purchases) and the GST received on outputs (sales) for the reporting period. If the GST received on outputs exceeds the GST paid on inputs, the outstanding balance is paid to the ISTD. If the GST received on inputs exceeds the GST paid on outputs, the balance is carried forward to the next period.
The time limit for a taxable person to reclaim input tax in Jordan is three years. Balances carried forward can be recovered after three consecutive periods (six months) of ongoing credit carryforward. The time limit for reclaiming input tax from previous periods is three years from the period when the credit was carried forward.
Input SST (SST on purchases) related to goods that are used to produce final goods that are also subject to SST is recoverable.
A valid tax invoice or customs documents must exist to recover input tax.
Special rules apply to the recovery of input ST on goods purchased or imported before registra tion.
Nondeductible input tax. Input GST related to (i) goods and services not used for business pur poses, (ii) exempt goods and/or services and (iii) other business expenditures set out in the Sales Tax Law is non-recoverable. The following lists provide some examples of items of expenditure for which input tax is not deductible.
Input SST is generally nondeductible (excluding SST on goods that are used to produce final goods that are also subject to SST).
Examples of items for which input tax is nondeductible
• Goods and services used for nonbusiness purposes
• Goods and services attributable to exempt or nontaxable supplies
• Sporting and recreational activities, other than those used for supplying goods or services
• Restaurants and hotel services, other than those used for supplying goods or services
• Purchases accounted for as returned purchases
• The special tax paid on the items listed in Schedule (1) of the ST legislation (unless otherwise provided for)
• Goods and services that have been used for construction purposes, other than those used for renting of construction and destruction equipment
• Saloon cars, other than cars purchased by car-trading businesses or for car rental purposes
Examples of items for which input tax is deductible (if related to a taxable business use)
• Business use of telephone and mobiles
• Accounting and tax consulting fees
• Cars purchased by car-trading businesses or for car rental purposes
Partial exemption. If a taxable person makes both exempt and taxable goods and services, it may recover input tax partially through its returns.
If the same taxable inputs are attributable to both taxable and nontaxable supplies (whether exempted or for nonbusiness use), the portion of the deductible general input tax is determined based on the production formula. If this is not possible, it is calculated based on the proportion of taxable supplies to total supplies.
Approval from the tax authorities is not required to use the partial exemption standard method in Jordan. Special methods are not allowed in Jordan.
Capital goods. There are no special recovery of ST rules in Jordan for capital goods. Therefore, the recovery of GST for taxable persons rules apply (as outlined above).
Refunds. Tax is repaid within a period not exceeding three months after the date on which the claim for refund has been filed if any of the following circumstances exist:
• Tax is paid on goods or services exported or used in the manufacture of other goods that have been exported.
• Tax is collected by mistake.
• Recoverable input tax that was paid at least six months ago and that was carried forward as a credit has not yet been deducted from the tax charged on supplies made during that period.
• Tax was paid on goods that left the country in the possession of nonresident persons, and the tax amount to be refunded cannot be not less than JOD50 but not more than JOD500.
• ST was previously paid on goods supplied to the bodies relieved from payment of tax under Article 21 of the Sales Tax Law (the King of Jordan, embassies, diplomats and consuls [subject to reciprocity] and international and regional organizations working in Jordan).
Pre-registration costs. Following tax registration, a taxable person can recover ST paid or charged before registration on the goods provided that a tax invoice in proper form is presented and sub ject to the recovery of ST for taxable persons rules (as outlined above).
Bad debts. Relief for GST on bad debts can be claimed in the following cases:
• If the purchaser dies without leaving assets sufficient to pay the tax
• If the purchaser declares that his funds are not sufficient to pay the debts in full or in part, or if he fails to pay or communicate about the debt for two years
• If the seller has exhausted all legal means to collect the debt, including the tax, with no success
• If the seller has proved that the buyer has declared bankruptcy
Noneconomic activities. Input tax incurred in relation to noneconomic activities is not recoverable in Jordan.
G. Recovery of ST by non-established businesses
Input tax incurred by non-established businesses in Jordan is not recoverable.
H. Invoicing
ST invoices. Invoices must be issued for sales exceeding one Jordanian dinar. The invoice must be issued on the date the sale/supply is made. As mandated by the Tax Invoicing Regulations, there should be three copies of the issued invoice. One copy should be issued to the Jordanian cus tomer as per the requirements above. The other invoice copies should be maintained internally by the registered person for bookkeeping purposes.
Credit notes. Credit notes are issued when an issued invoice must be amended or canceled; examples include when a customer returns purchased goods fully or partially, when a customer changes their initial order or an incorrect amount has been reflected on the invoice.
Electronic invoicing. Electronic invoicing is allowed in Jordan, but not mandatory. However, there are no special rules or limitations in Jordan for electronic invoicing. Therefore, the general invoicing rules apply (as outlined above).
Simplified ST invoices. There are no simplified ST invoice rules in Jordan.
Self-billing. Self-billing is not allowed in Jordan.
Proof of exports. The original invoice and customs declaration of exported goods stamped by the Customs Center; and the original invoice, related contract and proof of transfer related to export ed services is required as proof of exported goods and services respectively.
Foreign currency invoices. Foreign currency invoices are accepted. However, the value must be converted into the domestic currency, which is the Jordanian dinar (JOD), according to the exchange rate at the time of supply.
Supplies to nontaxable persons. There are no special invoicing rules for supplies to nontaxable persons in Jordan. As such, full ST invoices are required.
Records. ST documentation (tax returns, invoices, notes and other related reporting obligations) must be held for record-keeping purposes. The records can be held in Jordan or outside the country. There are no specifications on where the records must be kept.
Record retention period. Company records must be kept for a period of 10 years. ST records must be kept for a period of four years from the date of submission of the ST return.
Electronic archiving. Electronic archiving is allowed in Jordan. Records can be stored either elec tronically or physically. However, they must be easily accessible and made available if requested by the tax authorities during ST audits.
I. Returns and payments
Periodic returns. GST must be declared to the ISTD through a bimonthly electronic GST return due within 30 days following the end of every two-month period. SST must be declared to the ISTD through a monthly electronic SST return due within 30 days following the end of every month.
Periodic payments. GST must be paid within 30 days following the end of every two-month period. SST must be paid within 30 days following the end of every month. Payments must be made electronically using the ISTD’s online portal.
Electronic filing. Electronic filing is mandatory in Jordan for all taxable persons. Taxable persons are required to register and submit ST returns electronically on the ISTD’s official website (www. istd.gov.jo).
Payments on account. Payments on account are permitted, but not required, in Jordan. There are no specific rules in Jordan for payments on account. If the taxable person does not settle the amounts due, there would be an amount payable. If advance payments are made, these would reduce the amount payable.
Special schemes. The Sales Tax Law in Jordan does not provide for any special ST schemes, unless the ISTD agrees to grant exceptions on a case-by-case basis.
Annual returns. Annual returns are not required in Jordan.
Supplementary filings. No supplementary filings are required in Jordan.
Correcting errors in previous returns. Any errors in previous ST returns can be corrected by submitting an amended ST returns in person at the ISTD.
Digital tax administration. There are no transactional reporting requirements in Jordan.
J. Penalties
Penalties for late registration. The following penalties are assessed for late registration:
• A penalty of two to three times the output tax, plus a criminal penalty equal to JOD200 is imposed if the date of registration is more than 60 days from the date on which the business should have been registered.
• A penalty of JOD100 is imposed if the date of registration is less than 60 days from the date on which the business should have been registered.
Penalties for late payment and filings. Late filing penalties range between JOD100 to JOD500. If an additional ST liability is imposed, late payment penalties will be imposed at 0.4% of the unpaid ST amount for each late week or part thereof (up to the tax amount due) calculated from the date the outstanding ST should have been paid to the actual date of payment. In addition, Article 31 of the Sales Tax Law stipulates that a maximum of three times the tax penalty can be applied on taxable persons that commit an act of tax evasion.
Penalties for errors. If there are additional ST amounts due from any errors, late payment penalties will be imposed at 0.4% of the unpaid ST amount for each late week or part thereof (up to the tax amount due) calculated from the date the outstanding ST should have been paid to the actual date of payment.
If a taxable person fails to notify the tax authorities within the prescribed period for changes in its ST registration details, a penalty ranging between JOD100 to JOD500 may apply. For further details, see the subsection Changes to ST registration details above.
Penalties for fraud. A person who commits a criminal tax fraud offense is liable for a civil com pensation penalty payable to the ISTD of not less than twice and not more than three times the
tax due, and a criminal penalty of not less than JOD200 and not more than JOD1,000. For a second offense, the criminal penalty imposed is doubled. If the offense occurs again within one year thereafter, the court may impose the highest criminal fine or a term of imprisonment for a period not less than three months and not exceeding six months, or both.
Personal liability for company officers. Company officers who hold shares and have been granted the powers of management can be held personally liable.
Statute of limitations. The statute of limitations in Jordan is four years. During this period the ISTD can go back and review ST returns, identify errors and impose penalties for any late filings or unpaid ST amounts. There is no time limit for taxable persons to voluntarily correct errors in previous ST returns.