Jordan, with its strategic location in the Middle East and a stable political environment, offers significant opportunities for foreign investors looking to establish a company. However, like any country, Jordan has specific regulations and conditions that foreign entrepreneurs must follow to legally set up their businesses. This article will explore the condition of opening a company in Jordan for foreigners, detailing the requirements, procedures, and important factors to consider.

Key Conditions for Foreigners to Open a Company in Jordan

Foreigners who wish to open a company in Jordan must adhere to certain conditions that are designed to regulate foreign investment while fostering economic growth in the country. Below are the primary conditions:

1. Business Ownership Structure:

• Foreign investors can establish companies in Jordan either as sole proprietors or through partnerships.
• For many sectors, foreign investors can own up to 100% of a company's shares. However, in some sectors, there are restrictions on the percentage of ownership, and local participation may be required. For example, certain industries like transportation, trading, and construction require a Jordanian partner holding at least 50% of the company's shares.

1. Minimum Capital Requirements:

• Foreign-owned companies must meet specific capital requirements depending on the business activity.
• The minimum capital requirement for foreign investments typically starts at JD 50,000 for most business activities. However, sectors such as telecommunications, tourism, and finance might require higher capital.
• For foreigners seeking to own 100% of the business in restricted sectors, the minimum capital requirement may increase significantly, often exceeding JD 100,000.

1. Industry and Sector Restrictions:

• Jordan has restricted sectors where foreign ownership is limited or prohibited. These include businesses related to military services, media, and certain public utility sectors.
• Foreign investors must carefully review the regulations related to their specific industry to determine whether they are eligible to operate within that sector.

1. Work Permits and Residency:

• Foreign business owners and their employees must obtain valid work permits and residency in Jordan.
• The work permit application requires approval from the Ministry of Labor, and the applicant must meet specific criteria, including qualifications and the nature of the job role.
• Residency permits are typically granted after securing a work permit, and they must be renewed annually.

1. Legal Representation and Licensing:

• Every foreign-owned company in Jordan must have a local legal representative who can assist with regulatory compliance, legal filings, and official paperwork.
• The company must obtain the necessary licenses and permits for its operations, which vary depending on the industry. These can include commercial licenses, professional licenses, and sector-specific certifications.

1. Taxation and Financial Reporting:

• Jordan has a corporate income tax rate of 20-35%, depending on the industry in which the business operates.
• Foreign companies are subject to the same tax obligations as local businesses. This includes corporate income tax, VAT (16%), social security contributions for employees, and other applicable taxes.
• It is mandatory to submit annual financial reports and maintain transparent bookkeeping that complies with Jordanian accounting standards.

1. Registration with Jordan Investment Commission (JIC):

• Foreign investors must register their businesses with the Jordan Investment Commission (JIC), which oversees investment regulations and provides assistance to investors.
• The registration process typically includes submitting the company’s business plan, information about the shareholders, and the required capital.
• After registration, JIC provides the necessary approvals, including investment incentives if applicable, such as tax exemptions and simplified import/export procedures.

1. Banking Requirements:

• Foreign companies need to open a corporate bank account in Jordan to conduct business transactions.
• To open a bank account, foreign investors are required to submit their business registration documents, proof of identity, and other legal paperwork. Some banks may also require the company’s financial projections and business plan.

The Steps to Open a Company in Jordan as a Foreigner

1. Choose the Business Structure:

• Determine whether the company will be a sole proprietorship, partnership, or limited liability company (LLC). The type of business entity chosen will affect the registration process, tax obligations, and ownership structure.

1. Register the Business Name:

• Choose a unique name for the company and check its availability with the Ministry of Industry, Trade, and Supply. Once approved, reserve the business name.

1. Prepare Legal Documents:

• Draft the company’s Articles of Association and Memorandum of Association, outlining the company’s purpose, ownership structure, and operational guidelines.
• Have these documents notarized by a Jordanian notary public.

1. Submit Registration Application:

• File the application for company registration with the Companies Control Department at the Ministry of Industry, Trade, and Supply. This application must include the business plan, shareholder information, and financial details.

1. Deposit Capital in a Jordanian Bank:

• Deposit the required minimum capital in a Jordanian bank and obtain a deposit certificate.

1. Obtain Licenses and Permits:

• Apply for the necessary business licenses from the relevant government authorities, depending on the sector in which the company will operate.

1. Hire Local Staff and Obtain Work Permits:

• If hiring local employees, comply with the labor laws by registering them with social security and obtaining work permits for any foreign workers.

1. Start Operations:

• Once all registrations and licenses are in place, the company can legally commence operations in Jordan.

Additional Considerations for Foreign Investors

• Incentives for Foreign Investors: Jordan offers several incentives for foreign investors, particularly in free zones and development zones, including tax exemptions, customs duty reductions, and relaxed labor regulations.
• Dispute Resolution: Foreign companies operating in Jordan must be aware of the dispute resolution mechanisms available, including arbitration and mediation, in case of legal disputes.

Conclusion

Opening a company in Jordan as a foreigner involves several key conditions and requirements, including capital investment, legal representation, industry-specific restrictions, and obtaining work permits. By understanding the condition of opening a company in Jordan for foreigners, potential investors can navigate the regulatory landscape more effectively.

However, the process can be complex, and seeking the advice of legal experts and consultants who are familiar with Jordanian business law is advisable. By doing so, foreign investors can ensure that their businesses are set up correctly and positioned for long-term success in Jordan’s growing economy.