Jordan Payroll & HR Insight from a Global Payroll Outsourcing Leader

This guide is a must read before you either outsource your Jordan payroll or build a local HR and Payroll function. As a Global Payroll Provider, Mercans can guarantee your full compliance with all the applicable regulations.

1.0    Doing Business in Jordan

1.1       Registrations and Establishing an Entity

Companies in Jordan must register for taxes (including corporate tax, income tax, and VAT) by completing the application form and submitting it to the relevant one-stop-shop counter of the Companies Registry.  The company obtains a unique Tax Identification Number (TIN).

There are two types of operating companies in Jordan

  • A limited period whereupon such companies are awarded tenders and carries out their business in Jordan for a period limited to the duration of a contract. The registration of such companies shall cease upon completion of their business in Jordan.
  • Companies operating permanently in Jordan under a license granted by the authorities.

Registering a company is mandatory for operating the business in Jordan and the documentation requirement for the registration are as follows-

  • A copy of the Articles and Memorandum of Association of the company.
  • The official documents certifying that the company has obtained the approval of the competent Jordanian authorities to perform its business.
  • A list of the names of members of the Board of Directors of the company, the management committee or the shareholders and their respective nationalities, in addition to the names of the authorized signatories of the company.
  • A copy of the power of attorney by virtue of which a foreign company authorized a person resident in Jordan to carry out its activities and receive service letters/notifications on its behalf.
  • The financial statement for the last fiscal year of the company (head office) certified by a licensed auditor.
  • Any other data or information that the controller of Companies deems necessary.
  • The application form for registration must be signed by the person authorized to register the company before the controller of companies, or any person authorized in writing, or public notary.
  • All documents should be legalized by the Jordanian Embassy/consulate, the ministry of foreign affairs in the company’s country of origin, and the Jordanian ministry of foreign affairs. All documents should also be translated into Arabic and legalized by a public notary in Jordan.

1.2       Banking

It is not mandatory to make employee salary payments from an in-country bank account; however, it is mandatory to make third party authority payments from an in-country bank account.

Banks are typically open from 08:30 to 13:00, and some have recently introduced afternoon hours from 16:00 to 18:00.

1.3       Working Week

 

Friday and Saturday is the weekly holiday when government offices, banks and most offices are closed.  Most businesses and banks have a half-day on Thursday, and some businesses and banks take Sunday as a half-day or a complete holiday.

Government departments are open from 08:00 to 14:00 daily, except Friday.

The maximum working hours are forty-eight during a six-day week.  The seventh day is a paid weekly day off. Additional hours will be considered as overtime and qualify for compensation of 25% over the regular wage, excluding overtime hours worked during public holiday, which are subject to an overtime compensation of 150% of the standard wage.

1.4       Basic Facts about Jordan

 

General Information:

Full Name: Hashemite Kingdom

Population: 9.702 million

Capital: Amman

Major Languages: Arabic

Currency: Jordanian dinar (JOD)

Main Industries: Clothing, Phosphate Mining, Fertilizers, Pharmaceuticals, Petroleum Refining,

Cement, Potash, Inorganic Chemicals, Light Manufacturing, Tourism

GDP Growth: 2.2%

Internet Domain: .jo

International Dialling Code: +962

How to say: –

Hello As-Salām ‘Alaykum

Good Morning abā-ul Kh-Ayr

Good Evening Masā’ Al-Khayr

Do You Speak English? Hal Tatakallam El-Ingliziyya

Good Bye Bāy Bāy ,Ma`A As-Salāma

Thank You Shukran Jazīlan (Shukran)

See You Soon! Ashoufak ‘Ourayyeb

Dates & Numbers

 

Dates are usually written in the day, month and year sequence. For example, 1 July 2015 or 1/7/15.

2.0    Tax & Social Security

In Jordan, the non- residents are taxed on their Jordan-sourced income. However, married couples are generally taxed separately but they may elect for joint taxation.

Taxable profits include:

  • Interests, Discounts, Exchange Gains and Commissions,
  • Any Obligation or Annuity,
  • Income or rent and other profits from movable and immovable property
  • Capital gains from the disposal of immovable property during the course of a business and from the disposal of property acquired on or after 01 November 1989.

2.1       Income Tax

The modifications to the previous tax law were published in the Official Gazette on 2 December 2018 with an effective date of 1 January 2019 and 1 January 2020, putting into effect Jordan’s new Income Tax Law No. 38 of 2018 (the New Income Tax Law).

The New Income Tax Law has reduced the amount of exemptions available to natural persons and adjusted the treatment of the end of service benefit and pension in arriving at taxable income. Furthermore, modifications have been made to the tax brackets and rates applicable when calculating the personal income tax liability, and a new national contribution tax has been introduced and made applicable to the net income of high-earning individuals.

The following annual personal income tax exemptions apply from 1 January 2020:

 

  • Personal exemption                                                                                                                                           JD 9,000
  • Dependent exemption for a non-employed spouse                                                                                    JD 9,000
  • Additional exemptions for medical expenses, educational expenses, rent, home loan interest, and murabaha                                                                                                                                                                                JD 4,000*

*JD 1,000 for individual, JD 1,000 for spouse and JD 1,000 per child up to JD 3,000. The exemption is granted on a case-by-case basis after the Income Tax Department has reviewed the related supporting documents.

As for the income corporate tax, the amount is as follows:

Sector

Rate

Banking35%
Electricity generation24%
Basic mining companies24%
Finance, financial intermediary and financial leasing24%
Telecommunication24%
Drug and Clothes10%
Insurance and reinsurance24%
Other sectors20%

 

Income Tax Table

 

Taxable Income After Applicable Tax Exemptions

Exceeding

Not Exceeding

Rate

JD

JD

%

05,0005
5,00110,00010
10,00115,00015
15,00120,00020
20,0011,000,00025
>1,000,00030

 

For payments made by Resident Taxpayers to Non-Residents for taxable activities in Jordan, taxpayers must withhold 10% 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.  This tax is final.

2.2       Social Security

Employers with more than five employees are required to register and contribute to the Social Security Corporation. All employees who work for the registered employer have to register with the Social Security Corporation.

Non-Jordanians are subject to the social security deductions if they are residing in Jordan and work for an entity subject to the provisions of the Social Security Law.

According to Law No (1) of 2014, social security rates will be increased in 2015, 2016, and 2017. The increase will be 0.25% on employee share and 0.50% on employer share yearly. This will be fixed after 2017 when employee share will be 7.5% and employer share will be 14.25%.

 

YEAR

EMPLOYEE

EMPLOYER

2015

7%

13.25%

2016

7.25%

13.75%

2017+

7.5%

14.25%

2.3       Reporting

The tax year is the calendar year. Tax returns must be filed in Arabic using a prescribed form within four months after the end of each fiscal year.  The total amount of tax due must be paid at that time.

2.4       New Employees

When a new employee is hired, the employer should submit the ‘Form of insured’s contribution in the Social Security (Form No.1)’ to the Social Security Corporation (SSC) within a maximum of 15 days from the employment start date.

The documents required to register the new starts are as follows-

  • Passport (Expatriates)
  • Residency card (Jordanians)

2.5       Leavers

All leavers must be reported to the Social Security Corporation (SSC) within maximum of 15 days from their last working day.

The employer must report to the SSC the ‘Leavers Contributions Form – From 3 Appendix’ that includes all leavers’ details.

3.0    Payroll

There are no procedures regarding the provision of online payslips.

3.1       Reports

Monthly

Every employer who pays salaries, wages, allowances or bonuses to employees must deduct from such payments the tax due and forward it to the Tax Authorities on a monthly basis.

4.0    Employment Law

4.1       Holiday Accrual / Calculations

Each employee shall be entitled to annual leave with full pay for 14 days per year of service unless more than that period was agreed upon, provided that the annual leave shall be 21 days if the employee remains in the service of the employer 5 successive years.  The public holidays, religious feasts and the weekly holidays shall not be calculated from the annual leave unless they took place during it.

4.2       Maternity Leave

Working Mothers in Jordan are provided with additional legal protection. The labour law in Jordan disallows employers from terminating their jobs or giving them notice about termination if they are past their sixth month of pregnancy or on maternity leave. It also gives mothers 10 weeks of paid maternity leave, as well as an hour a day for breast-feeding during the first year after delivery and a year’s unpaid leave to care for their new-born.

4.3       Paternity Leave

New Fathers in the private sector are obliged to use another type of leave, such as annual leave or unpaid leave in order to support their wives and welcome their new child.

In the public sector paternity leave has been legally recognised and enforced.  Fathers currently receive paternity leave of three consecutive working days during the first month of the child’s birth.

Arguably, paid paternity leave should be in force by law for the private sector too and additional periods of unpaid leave should be granted to new fathers, especially where the mother may have encountered difficulties with her pregnancy or the delivery of the child or where the new-born suffers any complications.

4.4       Sickness

The first 14 days are of Sick Leave are fully paid. The following 14 days are half paid if the employee is not hospitalized and fully paid if the employee is hospitalized.

5.0    Employee Benefits

Jordanian Labour law regulates the relationship between the employer and the employee, which means that any contract or any term in any contract between both parties that contradicts the labour law is considered invalid.

6.0    Visas & Work Permits

All the non-Jordan nationalities must apply for a working permit if they want to work in Jordan; Work permits are issued with the approval of the Ministry of Interior.

An applicant may not begin working in Jordan before obtaining a work permit. Work permits may not be transferred from one employer to another; therefore, if an employee changes employer, the previous work permit is cancelled, and the worker must apply for a new permit.

A work permit is valid for one year and may be renewed each year.  The following are the fees for renewal: –

  • JD 180 for Arab workers in fields other than agriculture or nursing
  • JD 60 for Arab workers in agriculture or nursing
  • JD 300 for foreign nationals working in fields other than agriculture
  • JD 120 for foreign nationals in agriculture

According to Ministry of Labor instructions, an employer must submit a bank letter of guarantee to the order of the Ministry of Labor in the amount of approximately JD 300 to JD 1,000 for each expatriate employee.

Foreign investors may engage in almost any type of economic activity.  Jordan does not impose any limits on foreigners’ investments.  Except for certain sectors, including construction and trade, in which foreign ownership may not exceed 50%, non-Jordanians may fully own any economic project in Jordan. The following types of businesses may be 100% foreign-owned:

  • Agriculture
  • Hotels
  • Health care
  • Mining
  • Industrial
  • Telecommunications

In addition, under the Jordanian Labor Law, non-Jordanians are prohibited from having certain jobs, such as medical and engineering professions, administrative and accounting professions, clerical work including typing and secretarial work, warehouse work, haircutting work, teaching profession and mechanical and car repair profession.

ABOUT MERCANS

We are your trusted HR function outsourcing partner, simplifying employment tasks worldwide. We deliver bespoke human capital management services and global payroll solutions to empower businesses across all continents. A borderless people engagement enabler, driven by technology and innovation and committed to make your teams happy, we ensure your consistent and sustainable growth.

Mercans operate globally, ensuring timely and measurable results, and bottom-line savings. Supported by 500+ payroll and HR specialists with in-depth local knowledge, our pioneering human resources consulting services and trailblazing SaaS payroll software, HR Blizz™ & Mesaar™, are already satisfying 5,000+ international clients, regardless of the size of their organization and their industry. Visit mercans.com

SIMPLIFYING EMPLOYMENT TASKS WORLDWIDE

Local Presence. Regional Strategy. Global Success.

We are a borderless people engagement enabler, committed to make your teams happy. Driven by technology and innovation, we pride ourselves in being global people experts with striking local presence. We deliver bespoke human capital management services and innovative global payroll solutions to empower international businesses.

We are your reliable HR function outsourcing partner, delivering innovative HCM solutions, along with cutting-edge human capital management advice, to ensure consistent business growth, regardless of the size and industry of your company. We develop SaaS software and outsource HCM solutions tailored to 5,000+ clients across all continents.

Mercans operate globally, ensuring timely measurable results and bottom-line savings. We employ 500+ payroll and human resources specialists with in-depth local knowledge. Thanks to success-oriented teams striving for excellence and taking care of your organization’s tasks within budget, we have gained the trust of major multinational companies.

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