Doing Business in Jordan: Legal Framework and Recent Developments

Jordan has positioned itself as a stable and rules-based jurisdiction at the crossroads of the Middle East, Europe, and Africa. Its business environment is governed by a codified system of Investment Law, Companies Law, civil law statutes, ministerial regulations, and administrative instructions. Recent reforms, most notably the Investment Environment Law No. 21 of 2022, the Personal Data Protection Law No. 24 of 2023, and amendments to the Companies Law No. 22 of 1997, are aimed at streamlining procedures and aligning Jordan with international legal standards. 

Investment Environment Law 2022 

The Investment Environment Law No. 21 of 2022 (the “Investment Law”) entered into force on 14 January 2023 (Official Gazette No. 5823). It replaced the former Investment Law No. 30 of 2014. 

Key provisions include: 

• Equal Treatment, the law provides that “the non-Jordanian investor shall enjoy the same treatment as the Jordanian investor, unless otherwise provided by law or international treaty.” 
• Expropriation, the law prohibits expropriation except for a lawful public interest and mandates prompt and fair compensation. 
• Capital Repatriation, the law guarantees the right to transfer profits, dividends, and liquidation proceeds abroad in freely convertible currency. 
• Investor Guarantees, the Jordanian Law allows investors to agree on international arbitration for disputes with the government, subject to the Arbitration Law. 
• Incentives, the law consolidates customs and tax incentives, particularly for projects in designated zones. 
• Licensing, the law establishes the Ministry of Investment as the competent authority for registering investment projects and issuing licences. 
• The Regulation on Investment Enviroment further specifies activities restricted to non Jordanians or requiring minimum Jordanian ownership. 

Companies Law and Corporate Forms 

The Companies Law No. 22 of 1997 (as amended, Official Gazette No. 4204) is the principal legislation governing incorporation. 

The most common corporate forms include: 

1. Limited Liability Company (LLC); minimum capital JOD 1. 
2. Single-Person LLC. 
3. Private Shareholding Company (PSC); permits preferred shares and flexible governance. 
4. Public Shareholding Company; regulated by the Jordan Securities Commission. 
5. Operating Foreign Company Branch; must register with the Companies Control Department. 
6. Non-Operating Foreign Company (Representative Office)  

All company documents must be prepared in Arabic.  

Taxation 

Taxation is governed by the Income Tax Law and the General Sales Tax Law. 

1. Corporate Income Tax – General rate 20%. Higher rates: 35% for banks, 24% for insurance and telecoms, 14% for industry. 
2. Sales Tax – 16% standard rate, with reduced rates/exemptions. 
3. Withholding Tax – 5–10% on non-resident services, royalties, and interest. 
4. Customs – Customs Law regulates tariffs and exemptions. 
5. Double Taxation Treaties – Jordan has signed 30+ treaties, including with the UK, US, and France. 

Labour and Social Security 

Employment is regulated by the Labour Law No. 8 of 1996 (as amended, OG No. 4070). 

1. Employment contracts can be written or verbal. 
2. Working hours – maximum 48 per week. 
3. Leave entitlements – minimum 14 days annual leave, rising to 21 days after 5 years. 
4. Termination – wrongful dismissal claims are common; compensation is based on service. 
5. Employment policies – companies with 10+ staff must file internal regulations with the Ministry of Labour (Art. 55). 
6. Social Security – governed by Social Security Law No. 1 of 2014, requiring employer and employee contributions. 

Dispute Resolution 

Jordan has a three-tier judiciary: Magistrates’ Courts, Courts of First Instance, and Courts of Appeal, with the Court of Cassation as the highest court. The Administrative Court hears challenges to government decisions. 

Arbitration is governed by the Arbitration Law No. 31 of 2001. Jordan is a party to the New York Convention (1958), enabling recognition and enforcement of foreign arbitral awards subject to reciprocity and public policy. 

Intellectual Property 

1. Trademarks – governed by Trademarks Law, renewable every 10 years. 
2. Patents – Patents Law, protection for 20 years. 
3. Copyrights – Copyright Law, life of author 50 years. 
4. Industrial Designs – Industrial Designs and Models Law No. 14 of 2000. 
5. Jordan is a member of WIPO conventions and WTO TRIPS. 
6. Customs recordation available to combat counterfeits. 

Data Protection and Cybersecurity 

The Personal Data Protection Law No. 24 of 2023 (OG No. 5953) is the first standalone law regulating personal data in Jordan. It provides: 

• Data subject rights (access, rectification, erasure, restriction). 
• Obligations on controllers to secure and notify breaches. 
• Restrictions on cross-border transfers. 

The Electronic Crimes Law No. 27 of 2015 criminalises unauthorised access, interception, and tampering with electronic systems. 

Public–Private Partnerships and Concessions 

PPP projects are governed by the Public–Private Partnership Law, which sets out the framework for BOT, BOOT, and concession arrangements. Procurement is subject to the Government Procurement By-Law. 

Case Illustrations 

Jaradat Lawyers has acted in major mandates including: 

• Advising Aéroports de Paris (ADP) in relation to its investment in Airport International Group (AIG) the concession of Queen Alia International Airport. 
• Representing aircraft lessors from Ireland London, and Singapore in deregistration and export of Airbus aircraft leased to Royal Jordanian. 
• Advising a global courier company on obtaining licences and approvals for expansion in Jordan. 
• Assisting renewable energy sponsors on wind projects. 
• Represented a Turkish engineering company in their operations and disputes out og their EPC project for the rehabilitation of Aqaba Oil Terminal.  
• Incorporating subsidiaries for multinational companies in Jordan. 

Conclusion:

Jordan’s legal regime continues to evolve in favour of investors. The Investment Environment Law 2022 and the Personal Data Protection Law 2023 are milestones in aligning Jordan with international standards. Nevertheless, successful market entry requires careful navigation of the Companies Law, sectoral regulations, and tax and labour frameworks. 

Jaradat Lawyers provides comprehensive legal services for multinational companies and foreign investors, combining extensive local experience with an international outlook.