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Last updated at
October 28, 2025
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Book NowJordan's corporate tax system is governed by the Income Tax Law and applies to all legal entities operating in the country. The standard corporate income tax rate is 20 percent, while banks and selected sectors will pay higher rates on their profits. Corporate tax will be calculated on net income after adjustments for allowable deductions and non-deductible expenses. Companies must maintain proper records and comply with transfer pricing rules for intercompany transactions. Businesses are also subject to a national contribution tax based on sector. This blog explains how corporate tax in Jordan is calculated, who it applies to, the filing requirements that must be met, and available incentives for qualifying businesses.
Jordan applies corporate income tax at different rates depending on the industry and type of business activity. The rates are set to reflect the nature of each sector and ensure proper compliance. Resident corporations are generally not taxed on income earned outside Jordan, but interest from Jordanian deposits is subject to a 10 percent tax. Foreign branches of Jordanian corporations pay a fixed rate of 10 percent on net income earned in Jordan.
Key Rates:
20 percent: For most companies paying tax on net profits.
24 percent: For telecommunications, insurance, reinsurance, financial intermediation, currency exchange, finance leasing, electricity generation and distribution, and mining of raw materials.
35 percent: For banks, applied on net profits.
Taxable income in Jordan will be determined by adjusting the accounting profits for non-deductible expenses and for allowable deductions:
Non-deductible expenses: Include fines and penalties and also the costs that are not related to the business operations.
Allowable deductions: Cover salaries and the operational costs and also include the employer social insurance contributions.
Depreciation Method: Jordan employs the straight-line method for depreciating fixed assets, as specified in the Income Tax Law.
Accelerated deductions: A 30% first-year allowance on qualifying machinery is available with the approval of the Jordanian Tax Authority.
The general corporate tax rate in Jordan is 20 percent, but certain sectors will face higher rates based on the type of their operations and the level of revenue of a company. This structure ensures that each business contributes a fair share of tax depending on its economic activity and the nature of the services it provides.
Banks will be taxed at 35 percent while sectors including telecommunications, insurance, reinsurance, financial intermediation, currency exchange, finance leasing, electricity generation and distribution, and the mining of raw materials will be taxed at 24 percent. These rates will apply on the profits of each company within the relevant sector and are determined to reflect the financial activities and risks linked to that industry.
It is important for a business to determine the correct corporate tax rate on the operations of the company to ensure full compliance with the law and plan for its corporate taxes in an efficient manner. Understanding the applicable rate will support accurate financial forecasting and help in making informed business and investment decisions that align with the financial goals of the company.
Jordan imposes withholding taxes on payments to nonresident entities to secure tax collection on income earned in the country. Interest payments and royalties paid to nonresidents are subject to a 7 percent withholding tax, unless a tax treaty sets a lower rate. Dividends paid to nonresidents are generally not subject to withholding tax.
These withholding taxes act as advance payments of corporate tax on the income of the nonresident entity and are applied to prevent tax avoidance on cross-border transactions. Understanding these rules allows a company to comply with the law and plan for the tax impact on its payments to foreign investors efficiently.
Corporate tax returns in Jordan must be filed within four months of the fiscal year-end. A company closing its year on December 31 has a deadline on April 30. These rules apply to all corporate taxpayers and ensure income taxes are calculated and submitted on time.
Late filing or delayed payment will lead to penalties and interest calculated as a fixed percentage plus a rate linked to the Central Bank of Jordan. Timely filing and payment will reduce the risk of noncompliance and support smooth operations while maintaining the standing of the company with the tax authorities.
Jordan offers a range of tax incentives to attract investment and support the growth of businesses:
Free Zones: Companies in a free zone are exempt from income tax on profits from export, transit trade, sale or transfer of goods within the zone, and services provided inside it. They are also exempt from customs duties and other taxes on imported goods and materials.
Development Zones: Similar benefits will apply in development zones including exemptions from income tax, customs duties, and other taxes on the operations of a business within the zone.
Investment Law Approvals: Enterprises approved under the investment law will receive deductions or lower corporate tax rates which will reduce the total tax liability on the company.
Small Enterprises: Businesses with an annual turnover up to a specified threshold will follow simplified tax rules and will receive relief from some withholding taxes and advance payments on income.
Net operating losses in Jordan may be carried forward for a period of five years following the date they become final and audited by the Jordan Tax Authority. There are no specific limitations on the ability to carry forward losses based on changes in ownership or business activity.
Jordan does not have a formal group taxation regime that allows related companies to offset losses freely across separate legal entities.
Transfer pricing regulations require that all intercompany transactions follow the arm's-length principle. Businesses must maintain proper documentation, including a disclosure form, local file, master file, and country-by-country reporting, as applicable.
Jordan's corporate tax system is designed to support the growth of businesses while ensuring compliance with the applicable laws. The standard corporate tax rate is 20 percent with higher rates applied to certain sectors depending on the type of their operations. Companies will benefit from a range of incentives including exemptions on income in free zones and development zones. Timely filing of tax returns and adherence to the regulations on payments and reporting will be essential to avoid penalties. Consulting with the Income and Sales Tax Department or a local advisor will help a business ensure compliance and plan efficiently for the management of its corporate tax obligations.
What is the standard corporate tax rate in Jordan?
The standard corporate tax rate in Jordan is 20 percent on the profits of a company.
Are there higher tax rates for specific sectors?
Yes, certain sectors including banks and telecommunications will face higher rates, up to 35 percent depending on the type of operations and level of revenue.
Can businesses in free zones benefit from tax exemptions?
Yes, a business operating in a free zone will benefit from exemptions on income tax, customs duties and other taxes applied on imported goods and materials used in operations.
How long can net operating losses be carried forward?
Net operating losses of a company can generally be carried forward for a period of five years, subject to ownership and activity rules.
Is there a national contribution tax in Jordan?
Yes, a national contribution tax will apply to businesses with rates that vary by sector and type of activity.
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