In short: Jordan's general sales tax rate, often called VAT, is 16%, on goods and services alike. Some items are exempt, lower-rated or zero-rated, and some goods carry a special tax on top. Tax is worked out line by line at each item's rate and after any discount, and the tax in your drawer is owed to the department every two months. It is not profit.
In this guide
Jordan's sales tax, the tax most people call VAT, is the figure your customer sees on every receipt, but the person who collects it and answers for it is the registered shop owner. This guide walks through what Jordan's General Sales Tax Law No. 6 of 1994 says, in a shop owner's terms: the rate, when it changes, who pays what and when, and how to work out the tax on an invoice without the same mistakes every day. This is general information, not tax advice. How each of your items is treated is for your accountant and the Income and Sales Tax Department to decide.
What sales tax is and who actually pays it
The law places a general tax on selling and importing goods and services. The customer pays it inside the price. The registered shop collects it and passes it on to the Income and Sales Tax Department. So the tax sitting in your drawer is not profit. It is money you are holding until it is due.
The law says the tax is added to the price of the goods or service, that a registered seller must issue a tax invoice for every taxable sale, file a return every two months, and pay the tax due within the month after the period ends. The return is due even if you sold nothing in that period.
The 16% general rate and when it differs
The general rate in the law is 16%, and it applies to any goods or service that has no other treatment. But not everything on your shelves carries 16%. There are three other treatments, and the difference between them matters.
| Treatment | What it means | What shows on the invoice |
|---|---|---|
| General rate, 16% | The default in the law for any goods or service without another treatment | 16% tax on the price before tax |
| Lower rate | Goods and services set at a rate below 16% | Tax at that item's own rate |
| Zero rate | The sale is taxable, but at a rate of zero, in cases the law defines | The item is listed with zero tax |
| Exempt | Goods and services in the exemption schedule attached to the law, or exempt under its provisions | No tax on the item |
The lists of exempt and lower-rate items are amended by decisions from time to time, so we do not publish an item list here. Get each item's rate from the Income and Sales Tax Department or your accountant.
The special tax on some goods
Alongside the general tax, the law defines a special tax on specific kinds of goods, charged at set rates or set amounts listed in its schedules and in decisions issued under it. In the usual case it does not replace the general tax but comes with it: the special tax is worked out first, then the general tax is worked out on a price that includes it. So multiplying by 1.16 is not enough for an item that carries the special tax.
JoFotara has a separate invoice type for these goods, the special sales tax invoice, with its own code in the technical guide for connecting. If anything you sell carries the special tax, ask your accountant for its rate and treatment before you sell it. A worked example, step by step, is in our guide to JoFotara invoice types.
Sales tax on services
The general tax is not only for goods. The law charges it on services too, and the 16% general rate is the default unless the service is exempt or has another rate. In a shop both can sit on one invoice: a phone shop selling a charger and charging for a screen replacement, or a clothing shop charging to take up a pair of trousers.
The difference that matters for services is the registration threshold: 30,000 JOD over twelve months for service providers, lower than the threshold for sellers of goods, as our sales tax registration guide explains. Your accountant sets the rate for each service, just as for goods.
Exempt and zero-rated are not the same thing
On a receipt they look alike: an item with no tax. The difference can show up in your books. The law lets a registered seller deduct the general tax they bore on their purchases from the tax they owe, with specific exceptions, and that deduction can be treated differently for exempt items and zero-rated items. You see the result in what you pay at the end of the period.
So do not set every untaxed item to 'zero' and move on. Give each item the treatment your accountant specifies, so your reports and returns come out right.
Working out the tax on an invoice
The rule: tax is calculated on each line at that item's rate, then added up. If a price is before tax, multiply by 1.16. If it already includes tax, divide by 1.16 to find the price before tax. The usual mistake is taking the total of a basket that mixes rates and dividing the whole thing by 1.16. Here is an invoice with one general-rate item and one exempt item, prices including tax.
| Line | Price incl. tax | Before tax | Tax |
|---|---|---|---|
| General-rate item at 16%, 2 × 4.640 JOD | 9.280 JOD | 8.000 JOD | 1.280 JOD |
| Exempt item | 2.500 JOD | 2.500 JOD | 0.000 JOD |
| Invoice total | 11.780 JOD | 10.500 JOD | 1.280 JOD |
Dividing the 11.780 total by 1.16 would give 1.625 JOD of tax, 345 fils too much on a single invoice. Figures are for illustration. Your accountant sets the rate for each item.
From invoice to return: what you actually pay
At the end of each tax period, every two months, what you owe works out broadly like this: the tax you collected on sales, minus what the law lets you deduct. That includes general tax you bore on purchases, within the conditions, tax you had already charged on sales that customers returned, and tax on debts that turned bad.
A simple example: you collected 2,400.000 JOD of tax on sales in the period and bore 1,750.000 JOD of deductible tax on purchases. You pay the difference, 650.000 JOD.
That is why a supplier invoice is not something to throw away once the stock is on the shelf. Without it you may not be able to deduct the tax you paid, which means paying it twice.
Mistakes shops keep making
- Importing every product from an Excel file at 16% in one go, when some are exempt or at a lower rate.
- Mixing tax-inclusive and tax-exclusive prices: some items entered with tax, some without.
- Calculating tax on the price before a discount. The law treats the price the buyer pays as the real value of the sale, so tax follows the discounted price.
- Treating the tax in the drawer as profit, then being caught out by the return.
- Losing supplier invoices, and with them tax you could have deducted.
- Working the tax out on paper, so your figures never match what reached JoFotara.
How Ghalleh helps
In Ghalleh you set each product's tax once, when you add or import it, and choose whether your prices include tax or have it added. From then on Ghalleh calculates the tax on every invoice line at that item's rate, even when a basket mixes rates, sends the invoice to JoFotara and prints the QR on the receipt.
Ghalleh issues income invoices and general sales tax invoices. It does not issue special tax invoices, so if your goods carry the special tax, check with your accountant before you connect any cashier app to JoFotara.
At the end of the period Ghalleh gives you a sales and tax report for whatever dates you pick, ready to send to your accountant as a PDF. To check a single figure quickly, the sales tax calculator on our tools page adds tax to a price or pulls it out of a tax-inclusive one. Ghalleh is available now on Google Play, and the Windows version is on the download page, with a 14-day free trial with every feature and no card.
Everything about JoFotara on one page: the JoFotara e-invoicing guide.
Common questions
What is the sales tax rate in Jordan?
The general rate in the General Sales Tax Law is 16%. Some goods and services have lower rates, a zero rate or an exemption, and those lists are amended by decisions, so get each item's rate from the Income and Sales Tax Department or your accountant.
Is sales tax calculated before or after a discount?
After. The law treats the price the buyer must pay as the real value of the sale, so tax is calculated on the discounted price. Check with your accountant how the discount should appear on the invoice.
Is Jordan's sales tax the same as VAT?
Its legal name is the General Sales Tax, not value added tax. It works much like VAT, though: a registered seller collects tax on sales, deducts the tax borne on purchases within the conditions, and pays the difference. That is why it is often called VAT in English. The general rate is 16%.
What is the special tax in Jordan?
A tax the law charges on specific kinds of goods at set rates or set amounts, in the usual case on top of the general tax. JoFotara has a separate invoice type for it. Ask your accountant for the rate on any item that carries it.
How often do I file a sales tax return in Jordan?
Under the law, a business registered for general sales tax files a return every two months and pays within the month after the period ends, even with no sales. The department sets when your period starts and ends.