GST in Jordan: Rules, Registration, and Compliance Guide

GST in Jordan

Jordan's Goods and Services Tax (GST) is administered by the Income and Sales Tax Department (ISTD) under the Ministry of Finance. It is a broad-based consumption tax applied on most supplies of goods and services within the country and on imported items. The standard GST rate is 16 percent and it will apply when a business has taxable supplies that exceed the applicable registration thresholds. This system helps the government generate stable revenue and supports balanced economic growth. This blog will explain how GST works in Jordan who must register and the procedures for filing returns accurately and on time.

GST Rules and Requirements in Jordan

The GST in Jordan operates similarly to the Value Added Tax (VAT) systems in other countries. It applies to most goods and services supplied within Jordan and on imported goods. A business must register with the ISTD if its taxable turnover exceeds the applicable thresholds.

Once registered, a business must charge GST on the sale of goods or services and remit the collected amount to the ISTD. Additionally, the business can claim credits on GST paid for purchases used in its operations. This ensures that tax applies only to the value of final consumption and prevents double taxation on business inputs.

However, not all transactions are subject to GST. Certain supplies of goods and services, such as the sale and lease of residential property and most financial services, are exempt from GST. This ensures that businesses and individuals in these sectors do not face additional GST costs on their activities.

GST Rate and Coverage in Jordan

The standard GST rate in Jordan is 16%. It applies to most goods and services supplied in the country and on imported goods. A business that meets the registration threshold must charge GST at this rate on taxable supplies and report accurately to the ISTD. This ensures proper accounting and consistent compliance on all transactions.

A business also needs to claim input tax on eligible purchases used in operations. This reduces the costs of business activities and ensures that tax applies only to the value of final consumption. Calculating input and output tax correctly helps a business avoid penalties and maintain complete records.

Zero-rated supplies of goods and services, including exports and international services, are taxed at 0%. Input tax on related purchases can be claimed. Exempt supplies, including residential property, most financial services, and approved investment metals, do not include GST, and input tax cannot be claimed.

GST Registration Requirements

A business will register for GST in Jordan if the taxable turnover at the end of a 12-month period exceeds the set thresholds or if the turnover is expected to exceed the thresholds within the next 12 months. The thresholds of registration determine when a business must charge GST and claim input tax on supplies.

The thresholds are:

• JOD 75,000 for suppliers of goods not subject to Special Sales Tax (SST)

• JOD 30,000 for suppliers of services

• JOD 10,000 for manufacturers of goods subject to SST

A business must register once turnover crosses the applicable threshold to comply with GST rules. Alternatively, a business below the threshold may register voluntarily to claim input tax on purchases and lower the cost of business operations.

After registration, a business must charge GST on all taxable supplies and file returns according to the schedule of the ISTD to avoid penalties and keep proper records.

GST Filing and Payment

A registered business will file GST returns electronically with the ISTD every two months. The return includes details of all taxable supplies and of purchases during the period. A business will calculate output tax collected from customers and input tax paid on purchases to determine the net GST payable or refundable.

Filing components:

• Total sales: A business must report the total value of all taxable supplies made during the two-month period on the GST return.

• Output tax collected from customers: A business must include the total GST collected from customers on sales of goods or services.

• Input tax paid on purchases: A business must include the total GST paid on goods or services purchased for business use. This amount can be claimed to offset output tax.

Zero-Rated and Exempt Supplies

GST in Jordan applies to different types of supplies of goods and services. A business must identify zero-rated supplies and exempt supplies to apply the tax correctly and claim input tax on the purchases that are allowed. Accurate classification ensures compliance with the rules of the ISTD and maintains records of GST collected and input tax claimed.

Zero-rated supplies: These supplies are taxed at 0%. A business will charge no GST on sales of goods or services under this category. A business will claim input tax on purchases used to provide these supplies. This allows recovery of GST paid on inputs while the sale remains free of GST for the customer.

Exempt supplies: Exempt supplies are outside GST. A business will not charge GST on sales or services in this category. A business will also not claim input tax on purchases used to provide these supplies. This applies to residential properties, most financial services, and approved investment metals. Proper application ensures correct GST reporting and compliance with the ISTD.

GST on Imported Goods and Services in Jordan

GST applies to imported goods and services consumed in Jordan. A business must account for GST on purchases brought into the country and on digital services supplied to Jordanian customers. Calculation of GST on these items ensures compliance with the rules of the ISTD and maintains proper reporting of tax obligations.

Import GST is payable on most physical goods brought into Jordan unless the items are exempt. A business importing goods must calculate GST based on the value of goods, shipping costs, and insurance. Accurate reporting maintains correct records of taxable imports and ensures proper settlement of GST with the ISTD.

Penalties for Non-Compliance

Penalties will apply on a business that fails to register for GST, files a return late, or reports the tax incorrectly under the GST law of Jordan. A business that fails to register will pay backdated GST on past supplies with additional charges from the ISTD. Late filing of a GST return will result in a penalty on the return and further fines for repeated delays. Incorrect or under-declared GST will lead to penalties based on the difference in tax and the level of non-compliance.

A business that maintains proper registration and submits GST returns on time while reporting GST accurately will avoid penalties. Maintaining records of the GST collected and claims of input tax will track the obligations of the business and ensure compliance with the ISTD.

Conclusion

GST in Jordan is 16% and applies to most goods and services for any business with turnover above the applicable thresholds. A business must register with the ISTD and charge tax on taxable supplies. It manages zero-rated and exempt supplies and reports imported goods and services to stay compliant.

Filing GST returns on time with accurate details will prevent penalties and keeps the operations of a business clear and steady. Maintaining records of the GST collected and of input tax claimed supports accurate accounting and keeps a business compliant with the ISTD.

FAQs

1. What is the GST rate in Jordan?
    The GST rate in Jordan is 16 percent on the supply of most goods and services by a registered business under the control of the ISTD.

2. Who must register for GST in Jordan?
    A business in Jordan will register for GST if the taxable turnover in any 12-month period exceeds JOD 75,000 for goods not under SST, JOD 30,000 for services, or JOD 10,000 for goods under SST.

3. Can a business in Jordan claim input tax on imports?
    A business in Jordan can claim input tax on the import of goods and services that are used for taxable supplies when proper invoices and tax records are kept.

4. How often must GST returns be filed in Jordan?
    A business in Jordan will file a GST return every two months on the schedule of the ISTD to stay under compliance with the law.

5. What happens if GST is not filed on time in Jordan?
    If a business in Jordan files GST late or reports incorrect details, the ISTD will apply penalties on the unpaid tax and issue an assessment on the due amount.