Navigating the complexities of payroll and employment taxes is a critical aspect of operating in Jordan. Both local and international companies employing staff within the Kingdom must adhere to specific regulations set forth by the relevant authorities, primarily concerning income tax and social security contributions. Understanding these obligations is essential for compliance and smooth business operations.
Employers in Jordan play a key role in the tax system, acting as withholding agents for employee income tax and contributing directly to the social security fund. Proper calculation, withholding, and timely remittance of these amounts are mandatory requirements that ensure adherence to Jordanian labor and tax laws.
Employer Social Security and Payroll Tax Obligations
Employers in Jordan are required to register with the Social Security Corporation (SSC) and make monthly contributions for their employees. These contributions cover various benefits, including old age, disability, death, work injuries, and unemployment insurance. The contribution rates are split between the employer and the employee, calculated based on the employee's gross salary, up to a specified ceiling.
For the year 2025, the standard SSC contribution rates are expected to be as follows:
| Contributor | Rate |
|---|---|
| Employer | 16.5% |
| Employee | 7.5% |
| Total | 24% |
These rates apply to the employee's monthly salary, subject to a maximum salary ceiling which is adjusted periodically. Contributions must be paid monthly to the SSC by the employer.
Income Tax Withholding Requirements
Employers are responsible for calculating and withholding income tax from their employees' monthly salaries. This is a mandatory requirement under the Income and Sales Tax Law. The amount of tax to be withheld depends on the employee's total taxable income after accounting for permitted deductions and personal allowances. Jordan operates a progressive income tax system with varying tax brackets.
Employers must calculate the monthly tax based on the employee's annualized income, taking into account the applicable tax rates and allowances. The withheld tax must be remitted to the Income and Sales Tax Department (ISTD) on a monthly basis.
Employee Tax Deductions and Allowances
Jordanian tax law provides certain personal allowances and permits specific deductions that reduce an employee's taxable income. These allowances are designed to provide a basic level of tax-free income.
For the tax year 2025, the main personal allowances are anticipated to be:
- Individual Allowance: A fixed annual amount for the taxpayer.
- Family Allowance: An additional annual amount for dependents (spouse and children), subject to conditions and limits.
Specific amounts for these allowances are determined annually by the ISTD. Beyond these personal allowances, certain expenses may also be deductible, such as contributions to approved pension funds (beyond the mandatory SSC) or specific medical expenses, subject to limits and conditions defined by the law.
Tax Compliance and Reporting Deadlines
Employers in Jordan have strict deadlines for reporting and remitting withheld income tax and social security contributions.
- Monthly Obligations:
- SSC contributions and withheld income tax must typically be paid by the 15th day of the following month. Late payments can incur penalties and interest.
- Annual Obligations:
- Employers are required to file an annual salary and wage tax return detailing the total compensation paid to each employee and the total tax withheld during the year. The deadline for this annual filing is generally March 31st of the following year.
Accurate record-keeping of payroll, allowances, deductions, and tax withheld for each employee is crucial for meeting these reporting requirements.
Special Tax Considerations for Foreign Workers and Companies
Foreign individuals working in Jordan are generally subject to Jordanian income tax on their income derived from sources within Jordan, regardless of their residency status. If a foreign worker is considered a resident for tax purposes (typically by residing in Jordan for a certain period), they are taxed on their worldwide income, though double tax treaties may provide relief. Employers of foreign workers must comply with the same withholding and reporting obligations as for local employees.
Foreign companies operating in Jordan may have additional tax considerations depending on their legal structure and activities. Establishing a permanent establishment in Jordan typically triggers corporate income tax obligations. Foreign companies employing staff directly in Jordan without a local registered entity may need to utilize an Employer of Record service to ensure compliance with local payroll, tax, and social security regulations, as the legal responsibility for these obligations rests with the entity considered the employer in Jordan. Understanding the distinction between hiring through a local entity versus other arrangements is vital for tax and labor compliance.
