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The rise of the gig economy has brought about significant changes in the way people work around the world. Jordan is no exception, with a growing number of individuals choosing to work as independent contractors.
Jordan's vibrant economy and diverse industries offer a plethora of possibilities for independent contractors. Whether you're a skilled IT consultant, a creative freelancer, or a specialized service provider, the opportunities to thrive in the Jordanian market are abundant.
Whether you are considering this path or are simply curious about the dynamics of working as an independent contractor in Jordan, this article will provide you with a comprehensive overview of what you need to know. Let’s dive in!
What is the Definition of an Independent Contractor Under Jordanian Law?
In Jordanian law, the term "independent contractor" refers to an individual or a company that provides services to clients or companies on a project basis, without being employed directly by them. The relationship between an independent contractor and the client is typically defined by a contract that outlines the scope of work, payment terms, and other relevant details.
The Jordanian Labor Law (No. 8 of 1996) distinguishes between two main types of employment relationships: employer-employee relationships and contractor relationships. The law defines an employee as an individual who works for an employer under a contract of employment, while a contractor is an individual or entity that provides specific services for a specified period or project.
According to the law, an independent contractor is not considered an employee and is therefore not entitled to the same benefits and protections as an employee. Independent contractors are responsible for managing their own business, including taxation, social security, and insurance.
It is important to note that the distinction between an independent contractor and an employee is not solely based on the label used in the contract, but on the nature of the relationship and the degree of control exerted by the client. If a contractor is found to have been misclassified as an independent contractor while performing duties that are typically considered within the scope of an employment relationship, they may be entitled to employment benefits and protections under the law.
Getting Set Up as an Independent Contractor in Jordan
To get set up as an independent contractor in Jordan, you need to follow several steps. Here's a general outline of the process:
Determine Your Business Structure
Decide whether you want to operate as an individual or establish a legal entity, such as a sole proprietorship or a limited liability company (LLC). Consider consulting with a lawyer or business advisor to determine the most suitable structure for your circumstances.
Register Your Business
Register your business with the Ministry of Industry, Trade, and Supply. The registration process involves submitting the necessary documents, which may include proof of identity, business plan, and relevant qualifications or certifications. You will also need to pay the required registration fees.
Obtain a Tax Identification Number
After registering your business, you need to obtain a Tax Identification Number (TIN) from the Income and Sales Tax Department. This number is necessary for fulfilling your tax obligations as an independent contractor.
Understand Tax Obligations
Familiarize yourself with the tax requirements and obligations for independent contractors in Jordan. This includes keeping track of your income and expenses, filing tax returns, and paying the applicable taxes. It is highly recommended to consult with an accountant or tax advisor to ensure compliance and proper tax planning.
Open a Bank Account
Open a separate bank account for your business transactions. This will help you keep your personal and business finances separate, making it easier to manage your finances and track your business income and expenses.
Obtain Necessary Permits and Licenses
Depending on the nature of your work, you may need to obtain specific permits or licenses to operate legally. Research the requirements related to your industry or services and ensure that you obtain any necessary authorizations.
Contracts and Agreements
Prepare comprehensive contracts and agreements for your clients. Clearly outline the scope of work, project timelines, payment terms, and any other relevant details. It is advisable to have a legal professional review your contracts to protect your rights and minimize potential disputes. Using a purpose-built solution, like RemotePass, helps to remove the complexity here.
Payment Methods for Independent Contractors in Jordan
When it comes to payment methods for independent contractors in Jordan, there are several options available. The choice of payment method often depends on the preference of the contractor and the agreement reached with the client. Here are some common payment methods used by independent contractors in Jordan:
- Bank Transfers: Bank transfers are a popular and secure method of payment. Clients can transfer funds directly to the contractor's bank account using wire transfers or online banking platforms. This method provides a transparent and traceable record of payment.
- Cash: In some cases, clients may prefer to pay independent contractors in cash. This method is more common for smaller projects or when conducting business in person. However, it is important to exercise caution when handling large amounts of cash and ensure proper documentation for financial records.
- Checks: Payment by check is another option available to independent contractors. Clients issue a check payable to the contractor, who can then deposit it into their bank account. It is important to verify the legitimacy of the check and ensure that sufficient funds are available before accepting it as payment.
- Online Payment Platforms: With the rise of digital transactions, online payment platforms have gained popularity. Platforms such as PayPal, Payoneer, and Skrill allow clients to send payments electronically. Contractors can then transfer the funds to their bank account or use them for online purchases.
- Purpose-built Platforms: RemotePass was designed with remote workers in mind, and offers a range of payout methods — ranging from bank transfer, to Wise, to crypto — and even direct payout-to-card. You also get access to a Super App to manage your finances, and a virtual and physical USD card. This gives remote contractors flexibility and choice with how they manage their money, and removes any uncertainty surrounding payday.
Tax Obligations for Independent Contractors in Jordan
As independent contractors in Jordan, individuals are responsible for managing their own tax obligations. Understanding and fulfilling these tax requirements is crucial to maintain compliance with the law and avoid potential penalties. Here are the key tax obligations for independent contractors in Jordan:
Income Tax
Independent contractors must pay income tax on their earnings. They are required to keep track of their income from all sources, including domestic and foreign clients. The tax rates for individuals are progressive, meaning the more you earn, the higher your tax rate.
Social Security Contributions
Independent contractors are also responsible for making social security contributions. These contributions provide access to various social benefits, such as health insurance, retirement benefits, and unemployment coverage. It is essential to register with the Social Security Corporation and pay the required contributions regularly.
Value Added Tax (VAT)
Depending on the nature of their services and the annual turnover, independent contractors might need to register for VAT. VAT is a consumption tax levied on the value added at each stage of the supply chain. Contractors must charge VAT on their services and remit it to the tax authorities.
Tax Filing
Independent contractors in Jordan are required to file their income tax returns annually. The tax year in Jordan follows the calendar year, starting from January 1st and ending on December 31st. Accurate and timely filing is essential to avoid any penalties or fines.
Benefits for Independent Contractors in Jordan
As a contractor in Jordan, you’ll enjoy the following benefits on RemotePass:
Health Insurance
Access health insurance plans for you and your dependents — regardless of your location — paid in monthly installments.
USD Card
With the RemotePass Card, you can receive payments in USD, hold funds indefinitely, and enjoy global, offline and online spending.
Payment options
Choose from 90+ currencies and seven payment options, including bank account, bank card, Wise, PayPal, Payoneer, or Crypto.
Super App
Manage contracts, cards, invoices, expenses, and time-off conveniently through a single app.
Get Set-up as an Independent Contractor in Jordan Today
Working as an independent contractor in Jordan offers great opportunities, but it is crucial to understand and fulfill your tax obligations. Compliance with tax laws and regulations ensures a smooth and successful professional journey. By staying informed, maintaining accurate records, and seeking professional assistance when needed, you can navigate the tax landscape effectively and focus on growing your independent contracting career.
To help remove the complexity, refer your clients to use RemotePass today — we’ll take care of the details, so you can focus on your work in Jordan.
Good luck on your contracting journey!
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