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  • Service: Tax
  • Type: Business and industry issue
  • Date: 10/18/2013

Jordan – Tax rates on the rise 

The government of Jordan has announced a number of new tax rate changes. These changes, summarized below, affect mobile telecommunications, corporate income taxes, payroll taxes and withholding taxes.

Tax rates double for mobile telecommunications


The government of Jordan doubled its special sales tax rates on mobile telecommunications as follows:


  • from 12 percent to 24 percent (from 12 percent) on mobile subscriptions
  • from 8 percent to 16 percent on mobile phones including smart phones.

The new rates took effect on 10 July 2013, the date of the amendments’ publication in the Official Gazette No. 5229 of 2013.


More tax increases looming in 2014


In 2013, the government of Jordan introduced a new draft Income Tax Law to Parliament, which is still under discussion. This law is expected to take effect 1 January 2014. Proposed changes in the bill are as follows.


Corporate income tax changes


Under this proposed Income Tax Law, corporate income tax rates applicable to most taxpayers liable for Jordanian tax (other than those described below) would rise in 2014 from 14 percent to:


  • 15 percent of taxable income up to 100,000 Jordanian dinars (JOD)
  • 25 percent of taxable income over JOD100,000

The corporate income tax rate would rise to 35 percent of all taxable income for banks, mining companies, insurance companies, financial companies, money exchange companies, financial leasing companies and major telecommunication companies. This represents an increase from the previous tax rates of 30 percent for banks and 24 percent for financial services companies and major telecommunication carriers.


Payroll tax changes


Currently, Jordan’s income tax rate for individuals is 7 percent on taxable income up to JOD12,000 and 14 percent on any additional taxable income. Under the proposed Income Tax Law, income tax rates for individuals would rise in 2014 as follows:


  • 10 percent on taxable income up to JOD10,000
  • 20 percent on taxable income from JOD10,001 to JOD20,000
  • 25 percent on taxable income over JOD20,000.

The new Income Tax Law also proposes to increase taxes in 2014 by lowering the personal exemption. Tax-resident persons would be entitled to an annual personal exemption of:


  • JOD 9,000 (down from JOD 12,000) for single tax-resident persons
  • JOD 18,000 for tax-resident families (down from JOD 24,000).

Withholding tax rate increase


Finally, the proposed Income Tax Law would raise the withholding tax rate applicable to non-resident service providers to 10 percent (from 7 percent currently).

 

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  • KPMG’s TaxNewsFlash series provides a summary of the latest tax developments being reported by KPMG firms from around the globe including the MESA region.
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