Policies, Laws & Regulation Q&A’s
What policies exist that are designed to attract capital industries?
Jordan is fostering the continued development of a liberal, free market economy and strengthening its growth through its comprehensive reforms and restructuring programs, a privatization program, liberalized trade policies, and investor-friendly policies and regulations.
Since the early 1990s, the government has followed a strategy of macroeconomic stability by creating a stable currency and reducing inflation through tight monetary control and the reduction of the public sector deficit.
Jordan has a forward-moving privatization agenda for state-owned entities. In 2000, the government sold 40 percent of Jordan Telecommunications to France Telecom and is in the process of divesting its remaining shares. Privatization and deregulation has resulted in substantial private sector, primarily foreign, investments in Jordan’s telecommunications infrastructure, which increased from US$43 million between 1990 and 1995, to nearly US$970 million between 1996 and 2003. The non-core activities of Jordan’s national carrier, Royal Jordanian, have been privatized.
“Jordan’s privatization program ranks as one if not the most successful programs in the Middle East region.”
Jordan has shown steadfast commitment to liberalizing its trade policies to improve its competitive position globally. In 2000, Jordan was the first Arab country to join the World Trade Organization (WTO). In December 2001, Jordan became the fourth country to sign a bilateral free trade agreement with the United States. A similar agreement, the EU-Jordanian Association Agreement, was signed in 2002. WTO accession and compliance with other free trade agreements require strict adherence to intellectual property laws that are attractive to investors who demand patent protection. In addition, 75 percent of the laws affecting the ICT sector have been modernized, improving the business environment for local firms and investors.
The Ministry of Information and Communications Technology issued a general ICT policy in 2007 creating a clear and stable ICT policy environment within which initiatives, investment, and sector regulation can proceed with confidence. The ICT policy calls for market liberalization, deregulation, and withdrawing the government from its majority ownership position in post and telecommunications.
The Investment Promotion Law provides attractive incentives to domestic and international investors and treats local and foreign investors equally. The law cancels the distinction between economic and approved economic projects, protecting and providing special exemptions to: industry; agriculture; hotels; hospitals; maritime transport and railways; leisure and recreation compounds; convention and exhibition centers; and any other sectors or sub-sectors designated by the Council of Ministers. These sectors are also subject to a revised tax rate. Foreign investors also enjoy full ownership in many sectors.
Other governmental support to attract investment includes the establishment of various foreign trade zones which offer a range of incentives, including tax exemptions and reductions In addition, the Jordan Investment Board created an “investment one-stop shop,” facilitating the registering of an investment project and encouraging investment into Jordan.
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What foreign exchange controls exist and how do they function?
In 1997 the CBJ, the supervisory authority of the financial system, scrapped all foreign exchange rate controls in a bid to attract foreign investment. Foreign investors are allowed to hold unlimited amounts of foreign currency in domestic banks and are subject to no restrictions on foreign and domestic currency outflows.
Jordan’s banking and finance sector has been liberalized and systematically modernized, creating an active, efficient and updated environment that facilitates business development and expansion.
What are the specific incentives offered by the Investment promotion law?
Businesses in the following sectors receive exemptions under the Investment Promotion Law:
Agriculture (without prejudice to privileges provided by other laws).
Maritime transport and railways
For the purposes of this law, the geographical areas that receive tax exemptions are classified into three development areas, A, B, and C, and are subject to the degree of the economic development of such areas in each of the sectors listed in Article (3) of this law, pursuant to a regulation to be issued for this purpose.
The government will decide that any the project that falls within one of the sectors or sub-sectors listed in Article (3) of this law shall be exempted from income and social services taxes, by the following percentages in accordance with the development area:
25% if the project is in a Class A development area
50% if the project is in a Class B development area
75% if the project is in a Class C development area
The exemption period upon the committee’s decision shall be (10) ten years starting from the date of commencement of work for services projects, or from the date of commencement of production for manufacturing projects.
The Committee shall grant an additional exemption if the project has been expanded, developed or modernized with the result of increasing its production capacity. The additional exemption period shall be for one year per each increase in production capacity, not less than 25 percent, and for a maximum of four years.
The fixed assets of the project shall be exempted from fees and taxes provided that they are imported into the Kingdom within a period of three years from the date of the committee’s decision approving the lists of fixed assets of the project. The committee may extend this period if it deems that the nature of the project and the size of work required.
Imported spare parts for the project shall be exempted from fees and taxes provided that the value of such spares does not exceed 15 percent of the value of the fixed assets for which they are required, and provided that they are imported into the Kingdom or used in the project within a period of ten years from the date of commencement of production or work, in accordance with a decision taken by the committee approving the lists of spare parts and their quantities.
The committee shall exempt from fees and taxes fixed assets that are required for the expansion, development or modernization of the project if such expansion, development or modernization shall result in an increase in the production capacity of the project by not less than 25 percent.
The Committee shall exempt from fees and taxes any increase in the value of the fixed assets which are imported for the Project if such increase is a result of a rise in the prices of such assets in the country of origin, of a rise in the freight charges applicable thereto or of changes in the exchange rate.
View the complete Investment Promotion Law
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Am I able to borrow or lend to/from an offshore subsidiary without any limit?
Jordan allows unrestricted transfer of capital and profits in all sectors.
Am I able deposit export earnings into an offshore account before it is brought into the country?
Yes, according to the Central Bank of Jordan’s regulations.
Am I able invest and repatriate offshore the surplus cash generated by the sub without any limit or restrictions?
Yes, according to the regulations of the Investment Promotion Law and the Central Bank of Jordan.
What roles do unions play?
Labor unions serve primarily as intermediaries between workers and the Ministry of Labor, and may engage in collective bargaining on behalf of workers. In order to strike, workers must obtain permission from the government. About 30 percent of Jordan’s labor force, including government service, is unionized. However, this figure includes numerous professional associations where membership is mandatory.
Workers in any trade may organize themselves in a trade union following Jordanian laws. Workers have the right to join the trade union if he fulfills membership conditions. No employer shall make the employment of a worker subject to the condition that he does not join a trade union or withdraws from membership of a trade union, attempt to bring about the expulsion of a worker from a trade union or cause prejudice to a worker’s rights by reason of his membership in a trade union or participation in its activities outside working hours. A trade union may be established by at least 50 founding members working in the same trade or engaged in similar or interdependent occupations within one field of production.
Non-citizens are not permitted by law to join unions, although the Ministry of Industry and Trade maintains that such workers enjoy any benefits and protections that unions obtain.
In Jordan, there are no unions for IT employees or professionals; however there is a union for engineers and only IT engineers are allowed to become members. Other IT employees have no unions.
There has never been a union strike in Jordan.
What is the Law on termination of employees?
Article (21) of the Labor Law states that a contract of employment shall be considered terminated if:
Both parties agree to terminate it; The duration of the contract has expired or the work itself has been completed; The worker dies or is no longer capable of working due to a disease or disability certified by the medical authority.
Article (23) states that: If one of the two parties to a contract of employment of indefinite duration wishes to terminate it, such party shall give the other party written notice to that effect at least one month in advance. Notice can then only be withdrawn with the approval of both parties. Such contract of employment shall remain in force throughout the notice period which shall be considered as part of the period of service. If notice is given by the employer, he may release the worker from work for the duration of the notice period, or he may not do so except for the last seven days of that period. In any case, the worker shall be entitled to his remuneration for the notice period. If it is the worker who gives notice, and he leaves work before the end of the notice period, he shall not be entitled to any remuneration for the period of absence and shall compensate the employer by paying him the equivalent of his own remuneration for that period.
An employer may not terminate the employment of a worker or give the latter notice, if the worker is: A pregnant woman who has reached at least her sixth month of pregnancy, or a woman on maternity leave; Performing military or reserve service; On annual or sick leave, on leave granted for worker education or pilgrimage or on leave agreed by both parties to take up trade union office or studies in a recognized institute, college or university. An employer shall be freed from the obligation stipulated in paragraph (1) of this section if the worker is employed by another employer during any of the periods mentioned therein.
What are the redeployment rules?
There are no redeployment rules stipulated in the law. The terms of redeployment are based on the contract signed with the employee.
What are the labor rulings around 12 hr shifts/compressed work weeks? Overtime treatment for shift workers on rest days and holidays?
Normal working hours are eight hours a day and not to exceed in any one week 48 hours over a maximum of six days, excluding meal breaks and rest periods.
A worker may be employed, with his consent, in excess of normal working hours, provided that he is paid overtime at a minimum rate of 125 percent of his regular remuneration.
If a worker works on his weekly rest day or on religious or official holidays, he shall be paid overtime at a minimum rate of 150 percent of his regular remuneration.
Are there holidays that require a complete factory shutdown?
Friday is observed as the day of weekly rest unless the nature of work requires otherwise.
A worker may, with the approval of his employer, accumulate his weekly rest days to use them all together as leave, for a period not exceeding one month.
Weekly rest days shall be paid in full unless a worker is employed on a daily or weekly basis. In such cases, he shall be entitled to receive full remuneration for the weekly rest day if he worked for six consecutive days before the specified rest day, and partial remuneration proportionate to the number of days worked, if he worked for three or more days.