PKF Jordan and Iraq
PKF ProGroup
PKF Khattab & Co.
PKF Planning Tax Advisory
PKF Human Resource Consulting
Practical Guide | September 2015
Jordanian Income Tax Law Number 34
of 2014
Contact Us:
PKF Jordan
Amman - Jordan
Website: www.pkf.jo
Email: [email protected]
Tel:
+962 6 5695442/ 3
Fax:
+962 6 5606344
PKF Iraq
Kurdistan - Iraq
Website: www.pkfIraq.com
Email: [email protected]
Tel:
+9647508829873
Fax:
+96265606344
PKF Jordan and PKF Iraq are member firms of the PKF International Limited
network of legally independent firms and do not accept any responsibility or
liability for the actions or inactions on the part of any other individual
member firm or firms.
Jordanian Income Tax Law Number 34 of
2014 | A Practical Guide
1. Effective from the 1st January 2015.
2. Tax rates on COMPANIES are as follows:
Sector
Tax Rate
Industrial sector
14%
Major telecom companies,
electricity distribution and
generation companies, mining
companies, insurance and reinsurance companies, brokerage
and financial institutions, legal
persons who practice financial
leasing
24%
Banks
35%
All legal persons except what was
stated above
4. Jordanian companies’ branches operating
outside the Kingdom, and foreign investments
if the source of capital was originated inside
the Kingdom are subjected to 10% tax ratio,
based on net income declared in their final
accounts which are certified by an external
certified auditor, while the former law dictated
that the mentioned companies are subjected to
20% of the net income of branches, and
according to the mother company sector and
foreign investments was subjected to 30%
ratio.
5. End of service reward that is greater than
5,000 JOD due to the employees starting from
1/1/2010 has been subjected to tax, where the
former law dictated that the end of service
reward was 50% exempted.
20%
3. Tax on NATURAL PERSON:
A. 12,000 JOD yearly exemption for
resident natural person.
B. 12,000 JOD yearly exemption for
dependents.
C. 4,000 JOD yearly exemption for natural
person and dependents to cover
medical treatment, education, housing
loans interests, Murabaha on housing,
technical, engineering and legal
services, provided that invoices or
supporting documents are presented.
Income tax according to the following ratios:
A. First 10,000 JOD are subjected to 7%
ratio.
B. Second 10,000 JOD are subjected to
14% ratio.
C. Any amount above that is subjected to
20% ratio.
6. Income generated from Agricultural activity
inside the Kingdom is exempted for legal and
natural persons, where the former income tax
law dictated that the first 75,000 of Agricultural
income is exempted for natural persons.
7. The taxpayer is allowed to deduct the provision
for doubtful debts provided that the company is
complying with the international financial
standards and audited by a certified external
auditor, noted that it was non-deductible in the
former income tax law.
8. The taxpayer is allowed to deduct medical
insurance expenses for employees and their
dependents, former income tax law limited the
medical insurance expenses deduction only for
the employees.
9. The Interests and Murabaha expenses are
fully deductible, where the former income tax
law dictated a percentage of average of
owner’s equity or paid capital, whichever is
greater should be accounted for.
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Jordanian Income Tax Law Number 34 of
2014 | A Practical Guide
10. Assets actual maintenance expenses are fully
deductible, where the former income tax law
dictated that assets actual maintenance
amounts spent are deductible provided it does
not exceed 5% of the asset’s value, and the
difference is capitalized for the following years.
11. Losses from previous tax periods are now
carried forward without exceeding (5) years,
where in former income tax law it was carried
forward without determining a period of time.
12. Losses for activities outside the Kingdom are
deducted from the activity’s profits, where in the
former income tax law it used to be deducted
from the profits of foreign investments as a
whole amount without determining a definitive
activity.
13. The law dictated that the legal person should
deduct and pay a rate of 5% as a down
payment of the fees and wages paid to a
resident person of :
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Doctors
Lawyers
Engineers
Auditors
Consultants
Authorized persons for taxpayers (Tax
Advisors).
Insurance and Re-insurance brokers.
Arbitrators
Customs brokers.
Real estate brokers
Arbitrators by commissions.
Financial brokers.
Shipping brokers by commissions.
Any other persons which are identified
under instructions.
14. Income from prizes, which its value or amount
exceeds 1,000 JOD is subjected at the rate of
15% and the withheld amount is considered a
final tax. Where in former income tax law the
rate was 10%.
15. Non- resident person deductible tax rate is
adjusted to be 10%, where it used to be 7% in
the former income tax law.
16. The taxpayer can adjust the fiscal tax year
through a notification to the Income tax
department, while the former income tax law
required the approval of adjustment from the
Income sales tax director.
17. Beneficiaries of inheritances or those who
represent them shall file a tax declaration on
behalf of the deceased within (90) days of the
death, where the former income tax law
dictated a period to be within (60) days.
18. Property tax paid by the taxpayer on the
leased building or land is deductible from the
income tax provided the property tax does not
exceed the tax amount, where the former
income tax law allowed to deduct 50% of the
property tax, and inside the municipal zones,
and does not allow to deduct property tax
inside Greater Amman Municipality.
19. Tax payer who is carrying out business
activities with gross income that exceeds (1)
Million Jordanian Dinars is required to remit
advance payments at the rate of 40% of the
due tax on his income from these activities for
first and second half of the tax year, and tax is
remitted during the next (30) days, while the
former income tax law dictated the taxpayers
who is carrying out business activities with
gross income that exceeds (500,000 JOD) are
required to remit the tax according to the
deadlines mentioned above.
20. The tax payer can write off the deductible tax
within the same year in which the tax is due,
without exceeding the next consecutive four
years, while the former income tax law did not
clarify this matter.
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Jordanian Income Tax Law Number 34 of
2014 | A Practical Guide
21. The legal deadline to audit the tax declaration is
(2) years from the date of submitting the tax
declaration to the Income and Sales Tax
Department, unless an audit notice was issued,
and the deadline of the audit decision is within 2
years from the issuance of the audit notice.
Selected Articles from the Income Tax Law
number 34 Effective starting from 1st
January 2015
22. And a deadline of (4) years from the date of
filing the tax declaration is the final deadline to
issue a notice of the audit results, and this
deadline is doubled to be (8) years in case there
was a proof that a tax evasion crime was
committed.
A. A penalty not less than 200 JOD and not
exceeding 500 JOD is imposed in any of the
following cases:
1. If the taxpayer fails to keep the record
or documents in accordance with this
law.
2. If the taxpayer fails to register with the
department in accordance with this
law.
3. If a CPA does not provide the
department with the names and
addresses of his clients according to
Article 25 of this Law.
4. Not notifying the Income and Sales
Tax Department of any changes
related to the information mentioned in
the registration application within the
specified time.
5. Failing to withhold and remit the tax to
the department in accordance with this
Law.
6. Refraining from submitting the records
and documents which should be kept
in accordance with the provisions of
this law.
7. Refraining from issuing any invoice or
documents when requesting it by the
beneficiary.
23. The income and sales tax director has the right
to Impose a fixed tax on the physical person in
cases in which the estimated tax does not
exceed 1,000 JOD, and fixed tax is imposed for
a period that does not exceed (5) years , while
in former income tax law , fixed tax was not
mentioned.
24. In case of failure to pay or remit the tax on the
specified date, the department shall impose a
late payment fine at the rate of 0.004 of the due
tax amounts from the date of the audit notice, in
case the tax amount is less than 5,000 JOD and
in case the tax amounts exceed 5,000 JOD, the
fine is calculated from the date of legal deadline
for the filing the tax declaration, and in both
cases the fine shall not exceed the tax amount.
While the former income tax law dictated that
the late payment fine is calculated at the rate of
0.004 of the due tax amounts, where it shall not
exceed 35% of the tax amount in case he tax
payer filled the Income Tax declaration within
the legal deadline, otherwise there is no ceiling
for the fine.
25. The legal compensation fine on tax differences
is canceled, while the former income tax law
dictated a legal compensation with rates
ranging from 15% to 100% of the tax difference,
in case the difference in due tax exceeded
20%.
Article 64:
B. The penalty amount stated in paragraph (A)
above of this article shall be doubled if the
violation repeated.
Article 65:
A. The taxpayer must pay the amounts imposed
on him in accordance with articles (63) and
(64) of this law, within 30 days from the
notification date and he may challenge the fine
decision before the Minister, the Minister may
confirm, reduce or cancel the fine if there is a
justified reason for that.
PKF Jordan and Iraq | Practical Guide
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Jordanian Income Tax Law Number 34 of
2014 | A Practical Guide
A. The Minister’s decision issued in accordance
with paragraph (A) of this article can be
challenged before the court within 30 days from
the notification date and the court have the right
to confirm, amend or cancel the fine.
Article 66:
A. A compensatory fine equals double the tax
difference shall be imposed on those who
evaded, try to evade, assist or instigate others
to evade tax by committing any of the following
acts:
A. Filing a tax declaration based on
falsified records or documents, with the
knowledge of such falsification, or
endorsing data that is different from
what is provided in the records and
documents
that
concealed
with
knowingly.
B. Filing tax declaration on the based on
the non-availability of tax related
records or documents and endorsing
data that is different from what is
recorded in the records or documents
that he concealed.
C. The intentional destruction of tax
related records or documents before
the expiration of the records keeping
period according to the provisions of
this law.
D. Falsifying or changing the purchases or
sales invoices or any other documents
to mislead the department to make it
believes that the profit decreased or the
loss increased.
E. Concealment of any taxable activity or
part of it.
F. Withheld the due tax according to the
provisions of this law and did not remit
or pay it to the department within 30
days of the payment date.
B. In addition to the penalty stated in paragraph (A)
of this article, if the tax difference exceeded
50,000 JOD and until 100,000 JOD, The penalty
shall be Imprisonment for not less than four
months nor more than one year, and if the tax
difference
exceeded
that
amount
the
imprisonment penalty is not less than one year.
C. If the court remanded the appeal request
entirely or partially it shall rule in the same
lawsuit with imposing a penalty equals the tax
difference, and that shall equal the tax amount
which the appeal was remanded for.
D. A fine not less than 500 Dinars and not
exceeding 1000 Dinars shall be imposed on
those who violates the provisions of this law
without official instructions being provided.
Article 74:
All persons who enjoy preferential tax treatment in
accordance with the provisions of any valid
legislation before 1/1/2010 shall continue to be
subject to the tax according to this preferential
treatment until the end of the period determined
according to the provisions of these legislations.
Article 78:
Subject to paragraph (B) of this article, no
provisions provided for in any other legislation
related to wholly or partially tax exemptions will be
applicable, except what is provided for in the
following laws:
1.
2.
Charity Fund No. (8) of 1988.
Al Hussein Corporation for Cancer Law No.7 of 1998
and its amendments.
3. King Hussein Bin Talal Foundation Law No.22 of 1999.
4. Law of National Commission of Mine Action and
Rehabilitation No. 34 of 2000.
5. Law of National Council of Family Affairs No.27 of
2001.
6. Law of Jordan River Foundation No.33 of 2001.
7. King Abdullah II Fund for Development No.37 of 2004.
8. Public Debt Exemption Law No.28 of 2006.
9. Hashemite Fund for Al Aqsa Reconstruction Law
No.15 of 2007.
10. Royal Al Albeit Foundation for Islamic Thought Law
No.32 of 2007.
11. The Jordanian Hashemite Fund for Human
Development Law No.37 of 1985.
12. Laws on ratification of concession agreements.
B. All provisions provided in the valid Aqaba
special economic zone, and the investment
law related to tax imposition and exemption.
PKF Jordan and Iraq | Practical Guide
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About Us
PKF Jordan and PKF Iraq, member firms of PKF International, are regional, multidisciplinary business
advisory firms with industry specific services. We offer outstanding opportunities, by providing
international standard based services, to dramatically position our clients as pioneers in a rapidly
growing business environment. PKF Jordan and PKF Iraq play a major role in business advisory
including Consultancy, Auditing, and Tax Services.
Areas of experience include Finance, Taxation, Market
Research, Strategic Planning, Organizational Development,
Human Resource Development, Investment, Technology
and Information Management, Quality Management, and
Socio-Economic Studies. We also initiate an added value
component where integration, consistency and reliability are
effectively enforced. PKF Jordan and PKF Iraq high quality
services help clients identify their business needs, improve,
excel, cope with business fluctuations and accomplish their
anticipated goals and excel.
PKF Network Worldwide
Around 50 years of experience
21,000 people
440 offices
125 countries
US$ 2.6 billion turnover
Top 10 assurance & advisory
firm worldwide
Our team approach enables operating as integrated cells exposed to diverse industries. Words like
creativity, innovation and flexibility generate great success within the firms’ services and culture, where
PKF Jordan and PKF Iraq promise of quality, accuracy, speed, and value remain applicable in all
deliverables. Relying on PKF Jordan and PKF Iraq beliefs makes our caliber professional. And
experiencing our services makes clients distinguishable.
PKF Jordan and PKF Iraq services are designed to look after the best interest of the clients and protect
their wealth. Our advisors thoroughly investigate the organization’s business cycle to innovate the most
rewarding solutions.
Our Vision:
To be number one preference for companies in their selection of professional advisors.
Our Mission:
To assist our valuable clients upgrade their business performance and efficiency and help them gain
competitive advantage for their business to succeed and excel.
Contact Us:
PKF Jordan
Amman - Jordan
Website: www.pkf.jo
Email: [email protected]
Tel:
+962 6 5695442/ 3
Fax:
+962 6 5606344
PKF Iraq
Erbil - Iraq
Website: www.pkfIraq.com
Email: [email protected]
Tel:
+9647508829873
Fax:
+96265606344
PKF Jordan and Iraq | Practical Guide
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About Us
PKF Jordan & Iraq deliver a full spectrum of services:
Assurance and Advisory
• Statutory audit
• Accounting services
• Non-statutory audit
• Sarbanes Oxley assurance
• Compilation of financial statements
• International accounting standards
• Assurance engagement
• Internal audit
• Business risk services
Tax Consulting
• Tax planning and tax manual
• Income tax
• Sales tax
• Withholding tax
• Employee’s tax
Corporate Finance
• Privatization and Build - Operate - Transfer
(BOT) services
• Private placement memorandum
• Business plans
• Finding and securing finance from the most
appropriate sources (such as private equity
firms)
• Business valuations
• Preparation of financial projections and
financial cash flow forecasts
• Investment agent
• Provide ongoing advice and support with
flotation, mergers and acquisitions,
management buy-outs / buy-ins and disposals
• Due diligence
• Advice on reorganizing and restructuring
existing businesses, commercial and tax
considerations and fundraising options
• Feasibility studies
Forensic Accounting
• Appraisal of financial losses resulting from
fraud
• Appraisal of damage resulting from prejudicial
acts
• Preparation of expert opinions and second
opinions
• Assisting solicitors in the financial aspects of
cases
• Intervention as arbitrators or mediators in
dispute resolution
Umbrella Services
Financial Planning
• Retirement planning
• Savings and investments
• Medical and life insurance
• Business assurance
• Property purchase
IT Consultancy
• Business process design
• Disaster recovery planning
• Managing Information Technology
(IT) expenditure - budgeting and control
• Project management of business
requirements
• Packaged software / Enterprise Resources
Planning (ERP) selection and implementation
• Information Technology (IT) security and crisis
planning
• Risk analysis and management
• Information Technology (IT) policies and
procedures
Management Consultancy
• Strategic planning to achieve a sustainable
competitive advantage
• Risk - measurement strategies, risk
management plans and crisis handling
• Institutional assessment and upgrading plans
• Reviewing business processes for efficiency,
control and effectiveness
• Organizational restructuring
• Competency-based human resources
management and development
• Performance scorecards and indicators
• Marketing and market communication plans
• Market studies, research and surveys
• Customer satisfaction programs development
• Financial policies and procedures including
procurement, accounting, and budgeting
• Corporate governance manuals
• Costing systems
• Internal audit manuals
• Operations manuals
• Quality management services
• Monitoring, evaluation, and impact assessment
studies
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