The difference between foreign companies and offshore companies in Jordan

Assalm Alaikom,

Arab and justice greeting,

Dear Sir,

The answer to your question, in brief, is as follows:

First: Pursuant to the article (240) of the Jordanian Companies Law, the operating foreign companies are two types:

• The first type is the companies operating for a limited period, whereupon such companies are awarded tenders and carry out their business in Jordan for a period limited to the duration of a contract unless they have new tenders.
•  The second type is the companies operating permanently in Jordan, and you may open a branch a foreign company for your company in Egypt and carry out business in Jordan for the purpose of manufacturing, marketing, importing and exporting Egyptian cotton in the Jordanian market. However, it shall be subject to all the fees, expenses and taxes of income, sale and others. 

Second: Pursuant to the article (245) of the Jordanian Companies Law, the non-operating foreign company is an entity which has a regional office or a representative office in Jordan for its operations, which are conducted outside Jordan or representative office to manage and coordinate its operations with its headquarters.

A non-operating foreign company is prohibited from carrying out any business or commercial activities in Jordan, otherwise, its license will be cancelled and will be liable to indemnify any loss or damage inccured by others. It is exempted from the registration fees and income tax.

Third: Pursuant to the article (211) of the Jordanian Companies Law, the offshore company can be a public joint-stock company, limited liability in shares, limited liability or private joint-stock, registered in Jordan but operating outside. The word (Offshore) shall be added to its name.

Pursuant to the article (4) of the Offshore Companies Law of 2007, the offshore company shall commit to operate within the purpose of its incorporation and not to operate for reason inside Jordan, and shall have an actual address in Jordan.

The commercial agency is a contract between the mother company and the agent whereof the agenct commits to import the company's products and distribute it, promote it or sell it inside the Kingdom of Jordan, or to do this directly on behalf of the company.

Sincerely your,

Greetings, 

In case you're not planning to conduct any business operations inside Jordan, the offshore is considered to be the best option to avoid taxes and benefit from the exemptions granted for this type of companies, as it is a company registered in Jordan but carries out operations outside. 

The company operations are confined to signing commercial contracts and agreements in Jordan without having the right to conduct any other activity.

Therefore, the operations of that company outside are not subject to the applicable taxes as per the Jordanian law since the generated profits are the result of carrying out its operations outside. Any other activity conducted inside Jordan shall be subject to taxes.

Concerning the (branch), it could be a branch of a non-operating company, and in this case is prohibited from carrying out any business or commercial activities in Jordan including the activities of commercial agents and brokers, otherwise, its license will be cancelled and will be liable to compensate any losses or damages incurred by others.

The privileges of non-operating foreign company

The non-operating commercial companies shall have the following benefits:

• Exemption from the registration and publication fees applicable to the operating foreign companies
• Exemption of the profits generated from its operations outside of the income tax and social services tax.
• Exemption from registration with the chambers of commerce and industry and professional syndicates and fees for registration or any other obligations toward it including the license of commercial professions.
• Exemption of the salaries paid by the non-operating foreign companies to its non-Jordanian staff working on it in the Kingdon from the income tax and social services tax.
• Allowing it to enter commercial samples and testers without any customs fee of import fee.
• Exemption of the furniture and equipment imported by the company for purpose of furnishing its offices, from the customs fee and other fees and taxes.
• Allowing the company to import one car under the status of temporary entry to be used by the non-Jordanian company staff, and the Minister may approve the entry of another car under the same status upon the recommendation of the custom control.

The exemptions mentioned in this article are granted pursuant to a special regulation.

Final advice, in case you have the desire in future to start a business in Jordan, the offshore company is the best, since the branch is merely a representative office to the Egyptian company.