Cabinet Confirms Tax Exemptions On Mutual Investment Fund Profits

(MENAFN- Jordan News Agency)

Amman, Sept. 9 (Petra) -- The Income and Sales Tax Department has clarified the government's position on the taxation of mutual investment funds, stressing that profits generated from equity holdings and company shares remain exempt from income tax.
The clarification comes in response to reports on certain news websites that misrepresented the Cabinet's recent decision regarding the taxation of such funds. The Department emphasized that the resolution aligns with broader fiscal measures designed to incentivize the establishment of collective investment schemes, while also reinforcing the legal opinion previously issued by the Legislation and Opinion Bureau.
According to the Cabinet decision, capital gains and dividend income earned by mutual investment funds through their equity stakes in companies are not subject to income tax, pursuant to Article 4(a)(8) of the Income Tax Law. Instead, these funds are liable for a final, non-refundable levy of 0.8 per thousand on the nominal value of equity transactions both purchases and sales, in accordance with Article 21(a) of Regulation No. 59 of 2015 on Tax Declarations, Records, and Profit Ratios.
This specific rate functions as a withholding mechanism and constitutes a definitive tax obligation, thereby excluding such funds from the standard corporate income tax rate outlined in Article 11 of the Income Tax Law.
The Department underscored that under Jordan's constitutional framework, any new tax or adjustment to existing rates requires the passage of new legislation or an amendment to current laws, neither of which has occurred in this case.
Reaffirming its commitment to transparency, the Department stated it remains open to engaging with all media outlets, including digital platforms, to ensure accurate dissemination of fiscal policy updates and regulatory decisions that directly impact capital markets and investment vehicles.

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