Tax Guide for US Expats Living and Working in Jordan
Who Is Liable For Income Taxes in Jordan
All income derived from Jordan is subject to tax in Jordan regardless of the residence of the recipient. In addition, income that is realized outside Jordan by Jordanian and other residents, including interest, commissions, investment returns and profits from trading in currencies, valuable metals and securities, is taxable if such income arises from funds and deposits held in Jordan.
A non-Jordanian national is considered resident for tax purposes if he or she resides in Jordan for a total of at least 183 days per year. Residents may claim personal allowances.
Income subject to tax
Employment income. Income tax is assessed on all remuneration and benefits earned in Jordan. This includes directors’ fees and employer-paid rent, school fees, air tickets and relocation expenses.
Self-employment and business income. Jordanian individuals must pay tax on income earned from all taxable activities in Jordan at the rates described in Rates.
Investment income. Interest income is subject to income tax.
Banks must withhold 5% from interest earned.
Rental income is treated as ordinary income and taxed at the rates set forth in Rates, with certain exceptions.
Capital gains. In general, capital gains, including those derived from the sale of shares and land (but excluding goodwill), are not taxed in Jordan. However, if the individual has business income, certain costs relating to dividends or capital gains on investments in shares are disallowed. Gains on depreciable assets, within certain specified limits, are subject to tax at the rates.
Deductions
Personal and family allowances. The following personal and family allowances are granted:
- Single person: JD 12,000
- Married couple: JD 24,000
Business deductions. All business expenses incurred in generating income are deductible. However, certain limitations apply.
For payments made by resident taxpayers to individual service providers, companies that do not have a tax number and resident professionals, such as engineers, auditors or lawyers, taxpayers must withhold 5% of gross payments and remit this withholding tax to the tax authorities within 30 days after the due date or payment date, whichever is earlier.
For rent payments made by resident taxpayers (except rent paid by governmental parties), taxpayers must withhold 5% of gross payments and remit this withholding tax to the tax authorities within 30 days after the due date or payment date, whichever is earlier.
Relief for losses. Taxpayers may carry forward losses indefinitely to offset profits if the losses are supported by proper accounting records, are acknowledged by the tax assessor and relate to taxable sources of income.
B. Other taxes
Jordan does not levy net worth tax, inheritance tax or gift tax.
C. Social security
Social security contributions are levied at a rate of 16.5% on gross salary except overtime. The employer’s share is 12.25%, and the employee’s share is 6.5%. The social security system provides retirement and death benefits as well as certain benefits for work-related injuries.
To learn more about the history, culture, economy and other information about Jordan
We have been preparing US income tax returns for US Citizens and permanent residents living in Jordan for over 15 years. As a US Citizen or permanent resident (green card holder) you are required to file a US return each year regardless of the fact that you file and pay taxes in your residence country. The expatriate earned income exemption ($100,800 for 2015) can only be claimed if you file a timely tax return. It is not automatic if you fail to file.
We have scores of clients located in Jordan and know how to integrate your US taxes into the local income taxes you pay. Any income tax you pay there can be claimed as a dollar for dollar credit against the tax on your US return on the same income.
As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end. (You cannot file using the tax fiscal year for US tax purposes). You must pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.
There are other forms which must be filed if you have foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership. If you do not file these forms or file them late, the IRS can impose penalties of $10,000 or more per form. These penalties are due regardless of whether you owe income taxes or not.
There are certain times you may wish to make elections with respect to your Corporation or Investment Company which will give you US tax benefits. There are other situations where forming a US corporation to receive your business income may be more advantageous than using a corporation in your resident country. We can help you with these decisions.
If you are self-employed, you will have to pay US self-employment taxes (social security). If you are a bona-fide employee you do not have to worry about paying US social security on your wages earned in Jordan.
We have helped hundreds of expats around the world catch up because they have failed to file US returns for many years. Unfortunately, unlike India, Canada, UK, etc. you must also file so long as you are a US citizen or resident. You can if you follow proper IRS and State Department procedures surrender your US Citizenship and therefore cut off your obligation to pay US taxes in the future. You must surrender that Citizenship for non-tax avoidance reasons and then can usually not return to the US for more than 30 days per year for the subsequent ten years.
Let us help you with your US tax returns, US tax planning and other US tax and legal concerns. Download our expat tax questionnaire or request a request a consultation by phone, skype or email