As of 6 August 2026, the Jordanian Cabinet, acting on proposals from the Ministry of Finance, published Official Gazette No. 6065 effecting targeted amendments to the Value-Added Tax rate structure. The modifications aim to restructure the tax burden across consumption categories, stimulate specific sectors identified as strategic for economic diversification, and enhance fiscal sustainability in alignment with Jordan’s Medium-Term Financial Program. The amendments adjust the standard VAT rate, introduce a reduced rate for renewable energy equipment, and maintain a zero-rate regime for essential foodstuffs and healthcare services, all effective 1 September 2026. Legal underpinnings reference the Jordanian Value-Added Tax Law No. 34 of 2014, as amended by Cabinet Decision No. 24 of 2026, and the accompanying Executive Bylaw provisions published concurrently in the Official Gazette.
Key Takeaways
- Standard VAT Rate Increased to 20% from 16%: The uniform rate applicable to most goods and services rises to 20% effective 1 September 2026, reflecting the government’s strategy to broaden the tax base while mitigating impact on low-income households through targeted exemptions. Businesses must update their invoicing software, revise pricing schedules, and ensure point-of-sale systems automatically apply the new rate. Failure to comply attracts penalties of 5% of the undercharged tax amount per quarter, with additional liability for interest at 10% per annum on underpayments detected during audits.
- Reduced VAT Rate of 5% Introduced for Renewable Energy Devices: A new concessional rate of 5% applies to the sale, lease, and installation of solar photovoltaic panels, solar water heaters, and associated energy storage systems. The measure is designed to accelerate Jordan’s renewable energy targets, support private-sector investment in green infrastructure, and qualify for international climate finance mechanisms. Eligible suppliers must obtain certification from the Ministry of Energy and Mineral Resources, validate customer eligibility through the Tax Bureau’s green-transition portal, and remit the reduced rate on all qualifying transactions effective 1 October 2026.
- Zero-Rate Regime Extended for Essential Medicines and Medical Devices: The zero-VAT regime, previously applied to a defined list of essential medicines, is broadened to include locally manufactured diagnostic equipment, prosthetic devices, and critical care instruments. The extension aims to improve healthcare accessibility, reduce out-of-pocket expenditures for patients, and align with World Health Organization recommendations on essential medicine pricing. Healthcare providers must maintain rigorous documentation, validate patient eligibility via the national health insurance portal, and file monthly zero-rate declarations with the Tax Bureau to retain compliance status.
Disclaimer:This article is compiled and summarized based on publicly available information and is for general information and academic exchange purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. For tax planning, please consult a qualified professional tax advisor or legal counsel.
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