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  • Service: Tax
  • Type: Business and industry issue
  • Date: 5/15/2014

Jordan – 2014 social security, corporate and personal tax rates 

Jordan is increasing its social security rates in stages as of 1 January 2014 and modifying the income base on which the rates apply. Jordan has also proposed to increase its personal and corporate income tax rates, raise the withholding tax rate on fees for non-residents’ services, and change how sales tax applies to mobile devices.

New social security rates


Employers – The overall employer social security contribution rate will rise over four years from 12.25 percent in 2014 to 14.25 percent in 2017, with a 0.5 percent increase on 1 January of each year.


Employees – The overall employee social security contribution rate will rise over four years from 6.5 percent in in 2014 to 7.5 percent in 2017, with a 0.25 percent increase on 1 January of each year.


Voluntary rate: The voluntary contribution rate will rise over four years from 14.5 percent in 2014 to 17.5 percent in 2017, with a 0.75 percent increase on 1 January of each year.


Social security rates for 2014 are as follows:


2014 social security contributions
Type of insurance Employee contribution Employer contribution Total contribution
Old age insurance 5.75% 9.5% 15.25%
Work injury insurance 2.00% 2.00%
Maternity insurance 0.75% 0.75%
Unemployment insurance 1.00% 0.50% 1.50%
Total contribution 6.75% 12.75% 19.50%

Source: New Social Security Law (Law 1 for 2014), published in the Official Gazette (Al-Jarida Al-Rasmiya), No. 5267 for 2014, 29 January 2014.


Monthly income base for calculating social security


Jordan has replaced its legislation governing the income base for calculating social contributions. The base is periodically adjusted for inflation under the previous and new regimes. Under the new regime,1 as of 1 March 2014:


  • For employees who were subscribed with the social security scheme before 1 October 2009, the monthly maximum wage threshold for contributions continues to be JOD5,000.
  • New employees who subscribed with the social security scheme after 1 October 2009 are subject to a monthly maximum wage threshold for contributions of JOD3,000 (up from the monthly base of JOD2,264 that applied for January and February 2014).

Proposed personal and corporate income tax rates


Jordan’s new Income Tax Law was expected to come into effect as of 1 January 2014, but has been postponed due to further changes in the law. Recently proposed changes under review are as follows:


Jordan – personal income tax rates and brackets (resident and non-resident employees)
Current Proposed (as of 1 January 2014)
On income up to JOD2,000 7% Up to JOD10,000 10%
Over JOD12,000 14% JOD10,000 – 20,000 15%
  Over JOD20,000 20%
Annual personal exemption – single JOD12,000 JOD 9,000
Annual personal exemption – married (spouse not working in Jordan) JOD24,000 JOD18,000

Source: Draft Jordanian Income Tax Law, Article 11.


The draft law proposes to increase Jordan’s corporate income tax rates for specified industries as follows:


Jordan – corporate income tax rates
Current Proposed (as of 1 January 2014)
Banks 30% 35%
Insurance, telecommunications, stock brokers, finance companies, currency exchange companies and leasing companies 24% 25%
All others 14% 20%

Source: Draft Jordanian Income Tax Law, Article 11.


Withholding tax


The draft law proposes to increase the withholding tax rate on fees paid on services provided by non-resident parties to 10 percent (from 7 percent).


Sales tax on mobile devices


As of 4 February 2014, cell phones, smart phones, tablets and other mobile devices are subject to general sales tax at the rate of 16 percent and are zero-rated for special sales tax purposes. Such devices previously were subject to special sales tax at the rate of 16 percent and were exempt from general sales tax.


1New Social Security Law (Law 1 for 2014).

 

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