Hashemite Kingdom of Jordan
Navigating international regulations with confidence
Currency
Jordanian Dinar – JOD
Official Language
Arabic
Fiscal Year
1 Jan - 31 Dec
Payroll Frequency
Weekly, Bi-weekly & Monthly
Tax System and Regulations
Income Tax Structure
Jordan does not tax worldwide income earned by residents. Instead, pursuant to Article 3 of Income Tax Law No. 34 of 2014, it taxes all income sourced from within Jordan, whether earned by residents or non-residents. The income tax structure is based on a progressive system. Taxable income is divided into bands, and each portion is taxed at a different rate, ranging from 5% to 30%. Withholding tax for employees is collected through the Income and Sales Tax Department (ISTD). Employers are responsible for deducting income tax directly from employees’ salaries and paying it to the government. The ISTD is the official body in charge of collecting income tax, making sure the rules are followed and handling tax returns and payments.
Payroll Taxes
Payroll taxes consist of income tax deductions and social security contributions handled through employer-led systems. Employers are required to withhold personal income tax from employees’ salaries based on progressive brackets ranging from 5% up to 30% and submit these amounts monthly to the ISTD. Additionally, Jordan mandates social security contributions, which provide pensions, disability coverage, work injury protection and unemployment benefits. Employers withhold 7.5% of each employee’s gross salary for social security and contribute an additional 14.25%. Governed by the Income Tax Law No. 34 of 2014 and the Social Security Law, these obligations form a key part of employment-related compliance in the country.
Tax Reporting and Payment Deadlines
The Jordanian tax year aligns with the calendar year, running from 1 January to 31 December, but businesses may use a different fiscal year if the director-general of the ISTD grants prior approval. Employers must withhold income tax and any applicable national contribution from employees’ salaries and remit these amounts to the ISTD by the end of the following month. Employers must also file an annual reconciliation report, detailing total employee earnings and taxes withheld, by the end of March the following year. Social security contributions, managed by the Social Security Corporation (SSC), must be reported and paid by the 15th day of the following month.
Compliance and Record-keeping
Under the ISTD Regulations No. 59 of 2015 (amended by No. 60 of 2021), businesses must retain all tax-related documents, including financial records and payroll files for at least four years. Specifically, copies must be kept from the end of the relevant tax period, the submission date of the tax return, or the date of assessment notification, whichever occurs later. Additionally, for SSC requirements and employer audit purposes, employers must keep comprehensive payroll records for at least five years. These records must detail each employee’s earnings, tax withholdings, social security contributions (employee and employer portions), overtime payments, allowances and any statutory deductions. Electronic filing and reporting are mandatory for most entities. Failure to comply with record-keeping obligations can result in financial penalties, interest charges and legal consequences.
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