Jordan: local rules

Jordan's arm's length rule is in article 20(d) of Income Tax Law No. 34 of 2014, as amended by Law No. 38 of 2018. It tells the Income and Sales Tax Department (ISTD) to check whether the terms between related persons differ from what independent persons would agree, and to adjust income and tax if they do. Article 77/a of the Law lets the Council of Ministers issue regulations, and Transfer Pricing Regulation No. 40 of 2021 was issued under it. The Regulation takes effect 30 days after publication in the Official Gazette (art. 1); law firms say it was published on 7 June 2021. It says related terms must match comparable independent terms (art. 3). The related person must adjust its own taxable income and declare it in the return (art. 3(e)), and if it does not, ISTD can direct an adjustment or disregard the deal (art. 3(f)). Related persons include 50% or more of votes, profits or capital, relatives to the second degree, and effective control (arts. 5 to 7). The Regulation does not limit the rules to cross-border deals. Executive Instructions No. 3 of 2021, issued under arts. 8, 9, 10, 12, 14 and 18, set the forms and dates. Law firms say they were published on 16 September 2021.

There are four documents. First, a disclosure form is filed with the annual return, within the legal period for the return (Regulation art. 9). ISTD's guide says it is required when related party deals exceed JOD 500,000 over 12 consecutive months. Second, a local file and third, a master file. The Regulation says they are given to ISTD on request (art. 8), and the Instructions set the time. ISTD's guide lists both as due within 12 months after the end of the tax period, for taxpayers over the same JOD 500,000 limit, and Deloitte and BDO say the same. Fourth, the country-by-country report (see below). Natural persons and small entities (related party deals up to JOD 500,000 in 12 consecutive months at arm's length value) do not have to keep transfer pricing documents (art. 16(b)). ISTD can also ask any person to prepare and keep documents, with at least 30 days to do it (art. 16(c)). Records are kept for 4 years (Law art. 23, as stated in the ISTD guide). The disclosure form must also say whether the taxpayer keeps the master file and local file (art. 9(a)(9)). ISTD's guide also asks for a statement from a certified accountant on whether the taxpayer follows the group's transfer pricing policy and its effect on the final financial statements.

Article 12 approves five methods: comparable price, resale price, cost plus, net profit margin and profit split. None has priority, and only one method is needed (art. 12(c)). The taxpayer picks the most suitable method after looking at the strengths and weaknesses of each, the nature of the deal, the data available and how comparable the deals are (art. 12(a)). If the method used meets the Regulation and the Instructions, ISTD accepts it (art. 12(d)). Another method is allowed if the taxpayer proves none of the five can give a reliable price (art. 12(e)). ISTD cannot adjust a documented price that is inside the arm's length range (art. 14(a)). If a price is outside the range, ISTD may adjust it to a point inside the range (art. 14(b)), and the Instructions set which point. Foreign comparables are accepted only if no local ones exist, and the taxpayer must prove they fit (art. 4(e)). ISTD must tell the taxpayer before it relies on comparables to change income (art. 4(d)). Corresponding adjustments are possible under a treaty (art. 15).

The Regulation has no penalties of its own. Article 17 sends a breach to the penalties in the Income Tax Law, and no penalty aimed only at transfer pricing was found. The general rules are: a late payment charge of 0.4% of the tax for each week or part of a week of delay (ISTD and Deloitte; the unofficial English text of the Law prints 0.04 percent), capped at the amount of the tax; a late return fine of up to JOD 300 for a company and up to JOD 1,000 for a public or private shareholding company; and an extra tax of JOD 200 to 500 for listed breaches, such as not presenting required books and records or a return that understates tax by 25% or more. ISTD also says a late filer owes an added tax for not filing. For tax fraud, the penalty equals the tax difference. A missing disclosure form or file is not named as a separate breach.

No Pillar Two law has been enacted in Jordan, and no draft income inclusion rule, undertaxed profits rule or domestic minimum top-up tax was found as of 27 October 2026. Deloitte's Jordan Highlights 2026 (updated January 2026) says Jordan has not committed to implement the GloBE rules. PwC's Jordan summary, reviewed 5 July 2026, does not mention them. There is no registration or return deadline.

The CbC report is required from a Jordanian group member when the group's consolidated revenue in the previous tax period is above JOD 600 million. The ultimate parent in Jordan files it within 12 months after the group's tax period (art. 10(a) and (b)). A Jordanian entity that is the approved filer files it when the foreign parent does not file, or its country has no working exchange with Jordan (art. 10(c)). Every Jordanian group member, including the parent, notifies ISTD of the ultimate parent, the approved filer and the filing country within the legal period for the return (art. 10(d)). The annual return is due within four months after the end of the tax period, so 30 April for a calendar year (Law art. 17(a)). Companies may use a calendar year or a fiscal year if they notify ISTD first, so no fixed year end is set. Weekly rest days are Friday and Saturday. Article 75 of the Law says that if the end of a period falls on an official holiday, it moves to the next working day. ISTD applied it for the 2025 returns: 30 April 2026 was declared a public holiday for Labour Day, and the deadline moved to Sunday 3 May 2026. ISTD also moved the 2022 deadline from Saturday 30 April to Sunday 8 May 2022 under the same article, which supports treating Friday and Saturday as non-working days. A date on a Friday or Saturday is moved to Sunday here.