Jordan

The Jordanian Companies Law provides for the establishing of a variety of legal and organisational forms of companies including those which may be of practical interest for foreign investors, such as:

• Public Shareholding Company
• Limited Liability Shareholding Company
• Limited Partnership with shares
• Offshore Company
• Foreign Company (operating and non-operating)
• Foreign Company Branch and/or Representative Office

Since Jordan is neither a country of continental law nor that of Anglo-Saxon (general) law, many legal definitions and terms are difficult to translate directly. For example, the term “company” is often used to refer to both a company and a partnership. And the term “partner” may mean both a partner in a partnership and a shareholder.

Public Shareholding Company

Public Shareholding Company may be established with a minimum charter capital of JOD 500’000 (US$1 is approximately JOD 0.7) and is characterized as follows:

• At least 20% of the charter capital must be paid up at the time of incorporation. The remaining amount must be paid up within 3 years from the date of registration;
• company may have two or more shareholders whose liability is limited with their shareholdings in the charter capital;
• company may offer its shares to the public;
• company is managed by the Board of Directors composed of from three to 13 members elected by the general meeting for four years. The Board of Directors is headed by the general director;
• all directors must be shareholders of the company;
• company has to allocate 10% of its net profit to a specially established reserve fund until the amount in the fund is 1/4 of the company's capital;
• company has to allocate 1% of its net profit to a specially established development fund;
• each year company publishes its audited financial report in the local newspaper.

Limited Liability Shareholding Company

Limited Liability Shareholding Company may be established with a minimum charter capital of JOD 30’000 and is characterized as follows:

• At least 50% of the charter capital must be paid up at the time of incorporation. The remaining amount must be paid up within 2 years from the date of registration;
• company may have one or more shareholders whose liability is limited with their shareholdings in the company's capital;
• shares may not be publicly offered;
• company may have one or several directors.
Limited partnership with shares
Limited partnership with shares may be established by at least five partners, including at least two general partners and at least three limited partners (physical and legal persons) and is characterised as follows:
• partnership’s minimum charter capital is JOD 100’000;
• partnership shares’ nominal value must be JOD 1 each;
• shares may be offered to the public but the number of such shares may not exceed twice the size of the general partner’s participation in the partnership’s capital;
• partnership’s name should include one of the general partners’ name.
• partnership is managed by general partners - physical persons, or managers appointed by general partners. Limited partners may not be involved in the management of the partnership.

Offshore Company

Offshore Company may be incorporated as a public limited company, a limited liability company, or as a limited partnership with shares and is characterised as follows:

• company’s capital may vary from JD 30’000 for a trading limited partnership to JD 1’000’000 for a public shareholding company engaged in the financial services sector.
• company has to carry out all its business outside Jordan;
• company may not offer its shares to the public;
• company has to invest at least 5% of its capital in Jordanian securities.

Foreign Company (operating and non-operating)

Foreign Company Branch (Representative Office) (operating and non-operating) (as well as Joint Venture are quite popular forms of foreign companies’ presence in Jordan.

Foreign Company Branch

Foreign Company Branch is organized and duly registered to enable a foreign company to deliver a certain project in Jordan on the basis of a contract to be approved by the Ministry of Industry and Trade. If the company enters into other contracts in Jordan, this registration is extended for the entire period of performance of obligations thereunder. If, upon completion of contract works, the company does not enter into other contracts, the branch’s operation is terminated and it is liquidated.

Foreign Company Representative Office

Foreign Company Representative Office in Jordan is not limited by the time of possible presence in Jordan and, in addition to providing informational services to the head company, may manage the head company's activities carried out in any country of the world. Representative office may not make a profit in Jordan but it has many advantages because it pays no taxes and enjoys a number of other benefits, such as:

• Representative office’s non-Jordanian staff are exempt from income tax and social security tax;
• representative office may import office equipment, furniture and samples of goods which are not charged with customs duties;
• Representative office’s staff may import a vehicle every five years without paying customs duties;
• Representative office is not required to be registered with the Jordanian Chamber of Commerce and to pay any fees in this regard;
• Representative office’s non-Jordanian staff may obtain a residence and work permit in Jordan, however, their number may not exceed the number of Jordanian staff.

Joint venture in Jordan is not an independent legal entity and it is formed on the basis of a contractual agreement between two or more physical or legal persons on joint activities in a particular business sector.

All companies (foreign and local) operating in Jordan are subject to corporate income tax in accordance with the types of activities:

• companies engaged in mining industry, industrial production, hotel business, transportation, health care, as well as in other areas approved by the Council of Ministers of Jordan;
• banks, financial companies, companies engaged in stock exchange transactions and brokerage firms;
• all other companies.

Taxpayers in Jordan may determine the fiscal year timelines at their discretion. Tax returns must be filed within four months of the end of the fiscal year.
Any amount paid to a non-resident of Jordan is charged with the withholding tax.

All companies pay an education tax.

The VAT in Jordan varies from 0% to 20%, while for services it is fixed at the level of 10%.

Projects related to hotel business, agriculture, livestock, maritime and railway transport, as well as projects implemented in certain undeveloped territories of Jordan and in the free economic zone - Aqaba Special Economic Zone, have significant benefits in the form of tax deductions from 25% to 75%.
There is no exchange control in Jordan, and Jordanian Dinar is a fully convertible currency for foreign transactions.

Jordan is not a tax heaven, and a concept of Jordan tax exempt company (and/or Jordan International Business Company (IBC), trust, foundation etc. registration) does not exist in Jordan as such. A company formation in Jordan could be arranged with a professional registered agent providing incorporation, virtual office and other corporate services in Jordan. To set up a company in Jordan is possible by correspondence, but to open a bank account in Jordan will, most probably, require a personal visit.

Jordan Double Taxation Agreements

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