Personal Income Tax
Individuals, whether resident or non-resident in Jordan, are taxed based on income earned in the kingdom from all taxable activities, including income from employment, business (either as sole proprietors or as partners), rental income and directors’ fees.
An individual present in Jordan for 183 days or more in a calendar year is treated as a resident for tax purposes. Resident and nonresident individuals are taxed only on income sourced in Jordan.
Income Tax Rate
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.
Personal income tax (PIT) rates are applied progressively as follows:
|Taxable income||PIT rate|
|Up to JOD 5,000||5%|
|JOD 5,001 – JOD 10,000||10%|
|JOD 10,001 – JOD 15,000||15%|
|JOD 15,001 – JOD 20,000||20%|
|JOD 20,001 – JOD 1,000,000||25%|
|Over JOD 1,000,000||30%|
Salaries, wages, allowances, and bonuses (in cash or in kind) received from any employment, including the estimated annual value of housing, lodging, boarding, or any other allowance, are taxable in Jordan.
The first JOD 2,500 of monthly pension salary paid by a resident person shall be exempt from income tax.
Moreover, there is an annual exemption of JOD 2,000 for people with full or partial disabilities.
According to Jordan’s Income Tax Law, the following income is exempt from PIT:
- Compensation paid by insurance entities, other than what is paid as a reimbursement for the loss of income from business activity or employment.
- Income from employment paid to members of non-Jordanian diplomatic or consular bodies representing other countries in Jordan, subject to the reciprocal treatment principle.
- Income from distribution of estates or wills for the inheritors or the devisees, according to the provisions of the effective legislations.
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.
- JOD 10,000 for the year 2019 and JOD 9,000 for the year 2020 and the following years for the resident dependants, regardless of their number.
Moreover, a further exemption is granted against the expenses incurred for medical treatment, education, rent, interest on housing, and murabaha on housing as follows:
- JOD 1,000 for the taxpayer from 2020 and the following years.
- JOD 1,000 for the spouse of the taxpayer from 2020 and the following years.
- JOD 1,000 for each child and with a ceiling of JOD 3,000.
A Jordanian non-resident person can benefit from the exemption of the dependants residing in Jordan if the non-resident person is responsible for their support.
In cases of submitting joint or separate declarations, the exemption amount granted to a single family shall not exceed JOD 23,000.
Sample Personal Income Tax Calculation
As per the new income tax law, the yearly PIT computation for a resident individual with total income of JOD 40,000 is as follows:
|JOD 1,000 against certain expenses**||(1,000)|
|Yearly taxable income||29,000|
|The first JOD 5,000 is subject to PIT at 5%||250|
|The second JOD 5,000 is subject to PIT at 10%||500|
|The second JOD 5,000 is subject to PIT at 15%||750|
|The second JOD 5,000 is subject to PIT at 20%||1,000|
|The remaining balance of the yearly taxable income (JOD 9,000) is subject to PIT at 25%||2,250|
* 20,000 if the individual has resident dependents.
** Such expenses should be supported by necessary documents and invoices. Moreover, the maximum amount for this exemption is JOD 3,000.
Leave A Comment
You must be logged in to post a comment.