doing business in jordan 2011

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Doin business in Jordan

2011



All Rights Reserved Doing business in Jordan 2– Ernst & Young

In the preparation of this guide, every effort has been made to offer current, correct and clearly

expressed information. However, the information in the text is intended to afford general guidelines only.

This publication is distributed with the understanding that Ernst & Young is not responsible for the result

of any actions taken on the basis of information in this publication, nor for any errors or omissions

contained herein. Ernst & Young is not attempting through this work to render legal, accounting or taxadvice. Readers are encouraged to consult with professional advisors for advice concerning specific

matters before making any decision.

The information in this publication should be used as a research tool only, and not in lieu of the tax

professional‟s own research with respect to client matters.

Ernst & Young offers assurance and taxation services, as well as customized services in corporate finance,

online security, risk management, the valuation of intangibles and e-business acceleration. This book is

one in a series of country profiles prepared for use by clients and professional staff. Additional copies may

be obtained from

Ernst & YoungP.O. Box 1140,

Amman, 11118

300 King Abdullah Street

Amman, Jordan

Tel: +962 6 5800777

Fax: +962 6 5538300

[email protected]

mailto:[email protected]





Preface

This booklet was prepared by Ernst & Young, Jordan, a member firm of Ernst & Young. It is meantprimarily for the busy executive for a quick overview of the investment climate, taxation, forms of

business organization and business and accounting practices in Jordan. Making decisions about foreign

operations is a complex exercise. It requires an intimate knowledge of a country‟s commercial climate,

with a realization that the climate can change overnight. Companies doing business in Jordan, or planning

to do so, are advised to get current and detailed information from experienced professionals. This book

reflects information current at January 2011.




ContentsA. Jordan – Executive summary .................................................................................................... 6

A.1 Regulatory constraints and reliefs ...................................................................................... 6 A.2 Tax system ........................................................................................................................ 6 A.3 Financial reporting and audit requirements .......................................................................... 7

B. Business environment .............................................................................................................. 8 B.1 Business and investment environment ................................................................................ 8 B.2 Economic trends and performance ...................................................................................... 8 B.3 Currency............................................................................................................................ 9 B.4 Economic structure .......................................................................................................... 10 B.5 Relationship of government and business .......................................................................... 14 B.6 Financial sector................................................................................................................ 15 B.7 Essential industries .......................................................................................................... 20 B.8 Energy, mineral and other natural resources ..................................................................... 21 B.9 Foreign trade ................................................................................................................... 21

C. Foreign investment................................................................................................................. 22 C.1 Exchange controls and debt to equity requirements ........................................................... 22 C.2 Restrictions on foreign investment ................................................................................... 22 C.3 Investment incentives ...................................................................................................... 23 C.4 Sources of finance for foreign investors ............................................................................ 24 C.5 Importing and exporting ................................................................................................... 24 C.6 Registration of intellectual property.................................................................................. 25

D. Structure of business entities................................................................................................. 26 D.1 Companies ....................................................................................................................... 26 D.2 Partnerships .................................................................................................................... 26 D.3 Joint ventures ................................................................................................................. 27 D.4 Operations of foreign companies ....................................................................................... 27

E. Labour force ........................................................................................................................... 28 E.1 Availability of skilled workers............................................................................................ 28 E.2 Special requirements for foreign nationals......................................................................... 29

F. Taxation ................................................................................................................................. 30 F.1 Principal taxes ................................................................................................................. 30 F.2 Tax administration ........................................................................................................... 30 F.3

Withholding Tax ............................................................................................................... 32

F.4 Depreciation and amortization .......................................................................................... 33 F.5 Loss Carryovers ............................................................................................................... 34 F.6 Individuals ....................................................................................................................... 34 F.7 Sales and Indirect Taxes ................................................................................................... 35 F.8 Tax treaties ..................................................................................................................... 36 F.9 Trusts.............................................................................................................................. 37

G. Financial reporting and auditing .............................................................................................. 38 G.1 Books and records............................................................................................................ 38 G.2 Source of accounting principles ........................................................................................ 38 G.3 Financial reporting ........................................................................................................... 38

H. General................................................................................................................................... 40 H.1 Geography ....................................................................................................................... 40 H.2 Population and language................................................................................................... 40



Section or Chapter title


H.3 Government and political system ...................................................................................... 41 H.4 Legal environment ........................................................................................................... 41 H.5 International relations and associations ............................................................................ 41 H.6 Entry visas and work permits ............................................................................................ 42




A. Jordan – Executive summary

The Hashemite Kingdom of Jordan is notably a country with scare resources such as limited agricultural

land, oil resources and scarce water. However, despite this adversity and a turbulent regional politicalenvironment, Jordan maintains a steady economic growth rate compared to other emerging economies in

the sub-region. This is due to the recent extensive economic reforms by the government, resulting in the

opening up of key sectors to foreign investment and vibrant economic activity.

A.1 Regulatory constraints and reliefs

Exchange controls

The Foreign Exchange Control Law No. 95 of 1966 governs all foreign exchange transactions in Jordan.

The law was supplemented by the Foreign Exchange Control Regulations of 1978, amended in 1979.

The Central Bank of Jordan (CBJ) is the ultimate controlling and monitoring body for all issues connected

with foreign exchange in the kingdom. The CBJ is responsible for maintaining monetary stability and

ensuring the convertibility of the Jordanian Dinar (JOD). It oversees an interest rate structure consistent

with the level of economic activity to provide sound macroeconomic environment in Jordan. The apex

bank is also responsible to ensure the safety and soundness of the banking system as well as the resilience

of the national payments system.

Foreign ownership of business

The investment rules in the kingdom are based on the Investment Promotion Law of 1995 which was

amended by regulation No. 54 in 2000. The regulation was titled: “Regulating Non-Jordanian Investments

Regulation for the year 2000”.

Articles 3 and 4 of the regulation restrict the percentage of non-Jordanian ownership in specific sectors to

50% and 49%, respectively. The sectors covered by Article 3 consist of six commercial activities and

another 13 services sectors and sub-segments. Article 4 of the regulation covers sectors of scheduled and

non-scheduled passenger, freight, and mail air transport services, and rental services of aircraft.

Non-Jordanian investments are open for whole or partial ownership in all sectors not specified in Articles

3 and 4. Investment from countries with free trade agreements (FTA) are subject to the terms of the

respective FTAs.

A.2 Tax system

The Jordanian tax law that is currently in effect is the Temporary Income and Sales Tax Law No. 28 of

2009 and its instructions which were issued in 2010. In addition, special regulations apply vis-à-vis the

Aqaba Special Economic Zone and other development and free zones throughout the kingdom.

The primary types of income taxes levied are corporate income tax, individual income tax, and withholding

tax. Corporate tax rates range from 14% to 30%. Individuals are allowed a JOD 12,000 annual exemption

for salaried persons and JOD 24,000 for households. Foreign employees working for non-operating

foreign companies (regional offices) are exempt from paying income tax.

Please refer to Section F. (Taxation) below for more information.



Jordan – Executive summary


A.3 Financial reporting and audit requirements

According to the Companies Law 22/1997 and its amendments, companies operating in Jordan are

required to maintain annual audited financial statements. This is applicable to all public shareholding

companies, general partnerships, limited partnerships, limited liability companies, private shareholding

companies and foreign companies. The Companies Law also stipulates that all registered companies

should maintain sound accounting records and present annual audited financial statements in accordance

with International Financial Reporting Standards (IFRS).

The market regulator, the Jordanian Securities Commission (JSC), requires all listed companies to apply

IFRS.




B. Business environment

B.1 Business and investment environment

Jordan is ranked 100 out of 183 economies, for „Ease of doing business‟ in 2009 as World Bank report.

The kingdom has taken significant steps to encourage foreign investment through timely reforms in its bid

to integrate itself into the global economy since 1998.

The government has opened up sectors such as, the information technology, pharmaceuticals, tourism,

and services sectors. Foreign and domestic investment laws offer specific incentives to industry,

agriculture, hotels, hospitals, maritime and rail transportation. Leisure and recreation projects,

convention and exhibition centers, transportation and distribution of water, gas, and oil/oil derivatives

using pipelines have also found favor with government incentives recently.

Jordan is a member of the World Trade Organization (WTO) since 11 April 2000. It entered into a FreeTrade Agreement (FTA) with the USA in 2000 and an Association Agreement with the European Union in

2001. This apart, the Kingdom is a member of the Greater Arab Free Trade Area (GAFTA), consists of 17

Arab countries. On 16 May 2004, Jordan entered into an FTA with Singapore.

In May 2001, the government converted the Aqaba port and surrounding area into a special economic

zone (ASEZ) offering special incentives to investors. The Aqaba SEZ covering around 375 sq km had

received investment of around US$8 billion by 2006, exceeding the original target of US$6 billion. Other

free trade zones are also opened at Zarqa, the Sahab industrial estate and Irbid.

The kingdom undertook several reforms to bring its economic policies and trade in accordance with its

WTO agreements. The government drafted special legislations of intellectual property rights. It also

amended laws of Standards and Metrology, Agriculture, National Production Protection, General Sales

Tax, Customs, and Import and Export as well as non-Jordanians' Investments Regulations.

All these steps boosted activity across the board, leading to the emergence of some principle growth

sectors in the economy. These include health technology, pharmaceuticals, telecommunications,

information technology, environmental technology, security and safety equipment. The hospitality

products and services, energy, and mining are likely sectors for growth in the future. Construction,

textiles, insurance, and financial services are also expected to witness increased activity going forward.

B.2 Economic trends and performance

The Jordanian economy managed to pull out a satisfactory performance in the year 2008, although signs

of slowdown started to appear during the last quarter of the year. Macroeconomic conditions were

favorable during most of 2008, with foreign direct investment flows and growing private consumption

demand boosting economic activity, prior to the eruption of the global crisis. Estimates put real GDP

growth at about 5.5% (International Monetary Fund), accompanied by a rise in inflation to an average of

14% driven by demand pressures and the rise in global basic foodstuffs and commodities prices during

most of the year.

Real Gross Domestic Product (GDP) grew at 2.8 percent in 2009 compared to 7.8 percent in 2008. The

Consumer Price Index (CPI) revealed a rise by 4.9 percent during the first four months in 2010 against a

rise in the amount of 1.7 percent during the same period in 2009.



Business environment


Furthermore, investments benefiting from the Investment Promotion Law totaled JD 685.9 million in the

first quarter of 2010, of which 23.3 percent were foreign investments, compared to JD 249.8 million

during the same period in 2009.

Annual Percent Change in Real GDP, Consumer Prices and Current Account Balance

Year Real GDP Consumer Prices Current Account Balance

2008 7.8 14.9 -10.3

2009 2.8 -0.7 -5.6

2010 4.1 5.3 -8.9

2011 4.5 4.6 -9.7

Source: IMF Report April 2009

Outlook for 2011-15

► Power in Jordan is expected to remain firmly in the hands of the king, Abdullah II, who will retain theloyal support of the army and the security services.

► The date for the parliamentary election has been set for November 9th. The amendments to theelectoral law are unlikely to alter the balance of power in the country. The king will be careful to retainhis primacy over policymaking.

► Jordan's fiscal deficit is expected to remain wide over the forecast period, averaging 5.3% of GDP ayear (including grants), as revenue growth is held back by sluggish economic expansion.

► The Central Bank of Jordan will retain a relatively loose monetary policy, in an effort to encouragecommercial bank lending.

► Although it will recover over the forecast period, real GDP growth is likely to remain below the highs of

2004-08, as the economy struggles because of weak public spending growth and the end of theconstruction boom.

► Headline average inflation will have risen sharply in 2010, although this primarily reflects an unhelpfulbase effect, and is expected to fall to 3.7% in 2011. It will average 4.3% over the forecast period.

B.3 Currency

The Jordanian Dinar (JD) is the currency of the Hashemite Kingdom of Jordan. The JD is divided into 100

qirsh (also called piastres) or 1000 fils. The Jordanian dinar also circulates in The Palestinian National

Authority.

Since October 1995, Jordan has adopted the pegged exchange rate system, whereby the Jordanian Dinar

is pegged to the U.S Dollar at an average price of 709 fils per Dollar. Accordingly, the JD‟s exchange ratewith other major currencies is determined by U.S Dollar‟s movement in the international financial markets.

The central bank‟s monetary policy is focused on maintaining the exchange rate peg. The CBJ cut the

interest rate by 50 basis points in September 2007, following the reduction in the Fed Funds rate.

However, the central bank lowered the interest rates only by 25 bps so far, in response to the subsequent

250 bps cut in the Fed rates. This was to avoid an excessively accommodative monetary stance.





B.4 Economic structure

The Jordanian economy reported signs of sluggishness amid one of the worst global economic crisis in the

World contemporary history. The real sector slowed down in real terms as foreign demand collapsed post-

crisis, but recession was avoided thanks to several domestic growth drivers within the Kingdom. Real GDP

growth is indeed estimated to have approximated 3.0% in 2009, which is far below the highs reached in

2004-2008, on the background of depressed FDI inflows and weakening remittances and exports. In

parallel, the consumer price index is estimated to have reported a negative rate of -0.7% in 2009 as

compared to 13.9% in 2008, mainly on the back of lower international oil and food prices as well as the

strengthening of the US Dollar, in addition to the slowing domestic economy. It is estimated that imported

inflation constitutes circa 56% of the CPI variation in Jordan. Despite the sharp decline in the consumer

price index, domestic consumption is estimated to have increased by a mere 2.7% at end-2009 according

to preliminary forecasts.

At the foreign sector level, as the global recessionary environment affected Jordan‟s regional trade

partners, exports decreased by 19.4% over the year 2009. However, the trade deficit shrank by 15.8%year-on-year as a result of a more significant drop in imports. Jordan‟s international investment inflows

plunged to US$ 1.2 billion in 2009, compared to US$ 1.9 billion in 2008, reflecting a contraction of 37%.

In parallel, total workers‟ remittances, accounting for 16% of the Kingdom‟s GDP, went down by 5.2% in

2009 as a result of the sluggish conditions in GCC countries that host the bulk of Jordanian diasporas.

Another external factor, Jordan‟s tourism income, declined by 1% in 2009 amid the retreat in the activity

of international travelers over the year.

Monetary conditions were yet favorable in 2009. The Kingdom witnessed important capital inflows

towards the domestic economy coupled with significant domestic conversions from foreign currency

holdings to local currency holdings and generating a sound surplus in the balance of payments. With both

residents and nonresident repatriating back and converting to Jordanian Dinars to take advantage of the

substantial interest rate differential between dinar and dollar deposits, there was a substantial increase in

foreign exchange reserves from US$ 8.6 billion at end-2008 to US$ 11.7 billion at end-2009, the

equivalent of circa 50% of the Kingdom‟s GDP.

The Jordanian banking sector was more or less unscathed by the global financial turmoil, despite the

impact of the latter on lending quality at large. The consolidated assets of domestic banks grew by 7.3% in

2009, driven mainly by customer deposits which grew by 12.1%. Depositors increasingly headed towards

deposits in Jordanian Dinars which grew by 18.9% in 2009, while deposits in foreign currencies recorded a

6.7% drop. Credit facilities yet went up by a mere 2.1% in 2009, against 15.6% in 2008, within the context

of global deleveraging. The decrease in the yield on liquidity uses since the eruption of the global financial

crisis, along with growing provisioning charges within the context of deteriorating lending quality put

pressure on banks‟ profitability at large. Within this context, aggregate net earnings of Jordanian bankssaw a contraction hovering around 28% during the first nine months of 2009.





Jordan: Selected economic indicators

Prel.2008

2009 2010 2011 2012 2013 2014

Real sector (Annual percentage changes)

Real GDP at market prices 5.6 3 4 4.5 5 5.5 5.5

Consumer price index (average) 14.9 4 3.6 2.1 2.1 2.2 1.8

Unemployment rate (percent) 12.7 13 13 12.5 ... ... ...

Gross domestic investment (in percent of GDP) 28.3 27.8 27.7 28.7 29.1 29.3 29.4

Gross national savings (in percent of GDP) 16.1 17 17.1 18.1 19.2 19.5 19.8

Public finance (In percent of GDP)

Central government revenue and grants 33.1 32.4 30.6 30.6 30.5 30.5 30.5

Of which: grants 5.1 4.5 2.6 2.4 2.2 2.2 2

Central government expenditure and netlending1

39.2 37.7 37.1 36.9 36.6 36.2 36

Central government overall fiscal balanceincluding grants

-6.1 -5.3 -6.5 -6.3 -6.1 -5.6 -5.5

Government and government-guaranteed netdebt

60.1 60.4 62.1 63.9 65 65.3 65.9

Balance of payments (In percent of GDP)

Current account balance (after grants), ofwhich:

-12.1 -10.8 -10.6 -10.5 -9.9 -9.7 -9.6

Exports, f.o.b. ($ billions) 7.8 6.8 7.5 8.2 8.9 9.7 10.6

Imports, f.o.b. ($ billions) 15 13.7 14.5 15.7 16.9 18.3 19.7

Gross usable international reserves ($ millions)2

7734 7311 7318 7480 7717 7935 8203

In months of prospective import cover 5.8 5.2 4.8 4.6 4.4 4.4 4.3

Relative to short-term debt by remainingmaturity

11.6 12.2 11.8 11.4 11.3 11.6 11.8

Money and credit (Annual percentage changes)

Broad money 17.3 7.1 7.7 6.7 7.2 7.8 7.5

Credit to private sector 14.8 7.2 7 5 5.8 7.6 7.3

Exchange rates

Real effective exchange rate (percent change) 3 5.5 … … … … … …

Sources: IMF Report

1 Including off-budget.

2 Net of short-term foreign liabilities, foreign currency swaps, and commercial bank foreign deposits with the Central Bank of Jordan.

3 End of period; a positive number indicates an appreciation.





Data on GDP and economic information

Central bank Central Bank of Jordan

InternationalReserves

US$ 12.161 billion (Source: IMF; Data updated: December 2009)

Gross DomesticProduct - GDP

US$ 27.129 billion (2010 estimate)

GDP (PurchasingPower Parity)

34.617 billion of International dollars (2010 estimate )

Real GDP growth 2000 2001 2002 2003 2004 2005 2006 2007

4.30% 5.30% 5.80% 4.20% 8.60% 8.10% 7.90% 8.50%

2008 2009 2010* 2011**

7.60% 2.30% 3.40% 4.20%

*Estimate **Forecast

GDP per capita -current prices

US$ 4,435 (2010 estimate)

GDP per capita - PPP $5,659 International Dollars (2010 estimate)

GDP (PPP) - share ofworld total

1980 1990 2000 2010* 2015**

0.04% 0.03% 0.04% 0.05% 0.05%


GDP - composition bysector

► agriculture: 3.5%

► industry: 29.9%

► services: 66.5% (2009 estimate)

(Data released on November 2010)

Gross domesticexpenditure on R&D(% of GDP)

N/A


Inflation 2008 2009 2010* 2011**

13.9%(2008)

-0.70% 5.50% 5%


Unemployment rate 2008 2009 2010* 2011**

12.70% 13% 13%(2009) 12.50%


Household savingrates

N/A


Public debt (Generalgovernment grossdebt as a % of GDP)

2007 2008 2009 2010* 2011**

71.10% 58.10% 61.40% 62.70% 62.40%





so nokkiyappol

Public deficit(General governmentnet lending/

borrowing as a % ofGDP)

2007 2008 2009 2010* 2011**

-4.50% -4.10% -8.10% -6% -5.30%


Government bondratings

Standard & Poor's: BB/Stable/B

Moody's rating: Ba2

Moody's outlook: STA

(Foreign Currency Government Bond Ratings; Data last updated Nov 2010)

Market value ofpublicly tradedshares

2007 2008 2009

US$41.216 billion

US$35.847 billion

US$31.865billion

Largest companies inJordan

Arab Bank (Banking), Arab Potash (Chemicals) - 2010

Data on trade and competitiveness

Current account balance US$ -1.9 billion (2010 estimate)(After 2008)

Current account balance by percentageof GDP

-7.2% of GDP (2010 estimate)(2009)

Exports as percent of GDP 46.5% (2009)

(Exports of goods and services) (Data released on December 2010)

Shares in world total merchandisingexport

0.05%(2007)

(Data were released in Nov 2010 and refer to 2009)

Shares in world total commercialservices export

0.13%(2007)

(Data were released in Nov 2010 and refer to 2009)

Total exports US$6.521 billion f.o.b. (2008 estimate)

Export commodities clothing, fertilizers, potash, phosphates, vegetables, pharmaceuticals

Total imports US$15.65 billion f.o.b. (2008 estimate)

Import commodities crude oil, machinery, transport equipment, iron, cereals

Exports - major partners US 22.4%, Iraq 12.9%, India 8.3%, UAE 7.8%, Saudi Arabia 7.5%, Syria4.9% (2007)

Imports - major partners Saudi Arabia 21%, China 9.7%, Germany 7.5%, US 4.7%, Egypt 4.4%(2007)

FDI inflows 2007 2008 2009

US$2,622million

US$2,829million(2009)

US$2,385million(2009)

FDI outflows 2007 2008 2009

US$48 million US$13 million US$72 million





Value of cross-border M&A, by countryof purchaser

2007 2008 2009 2010

US$45 million US$322 million(2009)

N/A(2009) N/A

Cross-border M&A deals worth over $3billion completed in 2007 (Acquiringcompany, Acquired company, Countryof the acquired company, Value of thedeal)

N/A

Cross-border M&A deals worth over $3billion completed in 2008 (Acquiringcompany, Acquired company, Countryof the acquired company, Value of thedeal)

N/A(2008 estimate)

Best countries for doing businessWorld Bank/IFC Doing Business Project(Economies are ranked on their ease of

doing business, from 1 – 183. A highranking means the regulatoryenvironment is more conducive to thestarting and operation of a local firm.)

Overall ranking: 111 out of 183 countries(2009) (2010)

Subcategories:

Starting a business: 127 out of 183 countries - Time necessary (days):13(2009)

Registering property: 106 out of 183 countries - Time necessary (days):21

Paying Taxes: 29 out of 183 countries - Time necessary (days): 101

Getting credit: 128 out of 183 countries

Protecting investors: 120 out of 183 countries

Trading across border: 77 out of 183 countries

Enforcing Contracts: 129 out of 183 countries

Global competitiveness ranking (rankingby country on a basis of 133, the first isthe best)

65 (2010/2011)

Index of Economic Freedom Ranking: 52 Score: 66.1 (Moderately Free) (2009)

WSJ and Heritage Foundation (100=totally free 0=totally repressed )

B.5 Relationship of government and business

In general, the Jordanian economy is private-sector oriented. The government‟s direct role in economic

activity is relatively small and confined to the mining sector (phosphates and potash) and in public utilities

(electricity, water, communications, and bus, railway and air transport).

Jordan stepped up its privatization programs in 1998. The government formed an Executive Privatization

Unit (EPU) at the Prime Ministry in order to facilitate the process in a speedy and transparent manner

based on comprehensive guidelines and regulations. The kingdom‟s accession to WTO and FTA with USA

and the association agreement with the EU have resulted in a spurt in capital inflows and economic

activity.

The overall investments rose 21.1% on year to a record high of JD2.22 billion in 2007, reflecting the

increasing confidence of foreign and domestic investors in the Jordanian business environment. Foreign

investment accounted for 47.3% of the total in 2007, up from 46.1% from a year earlier. These

investments were distributed among 421 projects, compared with 578 projects in 2006.





Jordan‟s industrial sector benefited largely, with 380 projects claiming 79.3% of the total last year. The

sector contributed significantly in terms of value added products, employment and wages.

The hotel sector, one of the supporting sectors for tourism came second, accounting for an 18.3% share.

Hospitals, agricultural projects, expositions and conferences centers, as well as fun and entertainment

cities came next in that order.

B.6 Financial sector

Monetary conditions in Jordan were marked in 2009 by deflation, moderate growth in money supply, and

strong official reserves that benefited from favorable interest rate differential. The Central Bank of Jordan

adopted a loose monetary policy since the beginning of the year to spur economic growth in the aftermath

of the global economic downturn.

Money supply (M2) reached JD 20,013 million at year-end 2009, growing by 9.3% or by JD 1,709 million

from JD 18,304 million at end-2008. The variation in money supply compares to a money creation of JD2,170 million, resulting mostly from an increase of JD 160 million in claims on private sector, a JD 328

million increase in net claims on public sector, a surge in net foreign assets of JD 1,780 million, and a JD

97 million decrease in the financial institutions‟ indebtedness. The difference between the growth in

money supply and money creation, amounting to JD 461 million, suggests a demonetization of monetary

claims in 2009.

Inflation retreated by a tiny 0.7% in 2009 after hitting an eighteen-year peak level of 13.9% in 2008. The

important fall in inflation rate is primarily due to lower energy and transport costs, in addition to weaker

domestic consumption in the aftermath of the global financial crisis. The breakdown of the Consumer

Price Index by categories reveals that the clothing and footwear category surged by 5.8%, followed by the

food items category which rose by 1.7%, while the other goods and services category fell by 3.9%, and the

housing category moved down by 1.7% over the year.

A. Banks

Jordanian banks weathered off the global crisis and its spillovers relatively well, within the context of

prudent regulations and supervision of behalf of the Central Bank of Jordan, and relatively limited

exposure to structured products and financial wholesale markets. In fact, total sector activity, measured

by assets of banks operating in Jordan, recorded a 7.3% rise in 2009, moving from US$ 42.0 billion at

end- December 2008 to US$ 45.1 billion at end-December 2009.

Total deposits, a major activity driver in the banking sector, managed to post a healthy 12.1% increase in

the twelve months ending December 2009, moving from US$ 25.5 billion at end-December 2008 to US$

28.6 billion at end-December 2009. Central Bank policies such as the guaranteeing of bank depositsfollowing the outburst of the global financial crisis actually maintained depositor confidence in the system

in a year of marked global uncertainties. The government has lately extended its bank deposit guarantees,

initially scheduled to end with the year 2009, until the end of the year 2010, amid the continuation of

relatively weak lending activity on behalf of banks operating in the Kingdom

In parallel, banks‟ lending activity remained essentially flat in 2009 in a year of acute deleveraging across

the world‟s major banking systems. Total credit facilities extended by Jordanian banks during 2009 posted

a mild 2.1% positive variation, from US$ 18.4 billion at end-December 2008 to US$ 18.8 billion at end-

December 2009, with lending activity showing some signs of improvement during the second half of

2009, in line with the amelioration of global economic conditions and alleviation of global systemic risks at

large.





The analysis of credit facilities by currency likewise underscores a drop in foreign currency lending (-7.7%)

while localcurrencylendingmanagedtopostaslight3.5%rise.This prompted a relative drop in the lending

dollarization rate, which moved from 12.8% at end-December 2008 to 11.6% at end-December 2009.

Jordan has a well- developed banking sector. There are 13 commercial banks, 2 Islamic banks and 8

foreign banks operating in the kingdom. In addition, there are five long-established specialized credit

institutions dealing with agricultural credit, housing, and rural and urban development and industry. This

apart, 121 authorized moneychangers operate in Jordan.

Banks in Jordan

Name Postal address Telephone Fax. E-mail

P.O.Box Postalcode

Commercial Banks

Arab Bank PLC. 950545 11195

Amman

5600000 5606793 [email protected]

Arab BankingCorporation(Jordan)

926691 11190Amman


Arab JordanInvestment Bank

8797 11121Amman


Bank of JordanPLC

2140 11181Amman


Cairo AmmanBank

950661 11195Amman


Capital Bank ofJordan

941283 11194Amman


JordanCommercial Bank 9989 11191Amman 5203000 5203005 [email protected]

Investbank 950601 11195Amman


Jordan KuwaitBank

9776 11191Amman


Jordan AhliBank PLC

3103 11181Amman


Societe Generalede Banque /Jordanie

560 11118Amman


The Housing Bankfor Trade &Finance

7693 11118Amman


Union Bank 35104 11180Amman


Islamic Banks

IslamicInternationalArab Bank PLC

925802 11190Amman


Jordan IslamicBank

926225 11190Amman


Jordan DubaiIslamic Bank

1982 11118Amman

4602200 4647821 N/A

Foreign Branches

StandardChartered

9997 11191Amman








Name Postal address Telephone Fax. E-mail

P.O.Box Postalcode

Egyptian Arab

Land Bank

6729 11118

AmmanHSBC BankMiddle East

925286 11190Amman


CitiBank 5055 11183Amman

5675100 5674888 n / a

Rafidain Bank 1194 11118Amman


National Bank ofKuwait

941297 11194Amman


Banque Audi /sardar AudiGroup

840006 11184Amman


Blom Bank 930321 11193Amman


National Bank ofAbu Dahbi

941110 11194Amman

5002222 5002233 N/A

Source: CBJ

Major monetary indicators

Year2009 (USD)

End of April2009 (USD) 2010 (USD)

10,879.0 CBJ‟s Foreign exchange Reserves 8,903.4 11,098.0

20,013.3 Money Supply (M2) 18,947.9 20,474.7

13,317.2 Credit Facilities, of which: 12,865.0 13,523.6

12,041.3 Private Sector (Resident) 11,656.9 12,195.2

20,298.4 Total Deposits, of which: 18,978.2 20,830.5

15,865.0 in JD 14,588.4 16,156.8

4,433.4 In Foreign Currencies 4,389.8 4,673.7

16,256.7 Deposits of Private Sector (Resident), of which: 14,925.6 16,668.0

13,500.0 In JD 12,211.5 13,742.0

2,756.7 In Foreign Currencies 2,714.1 2,926.0

Source: CBJ report of May 2010

On 3 February 2008, the CBJ decided to cut the Re-Discount Rate by 25 basis points, to 6.75% and

interest rate on Overnight Repurchases Agreements also by a similar margin to 6.5%. Meanwhile, the

Overnight Deposit Window Rate has been cut by 25 basis points to 4.50%.

http://www.nbk.com/

http://www.nbk.com/

http://www.nbk.com/

http://www.nbk.com/





B. Insurance

Insurance business in Jordan is regulated by the Jordan Insurance Commission, which was established

pursuant to the provisions of the Insurance Regulatory Act (No: 33) of 1999.

Jordan‟s insurance market, with 29 companies operating in a country of just 5.7m people, is saturated,despite regulatory encouragements for mergers and acquisitions. In terms of market share based on

premiums, motor coverage accounts for 42.4%, medical insurance 18.6%, fire and property damage 17%,

life 9.8%, marine and transport 7.9% and other insurance the remaining 4.3%. The insurance sector made

up 2.52% of GDP in 2006, up from 2.43% in 2005. Current plans call for increasing the sector‟s GDP

contribution to 7% in the short term and 10% in the long term. The sector holds great potential but

remains underdeveloped. Region-wide price increases and a lack of consumer understanding of products

are two major challenges. In addition, cultural considerations, including religion, make improving market

penetration difficult. The cost of living has also risen, and the IMF forecasts that the inflation rate will

reach 9% in 2008. Salaries have remained unchanged, however, leaving consumers with less disposable

income. Other than mandatory motor coverage, insurance products are considered a luxury by average

Jordanians, who must often prioritise spending. There will likely only be a few changes to the market inthe coming year. Members of the sector would like to see greater coordination among the regulators and

those working for the kingdom‟s legal system in order to improve insurance laws.

There are 29 insurance companies licensed to practice insurance business in Jordan, one of which is

licensed as a life company, 10 as non-life companies, and 17 as composite companies (life and non-life

insurance). Additionally, there are 2 non-operating foreign insurance companies in the Kingdom (regional/

representative office). The Insurance Commission regulates and supervises providers of insurance

supporting services including brokers, agents, loss adjusters and surveyors, consultants, reinsurance

brokers, actuaries, companies administrating the expenses and medical insurance services (TPAs), banks

licensed to practice bancassurance, in addition to foreign reinsurance brokers.

The regulatory and supervisory environment in Jordan has contributed in creating a qualitative shift in theinsurance sector's outcomes. Insurance gross premiums have reached 373.9 million Dinars in 2009.

Insurance gross premiums inside Jordan have increased from 99.8 million Dinars in 1999 to 365 million

Dinars in 2009 with a growth rate of 366%. The insurance sector‟s contribution in the GDP has increased

from 1.7% in 1999 to 2.2% in 2009.

C. Stock market

Jordan relied heavily on private capital to sustain its development programs. In the 1980s, the kingdom

sought to develop its internal financial base by establishing a stock exchange, the Amman Financial Market

(AFM).

In March 1999, the AFM was converted into the Amman Stock Exchange‟ (ASE) as a non-profit, privateinstitution with administrative and financial autonomy. It is authorized to function as an exchange for the

trading of securities. The exchange is governed by a seven-member board of directors. A chief executive

officer oversees day-to-day responsibilities and reports to the board. The ASE membership is comprised of

70 brokerage firms.

The establishment of the stock exchange helped the country to use its financial resources in a more

efficient way. It enabled both Jordanians and foreigners to invest in the private sector to help stimulate

the economy.





Amman stock exchange

Main Indicators for ASE

Indicator 2010* 2010

May Jun Jul Aug Sep Oct Nov

Number of ListedCompanies

276 275 275 275 275 275 276 276

Market Capitalization(JD million)

21207 20,921.70 20,787.40 20,565.90 20,114.30 20798 21159 21207

Value Traded (JDmillion)

6335.8 586.3 492.7 432.6 446.1 559.9 388.73 284.1

Average Daily Trading(JD million)

27.5 27.9 22.4 20.6 19.4 28 18.5 16.7

No. of Traded Shares(million)

6499.8 633.6 489.6 516 452.7 564.2 399.21 321.9

No. of Transactions(thousand)

1738.9 177 132.3 122.5 119.4 145.6 121.22 91.8

No. of Trading Days 230 21 22 21 23 20 21 17

Turnover Ratio (%) 95.2 9.3 7.1 7.5 6.6 8.2 5.8 4.6

Free Float Price Index(point)

2354.6 2401.6 2348.6 2334.8 2249 2306.5 2335.6 2354.6

Weighted Price Index(point)

5150.7 5065.7 5039 4971.7 4847.6 5040.6 5135.2 5150.7

Un-weighted PriceIndex (point)

846.9 976.6 920.2 913.7 869.6 889.2 857.9 846.9

No. of Traded Bonds(thousand)

0.0 0 0 0 0 0 0 0

Value of Traded Bonds(JD million)

0.0 0 0 0 0 0 0 0

Price/ Earnings Ratio(times)

25.59 21.8 22.7 24.4 24.3 25.03 25.503 25.59

Price/ Book ValueRatio (times)

1.61 1.6 1.6 1.6 1.5 1.58 1.606 1.61

Dividend Yield Ratio(%)

2.78 2.9 2.9 2.9 3 2.84 2.792 2.78

Non-JordanianOwnership of MarketCap.%

49.1 48.4 48.7 48.6 48.6 48.8 49 49.1

Non-Jordanian Buying

(JD million)

973 104.2 88 44.7 42.7 81.7 45.3 38.9

Non-Jordanian Selling(JD million)

988.6 105.8 80.7 39.4 64.2 84.1 44.4 36.4

Net Investments ofNon-Jordanians (JDmillion)

-15.7 -1.6 7.2 5.3 -21.6 -2.4 0.9 2.5

Market Capitalization /GDP (%)

119 138.9 138.1 136.6 133.6 138.1 140.5 119

Transactions ThroughThe SDC

132.7 4.1 12.8 7.1 8.8 1.5 5.8 2.2

Primary Issues ofShares (JD million)

87.3 1.7 6 11.9 1.5 10 6.4 9.1

Primary Issues ofBonds (JD million) 4644.1 687 490.5 423.5 292 225 736.8 415

* Cumulative up to November

Source: ASE





B.7 Essential industries

Mining /quarrying and manufacturing constitute Jordan‟s industrial sector. The sector accounts for a

major share of domestic exports.

Phosphates and potash are Jordan's main natural resources. The extraction of phosphate, petroleum

refining, and cement production are the country‟s major heavy industries. The kingdom is one of the

leading producers of phosphates in the world. Food, clothing, and a variety of consumer goods also are

produced. Medical and Pharmaceutical products, Potash, fertilizers and Machinery and transport

equipment industries contribute significantly to output. The industrial sector attracted the highest foreign

capital inflow since the economy is opened up in recent years.

The industrial sector, which includes mining, manufacturing, construction, and power, accounted for

approximately 26 percent of gross domestic product in 2004 (including manufacturing, 16.2 percent;

construction, 4.6 percent; and mining, 3.1 percent). More than 21 percent of the country‟s labor force

was reported to be employed in this sector in 2002. The main industrial products are potash, phosphates,pharmaceuticals, cement, clothes, and fertilizers. The most promising segment of this sector is

construction. In the past several years, demand has increased rapidly for housing and offices of foreign

enterprises based in Jordan to better access the Iraqi market. The manufacturing sector has grown as well

(to nearly 20 percent of GDP by 2005), in large part as a result of the United States–Jordan Free Trade

Agreement (ratified in 2001 by the U.S. Senate); the agreement has led to the establishment of

approximately 13 qualifying industrial zones (QIZs) throughout the country. The QIZs, which provide duty-

free access to the U.S. market, produce mostly light industrial products, especially ready-made garments.

By 2004 the QIZs accounted for nearly US$1.1 billion in exports according to the Jordanian government.

Jordan‟s free trade agreement (FTA) with the US – the first in the Arab world – has already made the US

one of Jordan‟s most significant markets. By 2010 it will have barrier-free export access in almost all

sectors. A number of trade agreements with countries in the Middle Eastern and North African regions andbeyond should also reap increasing benefits, not in the least the Agadir Agreement, which is seen as a

precursor to an FTA with the EU. Jordan also recently signed an FTA with Canada. Furthermore, Jordan‟s

plethora of industrial zones offering tax incentives, low utility costs and improved infrastructure links are

helping incubate new developments. The relatively high skills level is also a key factor in promoting

investment and stimulating the economy, particularly in value-added sectors. Despite the fact that Jordan

has few natural resources it does benefit from abundant reserves of potash and phosphates, which are

widely used in the production of fertilisers. Exports by these industries are expected to have a combined

worth of $1bn in 2008. Other important industries include pharmaceuticals, which exported around

$435m in 2007 and $260m in the first half of 2008 alone, as well as textiles, which were worth $1.19bn

in 2007. Although the value of Jordan‟s industrial sector is high, the kingdom faces a number of

challenges. Because the country is dependent on importing raw materials, it is vulnerable to pricevolatility. Shortages in water and power also make consistent development difficult. Despite these

challenges, Jordan‟s economic openness and long-standing fertiliser and pharmaceutical industries should

continue to provide a solid source of foreign currency.

Jordan has a plethora of industrial zones and special economic zones aimed at increasing exports and

making Jordan an industrial giant. The Mafraq SEZ is focused on industry and logistics hoping to become

the regional logistics hub with air, road, and rail links to neighboring countries and eventually Europe and

the Persian Gulf. The Ma'an SEZ is primaril industrial focusing on satisfying domestic demand and

reducing reliance on imports. With a national rail system under construction, Jordan expects trade to

grow significantly and Jordan will mostly become the trade hub of the Levant and even the Middle East

region as a whole due to its geography.

Jordan's tourism revenues in the first seven months of the year 2010 hit 1.414 billion Jordanian dinars (

about 2 billion U.S. dollars), up 26 percent from the same period last year.

http://en.wikipedia.org/wiki/Jordan

http://en.wikipedia.org/wiki/Jordan





Tourism is another important sector, contributing significantly to growth. Jordan's numerous ancient

places, its unique desert castles and unspoilt natural locations to its cultural and religious sites have

become major tourist attractions.

B.8 Energy, mineral and other natural resources

Jordan is a country with limited resources. The deposits are confined to phosphates, potash, limestone,

marble, dolomite, kaolin and salt. Barite, quartzite, gypsum and feldspar are recent discoveries. There are

unexploited deposits of copper, uranium, and shale oil. Unlike gulf, the country has no significant oil

deposits. There are modest reserves of natural gas located in its eastern desert.

The kingdom is among the most water-poor countries in the world. Recently, it is exploring to expand its

source and use of water more efficiently, including through regional cooperation. The country depends on

external sources for the majority of its energy requirements.

Iraq was the main source for the kingdom‟s oil needs during the 1990s, often at concessionary prices. Thecountry started importing oil from Saudi Arabia at concessionary and market prices from early 2003. In

addition, a natural gas pipeline from Egypt to Jordan is now operational.

In 2007, the kingdom evolved a new energy strategy to help develop more indigenous and renewable

energy sources, including oil shale, nuclear energy, wind, and solar power.

B.9 Foreign trade

Leading imports and exports

The Country‟s major imports are Crude oil, wheat, sugar, meat and machinery, while the main exports

consist of phosphates, potash, fertilizers, chemicals and pharmaceuticals.

Trading partners

Jordan‟s main trade partners are USA, Saudi Arabia, Iraq, China and India.

Regional and international trade relations

Jordan‟s foreign trade policy is based on the norms of economic openness and integration into the rapidly

globalizing world economy. Its efforts in strengthening its economic ties with its neighboring Arab

countries and trade agreements with the US and the EU are aimed at stimulating growth. This will help

enhance Jordan‟s export potential, besides attracting substantial inflow to drive the economy further.




C. Foreign investment

C.1

Exchange controls and debt to equity requirementsExchange controls

Jordan‟s liberal foreign exchange law entitles foreign investors to remit abroad, in a fully convertible

foreign currency, foreign capital invested, including all returns, profits, and proceeds arising from the

liquidation of investment projects. Non-Jordanian administrative and technical employees are permitted

to transfer their salaries and compensation abroad.

The Jordanian dinar also circulates in West Bank together with the Israeli new sheqel. Since 1995, the

dinar has been officially pegged to the IMF's Special Drawing Rights (SDRs). In practice, it is fixed at 1 U.S.

dollar = 0.709 dinar most of the time.

Latest Exchange Rates: 1 Jordanian Dinar = 1.41044 United States Dollar

Licensed money-exchangers are supervised by the central bank, but are free to set their own exchange

rates depending on market conditions. Unlike banks, they do not pay the central bank commissions for

exchange transactions, giving them a competitive edge over banks.

Other foreign exchange regulations include:

► Non-residents are allowed to open bank accounts in foreign currencies. These accounts are exemptedfrom all transfer-related commission fees charged by the central bank

► Banks are permitted to purchase an unlimited amount of foreign currency from their clients in

exchange for JD on a forward basis. Banks are permitted to engage in reverse operations involving theselling of foreign currency in exchange for JD on a forward deal basis for the purpose of covering thevalue of imports

► There are no restrictions on the amount of foreign currency that residents may hold in bank accounts,and there are no ceilings on the amount residents are permitted to transfer abroad

► Banks do not require prior central bank approval for the transfer of funds, including investment-related transfers

C.2 Restrictions on foreign investment

Special rules were issued specifying the sectors in which foreign investors are allowed to invest and the

proportion of ownership foreign investors may maintain in addition to the minimum capital requirement

for foreign investors. The rules are governed by the Investment Promotion Law of 1995, which was

amended by regulation No: 54 in 2000.

There is restriction for foreign investment (49% to 50%) in specified industries/sectors according to the

Regulating Non-Jordanian Investments Regulation for the year 2000. All investments from countries,

other than those with FTAs, are subject to this regulation.

Incidentally, the US-Jordan FTA stipulates following main conditions for investment in the kingdom:

► Only Jordanian natural persons or Jordanian juridical entities wholly owned by Jordanians arepermitted to own periodical publications in the kingdom

► Investments by non-Jordanians are capped at 60% in the printing/publishing as well as aircraft orvessel maintenance and repair services firms

► Investments are limited to 50% in a certain specified list of businesses



Foreign investment


C.3 Investment incentives

Jordan acceded to the World Trade Organization (WTO) in April 2000. In addition, a U.S.-Jordan Free

Trade Area Agreement (FTA) entered into force on December 17, 2001. Investment promotion activities

have been consolidated under the Jordan Investment Board (JIB), which provides a “one-stop shop” for

investors. A new investment promotion law stalled in the parliament during 2009 but is expected to be

resubmitted once a new parliament is elected. Jordan is still conducting negotiations on a WTO

Government Procurement Agreement and is conducting interagency consultations with the aim to try to

conclude an agreement in 2010. Jordan‟s current investment laws treat foreign and local investors

equally, with the following exceptions:

► Under the terms of the FTA, ownership of periodical publications is restricted to Jordanian naturalpersons or Jordanian juridical entities wholly-owned by Jordanians.

► Foreign investors may not have whole or partial ownership of investigation and security services,sports clubs (except for health clubs), stone quarrying for construction purposes, customs clearance

services, or land transportation services including buses or taxis. However, the Cabinet may decide toapprove projects in such categories upon the recommendations of the Investment PromotionCommittee. The Committee includes senior officials from the Ministry of Industry and Trade, IncomeTax Department, Customs Department, the private sector, and the Director General of the JordanInvestment Board. To qualify for exemptions, projects have to be highly valuable to the nationaleconomy and recruit a large number of Jordanians. The Prime Ministry deals with such exceptionalcases and provides exemptions accordingly.

► Under the FTA, foreign investors are limited to 50 percent ownership in printing/publishing companiesand in aircraft or maritime vessel maintenance and repair services. Also under the FTA, foreigninvestors are limited to 50 percent ownership in a number of businesses and services. The most up-to-date listing of limitations on investments is available in the FTA Annex 3.1 and may be found at thefollowing internet address: http://www.ustr.gov/Trade_Agreements/Bilateral/

Jordan/Section_Index.html.► A minimum capital requirement of JD 50,000 (USD $70,000) is set for foreign investors. This

requirement was lowered for Jordanian businesses in 2008 to JD 1,000 (USD $1,400). Thisrequirement does not apply to participation in public shareholding companies.

The Investment Promotion Law of 1995 (law No: 16), and its amendments in 2000, repealed all earlier

laws concerning foreign investments in Jordan. The new law opens the economy to all investors, setting

detailed guidelines for starting business in the kingdom and incentives.

Pursuant to the Law, a Higher Council for Investment Promotion, chaired by the Prime Minister was

formed to achieve the comprehensive development goals. The council is empowered to take suitable

decisions on all matters regarding investment in Jordan.

According to the provisions of the Law, a corporation named “The Jordan Investment Board (JIB)” was

established to assist the council to promote investment in the country. JIB‟s main tasks include measures

enhancing business confidence, simplifying registration, licensing process, and implementing investment

promotion programs. A committee named, “The Investment Promotion Committee”, with representatives

from various departments like Income Tax, Customs, Industry and Trade, etc., was also formed to carry

out specific functions on taxation and duties.

According to the Investment Promotion Law of 1995, projects in certain sectors are allowed special

exemptions to attract more investment. The sectors are Industry, Agriculture, Hotels, Hospitals and

Maritime Transport and Railways. Besides, the Council of Ministers can add any other sector based on the

recommendation of the Higher Council for Investment Promotion.



Foreign investment


The main incentives for above sectors are the following:

► The fixed assets of the project shall be exempted from fees and taxes, provided that are imported intothe kingdom within a period of three years from the date of approval

► Imported spare parts for the project shall be exempted from fees and taxes, provided the value ofspare parts does not exceed 15% of the value of fixed assets

► The Investment Promotion Committee shall exempt fees and taxes for fixed assets imported forexpansion of capacity over 25%

For the purposes of this Law, the geographical areas which enjoy tax exemptions are classified into three

development areas, A, B and C. The classification was based on the degree of the economic development

of such areas in each of the Sectors listed in Article (3) of Investment Promotion Law of 1995.

Jordan has set up a number of Free Zones in order to encourage export-oriented industry. The Aqaba SEZ

was the first Free Zone in the kingdom. Other free trade zones are located at Zarqa, the Sahab industrial

estate and Irbid. In February 2008, the Jordan Parliament passed the new Development Areas Law of

2008 (DAL), setting specialized rules to facilitate the creation of economic growth areas within certain

zones. This was aimed at enhancing the economic capability of the kingdom, attracting investments and

creating an advanced investment environment for economic activities.

The new law also ensures a number of incentives for investment within the specified areas, including a flat

rate of 5% income tax with no Customs duties for materials, machines and equipment used for projects in

the area.

C.4 Sources of finance for foreign investors

Banking sectorBanks generally observe an accommodative credit policy with regard to private sector under the prudent

supervision of the CBJ. The classification of extended credit facilities according to economic activity

during the first four months in 2010 demonstrated that the increase in total credit facilities was an

outcome of the increase in the credit facilities extended to the sectors of construction and industry by JD

480.9 million, or 18.6 percent and JD 71.2 million, or 4.4 percent, respectively, compared with their

levels at the end of 2009, on one hand, and the decline in the credit facilities extended to activities

classified as “Other” (mostly represent facilities extended to individuals) by JD 379.1 million, or 11.2

percent, on the other Apart from commercial banks, there are specialized credit institutions, like the

Industrial Development Bank. Banks, including foreign banks, may be established in a free zone, must deal

exclusively in foreign currency and operate independently of other banking activities in the country.

C.5 Importing and exporting

Since 1995, economic growth has been low. Real GDP has grown at only about 1.5% annually, while the

official unemployment has hovered at 14% (unofficial estimates are double this number). The budget

deficit and public debt have remained high and continue to widen, yet during this period inflation has

remained low due mainly to stable monetary policy and the continued peg to the United States Dollar.

Exports of manufactured goods have risen at an annual rate of 9%. Monetary stability has been reinforced,

even when tensions were renewed in the region during 1998, and during the illness and ultimate death of

King Hussein in 1999.



Foreign investment


Expectations of increased trade and tourism as a consequence of Jordan's peace treaty with Israel have

been disappointing though not unexpected. Security-related restrictions to trade with the West Bank and

the Gaza Strip have led to a substantial decline in Jordan's exports there. Following his ascension, King

Abdullah improved relations with Arabic states of the Persian Gulf and Syria, but this brought few real

economic benefits. Most recently the Jordanians have focused on WTO membership and a Free TradeAgreement with the U.S. as means to encourage export-led growth.

The statistical data issued by the Department of Statistics indicate an increase in the value of national

exports by 16% during the first eight months of 2010 and a decrease in the re-exports by (24.8%) as

compared with the same period of 2009. The imports value has increased by 8.7% during the first eight

months of 2010. The value of exports has reached JD 2721.4% million, where the value of re-exports was

JD 516.2 million and the value of imports was JD 7095 million during the first eight months of 2010.

On 11 April 2000, Jordan became the 136th member of the WTO. The WTO‟s General Council concluded

negotiation with Jordan and approved the accession package on 17 December 1999. Jordan agreed to

assume its entire WTO obligation upon accession. In addition, it signed onto the two pluri-lateral

agreements on government procurement and on trade in civil aircraft. Jordan's accession packageincludes market-access commitments on goods and services. The working party on Jordan's accession to

the GATT/WTO was established under the GATT in January 1994 and was transformed into a WTO

working party in 1995.

C.6 Registration of intellectual property

The Kingdom of Jordan is a signatory to the Paris Convention for the Protection of Industrial Property and

a member of the World Intellectual Property Organization.

Patents, trademarks and copyright

Jordan enacted its new Patent Law No. 32 of 1999, in compliance with the international standards as part

of the process of acceding to the WTO. This was in line with its commitment through joining the WTO‟s

agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).

The areas covered by the TRIPS agreement are:

1. Patents

2. Copyright and related rights

3. Trademarks, including service marks

4. Geographical indications

5. Industrial designs

6. Layout-designs (topographies) of integrated circuits

7. Undisclosed information, including trade secrets

In general, the rules of the new Patent Law enjoy clarity and simplicity, and are well divided under various

main subjects of the Law. The main subjects are gradually headlined in the law as follows: Registration of

the patent, Rights of the patentee, Licensing of inventions, Expiry and nullification of patents, Industrial

property registration agents, Crimes and penalties, the Precautionary measures, and Closing rules.

The Paris Convention did not cover some areas for intellectual property rights. In some cases, the

standards of protection prescribed were thought inadequate. So the TRIPS agreement adds a significant

number of new or higher standards.

http://en.wikipedia.org/wiki/Israel

http://en.wikipedia.org/wiki/West_Bank

http://en.wikipedia.org/wiki/Gaza_Strip

http://en.wikipedia.org/wiki/Persian_Gulf

http://en.wikipedia.org/wiki/Syria

http://en.wikipedia.org/wiki/World_Trade_Organization

http://en.wikipedia.org/wiki/Free_Trade_Agreement




http://en.wikipedia.org/wiki/World_Trade_Organization

http://en.wikipedia.org/wiki/Syria

http://en.wikipedia.org/wiki/Persian_Gulf

http://en.wikipedia.org/wiki/Gaza_Strip

http://en.wikipedia.org/wiki/West_Bank

http://en.wikipedia.org/wiki/Israel




D. Structure of business entities

D.1 Companies

Following are the different forms of companies that are existing in Jordan.

Shareholding companies

A public shareholding company may be formed by two or more shareholders whose liability is limited to

their respective share of the company's equity. The minimum authorized capital is set at a JD 500,000

minimum. The subscribed capital must exceed JD 100,000 or 20 percent of the authorized capital,

whichever is greater.

Banks, financial institutions and insurance companies may only be incorporated as public shareholding

companies. Companies operating franchises must also be incorporated in this form.

Offshore company

An offshore company (or exempt company) is a public company, private company or a partnership limited

in shares that is registered in Jordan, but carry out its business outside Jordan. It is an entity that was

introduced in order to attract foreign investments.

This entity may not offer its shares for public subscription in Jordan, and it is prohibited for Jordanians to

subscribe to its capital. At least 5 percent of the capital of the offshore company must be invited in

Jordanian securities. Where the offshore company is engaged in insurance, banking, finance or joint

investments, its capital must be at least JD 1,000,000.

Mutual fund company

A mutual fund (joint investment) company may be organized as a public shareholding company. Its

objectives are restricted to investing funds on behalf of others by way of dealing in securities.

This entity may take the form of a company with variable capital, which issues redeemable shares, the

value of which is determined by the value of the company's assets. It may also take the form of a company

with fixed capital whose shares are not redeemable and are traded on the stock exchange.

D.2 Partnerships

General partnership

A general partnership is formed by at least two and not more than twenty partners who are jointly and

severally liable for the partnership's debts. Only the names of the actual partners may be included in the

partnership's name.

According to the new Law, if the partnership consists of two partners, the withdrawal of one of the

partners will not lead to the dissolution of the partnership. Instead, the remaining partner may seek to

replace the absent partner with another. Failure to do so within three months of the partner's withdrawal

will result in the partnership's dissolution by virtue of law.



Structure of business entities


Private Shareholding Company

The Private Shareholding Company (PSC) is generally composed of two persons or more, however, an PSC

may be composed of one person only upon justifiable recommendation by the Controller. The liability of

the shareholders is limited to their share in the company‟s capital. The minimum authorised capital is set

at JD 50,000 that should be paid upon incorporation of the PSC.

Limited partnership

A limited partnership consists of two or more partners who are jointly and severally liable for its debts and

one or more partners whose liability for the partnership's debts is limited to their contribution to the

partnership's capital. The limited partners of the limited partnership may not participate in the

management of the partnership or act in its name.

D.3 Joint ventures

A joint venture need not be registered in Jordan and, hence, is not governed by the Companies Law. A joint venture is typically regulated by the contractual agreement between the joint venture parties. This

does not apply in the event that the parties envisage the establishment of a corporate entity.

D.4 Operations of foreign companies

Foreign operating companies - Branch offices

This business structure is open to foreigners wishing to engage in business ventures in Jordan. A foreign

company requiring execution of work in Jordan, based on a contract, must register a branch office with

the Controller of Companies in the Ministry of Industry and Trade. Such a company is registered as a

foreign operating company for purposes of the contract and for the duration thereof.

If the company obtains other contracts in Jordan, then the same registration will be extended so as to

cover such new contracts. If no new contracts are obtained by the company, then the branch office should

be closed and liquidated upon the completion of the contract in respect of which the registration was

effected. Registration fees payable for a Branch Office are JD 5,000.

Foreign non-operating companies - Regional offices

Foreign companies are encouraged to set up regional offices in Jordan by offering incentives of tax and

customs duty exemptions and allowing free movement of foreign currency. A regional office can operate

from Jordan and conduct business anywhere in the world except in Jordan and may not generate income

in Jordan. It may, however, collect information concerning general business opportunities in Jordan or inrespect of a particular project. The duration of the regional office is not limited to any period of time or to

the completion of a specific project.

The Companies Law does not elaborate on the size or type of foreign company which may register as a

regional office in conformity therewith. It is now the policy of the Ministry of Industry and Trade, however,

to restrict this facility only to substantial and large companies of international standing in their fields.




E. Labour force

E.1

Availability of skilled workersThe labor force in Jordan according to 2009 est. is 1,667 million. Jordan is ranked 122 in labor force as

compared to other countries. Official unemployment according to 2009 est. is 13.5%.

Remittances from Jordanians working abroad dropped by 4.4 per cent during the first half of this year to

reach JD1.17 billion, compared with JD1.23 billion for the same period of 2008. According to Department

of Statistics figures, around 600,000 Jordanians work abroad, mainly in the Gulf countries, of whom

260,000 work in Saudi Arabia, 250,000 in the United Arab Emirates, 42,000 in Kuwait and 27,000 in

Qatar.

Labour legislation

Labor affairs in Jordan are governed by the new Labor Law No. 8 of 1996. The provisions of the law apply

to all employees and employers as defined by Article 2 of the Law.

In Jordan, the legal framework organizing labor is mainly comprised of the Jordanian Labor Law of 1996

and its amendments. This Code repeals the Labor Code of 1960, and all amendments made thereto. It

governs labor affairs in Jordan. The provisions of the law apply to all employees and employers as defined

by Article 2 of the Law. This law was completed by regulations, instructions and decisions issued in

accordance with its provisions. Based on ratified conventions, amendments to the labor law were adopted

in 2002. These amendments concern some important provisions, mainly:

► The extension of the coverage of the labor law to some categories of workers in the agriculture sector

► The establishment of private employment offices organizing the recruitment of foreign domesticworkers, and control of these offices by labor inspectors. This will extend the control of the Ministry ofLabor in dealing with the recruitment and working conditions of these workers

► The protection of workers from dismissal due to economic and technical factors by adoption ofdetailed regulation

► The regulation of working hours

► The inter-relation between employers‟ and workers‟ organizations

Working week

Maximum working hours are forty-eight during a six day week. The seventh day is a paid weekly holiday.

Overtime pay

Additional hours will be considered as overtime and qualify for compensation of 25 percent over the

regular wage. Except in the event of an emergency, an increase in daily work hours is subject to approval

by the Minister of Labor.

Vacations and leaves

Employees are entitles to an annual fourteen-day, fully-paid sick leave that may be extended by an

additional fourteen days if the employee was hospitalized. The Law makes provisions for compensation

regarding on-the-job injuries. A worker is also entitled to a one-time fourteen day leave to make the

pilgrimage to the Islamic holy shrines in Mecca, provided he has worked for the same company for five

years. Female employees are allowed ten weeks maternity leave with pay. Employers who employ twentyor more women must provide daycare for all children less than four years of age.



Labour force


Trade unions

The new Law regulates labor unions and employer alliances. Workers are free to join unions without

objection from their employers. Strikes and close-downs are also regulated by the new Law.

E.2 Special requirements for foreign nationals

The Jordanian economy is completely open to the foreign markets. In addition, the continuous needs of

Jordan for guest labor in some economic activities are as a result of the lack of national alternatives or the

reluctance of the Jordanian labor to work in these activities because of their low wages, hard nature, and

(or) some social reasons.




F. Taxation

F.1

Principal taxesJordan levies both direct taxes, such as the income tax and the withholding tax, and indirect taxes, such

as the general sales tax, stamp duties, and land tax.

Direct taxes

Income tax is levied on all income earned in, or derived from, Jordan for both individuals and

corporations.

Withholding tax is imposed on all payments of taxable income to non-residents for their activities in the

Kingdom. The payer is required to withhold 7% of these payments to non-residents.

Social security payments for employees are calculated on salaries at rates of 11% for the employer's share

and 5.5 % for the employee's share.

Indirect taxes

Other taxes include stamp duties at 0.6% which are payable on the total value of contracts with the

government and public shareholding companies and at 0.3% on contracts with other entities.

Land tax, sometimes referred to as a registration fee, is payable on the sale and registration of land at a

rate of 7% of the appraised amount or value whichever is higher.. This rate is applicable until 31 December

2010, after which the rate will be increased to 10%.

The General Sales Tax rate is 16%. This applies to all goods and services unless specifically exempt.

F.2 Tax administration

F.2.1 Filing and Payment

Jordan's corporate income tax rates are flat rates. Rates for resident corporations vary from 14% to 30%,

depending on the type of activity.

The corporate income tax rates are:

Sector Rate

Banking 30%

Insurance, Telecommunications, Stock Brokers, Finance Companies, Currency ExchangeCompanies, and Leasing Companies

24%

All other 14%

All business expenses incurred to generate income are eligible for deduction with certain limitations and

exceptions.

The tax year for corporations is their accounting (financial) year and for individuals it is the calendar year.

Tax returns must be filed on a prescribed form, in Arabic, within four months after the end of each taxyear.



Taxation


The tax return includes a payroll listing and information pertaining to goods and services supplied for the

year, including details related to the individual‟s or corporation‟s income, expenses, exemptions, and taxes

due.

The total amount of tax due must be paid at the time of filing to avoid penalties (see Penalties, below).

The tax authority has the right to conduct an income tax audit for up to four previous years and to charge

the company any additional taxes.

The tax regulations allow for payment of the year‟s taxes during the requisite period at a set payment

schedule, where payments made during the year are taken on account as follows:

Assessment period Rate from previous year’s tax Due date

2010 7.5%7.5%

July 2010January 2011

2011 25%25%

July 2011January 2012

2012 and after 37.5%37.5%

July 2012 and afterJanuary 2013 and after

*Fiscal year end is assumed at 31 of December.

*Payments are based on the financial information for the period. If such information were not available, payments will be calculated

based on previous year’s tax.

Taxpayers whose gross income exceeds JOD 500,000 are required to make a payment on account.

F.2.2 Deductions

All business expenses incurred to generate income are eligible for deduction with certain limitations andexceptions as follows:

► Income tax and its penalties

► Punitive and civil penalties

► Penalties paid as civil compensation

► Capital expenditures

► Expenditures related to income from years for which the taxyear has been finalized with the Incomeand Sales Tax Department (“ISTD”).

► Expenditures related to income exempted from income tax. (There will be further instructions fromthe Income and Sales Tax Department related to this issue)

► Provisions and reserves

► Personal expenses and expenses not related to work activities

► Income losses from investments

► Donations to governmental parties that exceed net income

► Donations to charities that exceed 25% of net income

► Operating losses incurred outside Jordan are deductible only if they are from revenues related tothese foreign activities and generated from outside Jordan



Taxation


► Deductible interest must not exceed the following ratios:

Year Total debt to Capital or average equity whichever is greater

2010 6 : 1

2011 5 : 1

2012 4 : 1

2013 & after 3 : 1

► Interest on loans taken from a resident local bank is tax exempt while interest on loans taken from anon-resident bank is subject to withholding tax at 7% and sales tax at 16%

► There are also other expenses which have deductibility restrictions such as depreciation, doubtfuldebts, hospitality, and training.

F.2.3 Penalties

If a tax return is not submitted within the statutory time limit, or there is a delay in submitting the taxform, a penalty of JOD 100-JOD 500 will be imposed.

Additional penalties are incurred in case differences arise between the tax return as filed and the tax

assessment as determined by the tax authority. These penalties are as follows:

► 15% of tax differences if these differences were between 20%-50% of the tax due

► 80% of tax differences if these differences were in excess of 50% of the tax due

F.2.4 Employee’s Income Tax Withholding

Employers are required to remit income tax withheld from employees each month to the Income Tax

Department by the end of the following month.

F.3 Withholding Tax

If a payment is made by a resident taxpayer to a non-resident entity for taxable activities performed in

Jordan, the taxpayer must withhold 7% of gross payments and remit this withholding tax to the ISTD

within one month from the due date or remittance date; otherwise, late payment penalties will be imposed

at 0.4% of the amount due at the beginning of each week.

Any service provided by resident parties, including rent, will be subject to a 5% withholding which should

be submitted within 30 days from date of payment for the service or date of invoice or contract,

whichever is earlier; otherwise, late payment penalties will be applied at 0.4% of the amount due at thebeginning of every week.

Instructions have been issued by the ISTD exempting the following from paying the 5% withholding:

► Banking activities

► Insurance activities

► Telecommunication activities (provided by major telecom companies)

► Electricity activities

► Air cargo services including airplane tickets

► Sea shipping services and related brokerage services

► Road transport services and related brokerage services

► Finance leasing services produced by a legally licensed party



Taxation


► Hotels and restaurants services

► Customs clearance services

► Software services provided by companies

► Hospital services provided by hospitals

► Advertising services and advertising

► Cleaning services

► Security services

► Training services provided by companies

► Any company which is already registered with the ISTD and has an ISTD registration number.

Despite the exemption from withholding, quarterly reporting to the ISTD of payments made to the above

parties is still required although no amounts are actually withheld.

F.4 Depreciation and amortizationDepreciation (for tangible and intangible assets) treatment is not addressed in the Income Tax Law 28 for

the year 2009 but further instructions are expected to be issued on this topic. Until such instructions are

issued, taxpayers are to continue to refer to the prior laws depreciation provisions.

The Income Tax Law allows for the assets with values of less than JD100 to be expensed during the same

fiscal year as purchases.

The Income Tax Department establishes statutory maximum depreciation rates for various fixed assets. If

the rates used for accounting purposes are greater than the prescribed rates, the excess is disallowed but

may be used for tax purposes at a later date. The following are some of the maximum straight-Iine

depreciation rates.

Asset Rate (%)

Industrial buildings 4

Buildings 2

Office equipment 10

Motor vehicles 15

Plant and machinery 10 – 20 (25 for computer equipment)

The taxpayer may choose to use the accelerated method whereby twice the straight-line rate will be

applied (except for buildings).

Machinery and equipment and other fixed assets that are imported on a temporary-entry basis (equipment

that the government allows foreign contractors to import on a temporary basis for the purpose of carrying

out certain contractual work in Jordan) do not qualify for accelerated depreciation.

Used assets are depreciated at the above statutory rates calculated on purchase price.



Taxation


F.5 Loss Carryovers

Taxpayers may carry forward unabsorbed losses to offset the profits of subsequent periods indefinitely.

To be carried forward, these losses must first be approved by the Income Tax Department

Losses may not be carried back.

Losses incurred from businesses outside Jordan are deducted from those related revenues generated

outside Jordan.

Losses incurred from exempt income are not deductible or carried forward to the next period.

F.6 Individuals

F.6.1 Definition of Resident

Jordanian citizens are considered residents of Jordan if either of the following applies:

► They typically reside within the country for a minimum of 183 days, consecutive or interrupted, in acalendar year or

► They are employed at any time during the year by the government or by any local authority within thecountry

Non-Jordanian individuals are considered residents if they reside in the country for a minimum of 183

days, consecutive or interrupted, in a calendar year.

F.6.2 Taxable Individuals Income

Individuals, whether resident or non-resident, are taxed on income earned in Jordan from all taxableactivities, including income from employment, income from business (either as sole proprietors or as

partners), rental income and directors' fees. Jordan does not tax foreign-source income.

Income from employment consists of salaries and other employer-paid benefits, such as rent, school fees,

etc… However, the following benefits do not constitute taxab le income to the employee:

► Occasional meals given to employees at work

► Accommodations given to the employees for work purposes

► Uniforms and equipment necessary for work

The following amounts are available as personal exemptions from individuals‟ income before arriving at

taxable income:

Amount

Single person JOD 12,000

Married couple (if the spouse does not work ) JOD 24,000

A resident non-Jordanian employee is treated as a Jordanian employee with a personal exemption of JOD

12,000 and an additional JOD 12,000 if the employee‟s dependents are residents of Jordan.

A non-resident foreigner who has dependents residing in Jordan may still claim the JOD 12,000

exemption in respect of dependents.

Any single household‟s total exemptions must not exceed JOD 24,000.



Taxation


Any amount that has been paid during the year as a donation to the government of Jordan or to its Armed

Forces or its public institutions or for its local authorities is deductible from the net income during the year

in which the amount has been paid.

It is allowable to deduct subscriptions and donations (with no associated personal benefit) paid inside

Jordan to religious, charitable, humanitarian, scientific, cultural, sport, or vocational purposes if the

Ministers‟ Council approves the subscriptions.

Donations paid for political parties are also deductible, provided that the amount does not exceed what the

Jordanian Political Parties‟ Law allows, and on condition that the amount deducted does not exceed one

quarter of the taxable income before the deduction.

The following tax rates apply to resident and non-resident employees:

► 7% on the first JOD 12,000

► 14% on any amount exceeding JOD 12,000

End of service gratuities that were paid before 1/1/2010 are completely exempt from income tax.

However, as of this date, 50% of the end of service gratuity is exempt and the remaining is subject to

income tax.

The employee‟s monthly tax return form should be filed in Arabic with the Income and Sales Tax

Department, along with a submission of the employee‟s withheld income taxes, within 30 days following

month end to avoid late payment penalties of 0.4% of the amount due at the beginning of each week.

An annual employee listing should be filed in Arabic. This should include employees‟ names, salaries,

benefits, income tax and welfare tax deduction and should be filed with the Income and Sales Tax

Department within one month after the end of the year.

50% of the amount paid for property tax is deductible from the income tax due from incomes related to

rent.

F.7 Sales and Indirect Taxes

F.7.1 Sales Tax

Sales tax applies to supply of goods or services in Jordan as well as importation of goods and services.

The standard General Sales Tax (GST) rate is 16%; however, for certain goods such as tea, dairy products,

and live animals, the GST rate is 4%. The threshold for registration is as follows:

JD

Retail trading 75,000

Trading and manufacturing 50,000

Services & industrial activities 30,000

In addition to the GST, there are certain goods and services that incur an additional (referred to as

“special”) sales tax according to weight, size, or unit of packing. These goods are mainly cement,

cigarettes, and motor vehicles. The taxable entity may recover input tax charged on goods and services

supplied to it for business purposes. However, input tax may not be recovered on purchases of goods andservices that are not used for business purposes.



Taxation


F.7.2 Stamp duties

Contracts with the government of Jordan and public shareholding companies are subject to stamp duties

at a rate of 0.6% of the total value of the contract.

Contracts with parties other than the Government of Jordan and public shareholding companies aresubject to stamp duties at 0.3% of the total value of contract. Stamp duties should be paid within seven

days from the signature date of the contract. Otherwise, late payment penalties up to 200% shall be

imposed.

F.7.3 Custom duties

Goods are subject to import duty, with the exception of those specifically exempted. Rates of custom

duties range between 5% and 30%, except for certain items such as cigarettes which are taxed at 100%,

and liquor which is taxed at 180%. Contracting companies may submit a letter of guarantee to import their

equipment under temporary basis.

F.7.4 Property tax

Property Tax is levied as follows:

► 2% of a land‟s annual rent

► 15% of 80% of a building‟s annual rent (whereby the 15% is composed of property, sewage, andeducational taxes of 10%, 3% and 2%, respectively). The educational tax is paid by the lessee, whileproperty and sewage taxes are paid by the owner of the property

F.8 Tax treaties

Jordan has entered into double tax treaties with Algeria, Bahrain, Britain, Canada, Croatia, Czech

Republic, Egypt, France, India, Indonesia, Iraq, Kuwait, Lebanon, South Korea, Sudan, Libya, Malaysia,The Netherlands, Qatar, Pakistan, Poland, Romania, Syria, Tunisia, Turkey, and Yemen. In addition,

Jordan has entered into other tax treaties, which primarily relate to transportation, with Austria, Belgium,

Cyprus, Denmark, Italy, Pakistan, Spain and the United States.

Treaty Partner Dividends (%) Interest (%) Royalties (%)

Canada 10/15 10 10

France 5/15 0/15 5/15/25

India 10 10 20

Korea (R.O.K) 10 10 10

Malaysia 10 15 15

Poland 10 10 10

Romania 15 12.5 15

Turkey 10/15 10 12

United Kingdom 10 10 10

Bahrain 10 10 10

Sudan 15 15 15

Egypt 15 15 20

Yemen 10 10 10

Algeria 15 15 15

Indonesia 10 10 10

Syria 10 10 18



Taxation


Treaty Partner Dividends (%) Interest (%) Royalties (%)

Tunis No Limit No Limit No Limit

Lebanon 10 10 10

Kuwait 5/10 5 30

F.9 Trusts

Trusts are not subject to tax in Jordan.




G. Financial reporting and auditing

G.1 Books and records

All business enterprises must maintain adequate financial records, which need not be maintained in

Arabic.

Method of accounting

The accounts for each enterprise are maintained on a modified cash basis, where revenues are recorded

when actually received and expenditures recorded when incurred or accrued.

G.2 Source of accounting principles

There is no legally established accounting and auditing standard setting body in Jordan. Under the various

applicable acts, financial reporting requirements are set by such regulators as the JSC, IC and CBJ. The

unregulated enterprises are under no legal obligation to follow any specific accounting standards.

Although the regulators have mandated the use of International Financial Reporting Standards, no

national organization issues guidance on implementation. As a consequence, preparers and auditors

implement accounting standards in ways dependent on their level of understanding. The absence of any

local requirement on applicable auditing standards and of an auditor‟s code of ethics has contributed to

divergent audit practices.

G.3 Financial reporting

The Companies Law stipulates that all registered companies should maintain sound accounting records

and present annual audited financial statements in accordance with International Financial Reporting

Standards (IFRS). In addition, preliminary unaudited financial statements should be filed to Jordan

Securities Commission within 45 days from fiscal year-end.

All companies should file audited financial statements certified by a public accountant (JCPA) within the

three months following year-end.

A quick glance at doing business in Jordan

Main indicatorsStarting business Procedure ( number)

Duration (days)Cost (% Income per capita)Min. Capital(% of Income per capita)

813

49.519.9

Dealing with Construction Permits Procedures ( number)Duration( days)Cost(% of income per capita)

1987

697.1

Employing Workers Difficulty of Hiring IndexRigidity of Hours IndexDifficulty of Firing Index

Rigidity of Employment IndexNonwage labor cost(% of salaryFiring costs( weeks of wages)

110

60

24114



Financial reporting and auditing


Registering property Procedure (number)Duration (days)Cost (% of property value)

721

7.5

Getting Credit Legal Rights Index

Credit Information IndexPublic registry coverage (% adults)Private bureau coverage (% adults)

4

21.00.0

Protecting Investors Disclosure IndexDirector Liability IndexShareholder Suits IndexInvestor Protection Index

544

4.3

Paying Taxes Payments (number)Time (hours)Profit tax (%)Labor tax and contributions (%)Other taxes (%)Total tax rate (% profit)

26101

14.312.4

4.631.1

Trading Across Borders Documents for export (number)Time for export (days)Cost to export (US$ per container)Documents for import (number)Time for import (days)Cost to import (US$ per container)

717

7307

191290

Enforcing Contracts Procedures (number)Duration (days)Cost (% of claim)

38689

31.2

Closing Business Time (years)Cost (% of estate)Recovery rate (cents on the dollar)

4.39

27.3

Source: IFC




H. General

H.1 Geography

The country consists mainly of a plateau between 700 and 1,000 meters high, divided into ridges by

valleys and gorges, and a few mountainous areas. The Hashemite Kingdom of Jordan came into existence

in 1946 and is bordered by Syria, Iraq, Saudi-Arabia and Israel and the Palestine Occupied Territories. It

has a southern port in Aqaba. Officially Jordan is a secular state with a constitution in which freedom of

religion and equality of colour and race are guaranteed.

H.2 Population and language

Population

Jordan has a population of about 6 million. Jordanians are Arabs, except for a few small communities of

Circassians, Armenians, and Kurds who have adapted to Arab culture. About 70% of Jordan's population is

urban; less than 6% of the rural population is nomadic or semi-nomadic.

Most of the Bedouin population descend from the Hejaz or tribal origins and account for around 40-45% of

the population. However, 50 to 55% of Jordan‟s population is from Palestinian origins, many of whom fled

from Palestine to Transjordan and gained citizenship after the Arab-Israeli wars in 1948 and 1967.

Approximately 1.7 million registered Palestinian refugees and other displaced persons reside in Jordan,

many as citizens.

Many Jordanians are also of Turkish and East European descent, as many Jordanian expatriates who

reside in East European countries marry there. The number of Lebanese permanently settling in Jordansince the 2006 Israel-Lebanon conflict has not been established, and is estimated to be very little.

According to a World Bank report, the kingdom has one of the youngest populations among „lower-middle

income countries‟ in the world. The report said that about 38% of its inhabitants are under the age of 14.

Over the last century, a succession of migration took place from various regions adding up to the

kingdom‟s population.

Religion

About 90% of the population is Sunni and 2% Shia Muslims. Christians form approximately 7% of the

population and have 9% of the seats in parliament. Most Christians belong to the Greek Orthodox Church

(called "Room Urthudux" in Arabic). The rest are Roman Catholics (called "Lateen"), Eastern Catholics(called "Room Katoleek" to distinguish them from "Western Catholics"), and various Protestant

communities including Baptists. Christians in Jordan are of many nationalities, as evinced, for example, by

the Catholic mass being celebrated in Arabic, English, French, Italian, Spanish, Tagalog and Sinhala, as

well as in Iraqi dialects of Arabic. Since the Iraq War, many Christians from Iraq have settled permanently

or temporarily in Jordan.

Language

The official language is Arabic, but English is used widely in commerce and government and among

educated people. Arabic and English are obligatorily taught at public and private schools. French is taught

at some public and private schools but is not obligatory.



General


H.3 Government and political system

Jordan is a constitutional monarchy based on the constitution promulgated on 8 January 1952. Executive

authority is vested in the king and his council of ministers. The king signs and executes all laws. His veto

power may be overridden by a two-thirds vote of both houses of the National Assembly. He appoints and

may dismiss all judges by decree, approves amendments to the constitution, declares war, and commands

the armed forces. Cabinet decisions, court judgments, and the national currency are issued in his name.

The council of ministers, led by a prime minister, is appointed by the king, who may dismiss other cabinet

members at the prime minister's request. The cabinet is responsible to the Chamber of Deputies on

matters of general policy and can be forced to resign by a two-thirds vote of "no confidence" by that body.

Legislative power rests in the bicameral National Assembly. The number of deputies in the current

Chamber of Deputies is 120.

The Chamber, elected by universal suffrage to a four-year term, is subject to dissolution by the King. The

King appoints the 55-member Senate for a four-year term.

The constitution provides for three categories of courts: civil, religious, and special. Administratively,

Jordan is divided into twelve governorates, each headed by a governor appointed by the king. They are

the sole authorities for all government departments and development projects in their respective areas.

H.4 Legal environment

The constitution provides for three categories of courts: civil, religious, and special. Jordan's legal system

is based on Islamic law and French codes. Judicial review of legislative acts occurs in a special High

Tribunal. It has not accepted compulsory International Court of Justice jurisdiction.

H.5 International relations and associations

Jordan has consistently followed a pro-Western foreign policy and traditionally has had close relations

with the United States and the United Kingdom. Jordan also has close relations with the West and is a key

player in the global political scene.

Essential to the Jordanian vision is the importance of being open-minded to the outside world and

remaining aware of the constraints imposed by the current international order.

Jordan signed a non-belligerency agreement with Israel (the Washington Declaration) in Washington, DC,

on 25 July 1994. King Hussein and Yitzhak Rabin negotiated this treaty. Jordan and Israel signed ahistoric peace treaty on 26 October 1994, witnessed by President Bill Clinton, accompanied by US

Secretary, Warren Christopher. The U.S. has participated with Jordan and Israel in trilateral development

discussions in which key issues have been water-sharing and security; cooperation on Jordan Rift Valley

development; infrastructure projects; and trade, finance, and banking issues.

Jordan also participates in the multilateral peace talks. Jordan belongs to the UN and several of its

specialized and related agencies, including the World Trade Organization (WTO), the International

Meteorological Organization (IMO), Food and Agriculture Organization (FAO), International Atomic Energy

Agency (IAEA), and World Health Organization (WHO). Jordan also is a member of the World Bank,

International Monetary Fund (IMF), Organization of the Islamic Conference (OIC), Nonaligned Movement

(NAM), and Arab League.

http://en.wikipedia.org/wiki/West






General


H.6 Entry visas and work permits

Passports

Passport valid for six months required by all nationals.

Visas

Required by all nationals of countries referred to in the chart above except the following:

a. Transit passengers continuing their journey to another country by the same or first connecting aircraftwithin 24 hours provided holding valid onward or return documentation and not leaving the airport.Transit visas can only be issued at Jordanian airports/airlines and not at embassies or consulates.

Ernst & Young in Jordan

Ernst & Young has been operating in Jordan since 1953 and is the largest professional services firm in thecountry. Our audit professionals are principally Certified Public Accountants or qualified Chartered

Accountants. We employ over 200 professional staff and 4 partners.

We are fully integrated with the Middle East firm in terms of methodology, training and quality control.

Under Ernst & Young International policy, we are authorized to commit the financial and human resources

of any Ernst & Young office world-wide to serve you.

Services offered

The Amman office offers clients a wide range of services, including Assurance & Advisory Business

Services, Business Risk Services, Business Advisory Solutions and Tax.

Assurance

► Agreed-Upon Procedures

► Compilation reports

► Financial Statement Audit

► Financial Statement Reviews

► Financial Statement Reviews ( interim) of Audit Clients

► Internal Controls Attest (JSOX)

► Internal Controls Attest (SOX 404)

► Security Offerings

► Sustainability Assurance

► Government Municipal Accounting

Tax

► Business Tax Services

► Human Capital

► Indirect Tax

► International Tax Services

► Transaction Tax



General


Transactions

► Lead Advisory – Mergers & Acquisitions

► Lead Advisory – Project Finance

► Lead Advisory – Transaction Real Estate

► Restructuring

► Due Diligence Services

► Valuation and Business Modeling

Advisory

► Anti-Fraud Services

► Application Controls and Security

► Contract Risk Services

► Corporate Compliance

► Enterprise Risk Management

► Financial Services Risk Management (FSRM)

► Functional Performance Assessment

► Information security

► Internal Audit

► Internal Controls- Financial Reporting

► Internal Controls – General

► Investigations and Disputes

► IT Effectiveness

► Program Advisory Services► Risk and Control Framework Assessment

► Risk Remediation

► Supply Chain

► Sustainability Advisory

► Third Party Reporting

Industries

Our clients range from family businesses to large multinational corporations and include government and

public sector companies. In addition to banks, our clients‟ portfolio includes manufacturing companies,

hotels, trading and insurance.

Location

The office is located at the eight circle of Jabal Amman ,300 King Abdalla Street.

Publications

Ernst & Young produces many publications that examine the challenges encountered by companies doing

business across borders. The International Business Series, which includes the Worldwide Corporate Tax

Guide, the Worldwide Executive Guide, Tax News International and the Doing Business In series, is

available through EY - Online.



General


International publications

► Worldwide Corporate Tax Guide: an annual publication summarizing the corporate tax systems inmore than 130 countries

► Worldwide Executive Guide: an annual publication summarizing the personal tax systems and

immigration rules and procedures in more than 130 countries

► Tax News International: a quarterly newsletter reporting recent tax developments around the world.Each issue typically includes updates from more than 50 countries

► Doing Business In books: a series of books that survey the investment climate, taxation, forms ofbusiness organization, and business and accounting practices in more than 50 countries

Local and regional publications

► Middle East Tax Review: A periodic publication with articles of interest to people doing business inJordan and elsewhere in the Middle East

► Corporate Taxation in the Middle East: A publication summarizing taxation in Jordan and other

countries in the Middle East



Ernst & YoungAssurance | Tax | Transactions | Advisory

About Ernst & YoungErnst & Young is a global leader in assurance, tax, transaction

and advisory services. Worldwide, our 141,000 people areunited by our shared values and an unwavering commitment toquality. We make a difference by helping our people, our clientsand our wider communities achieve their potential.

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The MENA practice of Ernst & Young has been operating in theregion since 1923. For over 85 years, we have evolved to meetthe legal and commercial developments of the region. AcrossMENA, we have over 4,200 people united across 20 offices and15 Arab countries, sharing the same values and an unwaveringcommitment to quality. We make a difference by helping ourpeople, our clients and our wider communities achieve theirpotential.

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