Jordan Tax Rate Updates 2024: Key Insights on Tax and Social Security Changes- TopSource Worldwide

Written by Emma Cooney | Apr 2, 2024 10:07:00 AM

In this blog we discuss the latest tax and social security updates in Jordan for the year 2024. Navigating the complexities of regulatory changes can be challenging, but staying informed is crucial for businesses and professionals operating within or in conjunction with the Jordanian market.

This article delves into the significant adjustments in payroll, personal income tax rates, and social security contributions, ensuring you're well-prepared for the implications these changes may bring to your business operations and workforce management.

Jordan’s standard VAT rate is 16%, the social security rate is 21.75%, the corporate income tax rate is 20% and the personal income tax (PIT) rate is 30% but applied in bands as follows:

Payroll / Personal Income Tax Rates:

Taxable Income *	Rate
First JOD 5,000	5%
Second JOD 5,000	10%
Third JOD 5,000	15%
Fourth JOD 5,000	20%
Over JOD 20,000 up JOD to 1,000,000	25%

In addition, please note that native people (individuals/employees) will be entitled to personal exemptions as follows:

Personal exemption of JOD 9,000. (Provided that he stays in Jordan for more than 183 days during the calendar year whether continuous or interrupted.)
Family Exemption of JOD 9,000. (Provided that his family stays in Jordan for more than 183 days during the calendar year whether continuous or interrupted.)
Additional Personal and family exemption of JOD 3,000 on Medical Expenses, University Education Expenses and Interests paid on Housing Loans, Housing rent, technical services, engineering services, legal services provided that supporting documents and invoices are available and to be granted on a case by case basis after reviewing the related supporting documents by the Income Tax Department.
Exemption in the amount of JOD 2,500 in relation to the monthly Retirement Benefits.

Withholding Taxes

Withholding tax of non-resident services providers remains at 10%
Certain service providers are subject to 5% retention. This includes doctors, lawyers, engineers, certified public accountants, experts, consultants, insurance agents, custom clearing agents, arbitrators, speculators, agents and brokers for commission, financial brokers and freight forwarders. Any other persons will be determined according to the related regulations which will be issued for this purpose by the Minister of Finance.
Withholding tax on in cash and in-kind prizes and Jordanian Lottery in excess of JOD 1000 per each prize is 15%.
In-kind and in-cash dividends are not subject to withholding tax whether paid to a resident to non-resident party.

Social Security Updates:

Jordan’s new social security rate in 2024 remains at 21.75% – made up of 14.25% employer contribution and 7.5% employee contribution and has been in place since 2017.

Year	Employee	Employer
2019	7.5%	14.25%
2020	7.5%	14.25%
2021	7.5%	14.25%
2022	7.5%	14.25%
2023	7.5%	14.25%

Conclusion

As we navigate through the evolving landscape of tax and social security regulations in Jordan, staying ahead of these changes is paramount for ensuring compliance and optimising your business operations. The updates for 2024 bring about both challenges and opportunities. By understanding and adapting to these changes, your business can continue to thrive in Jordan's dynamic market. Remember, TopSource Worldwide is here to support you every step of the way. Whether it's through our advanced Employee Cost Calculator or our tailored advisory services, we're committed to helping you manage your payroll and tax obligations efficiently and effectively.

Want to remove the headache of ever-changing Jordan payroll and HR legislation? Get in touch with one of our consultants to find out more about Topsource’s fully managed payroll and EOR services.

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