Registering Foreign Company Branches in Jordan depends on the nature of the branch to be registered, because Jordanian law distinguishes between an operating foreign company, which carries out activities or executes a contract inside the Kingdom, and a non-operating foreign company, which takes Jordan as a representative or regional office without carrying out any commercial activity inside it.
What Is Meant by Registering Foreign Company Branches in Jordan?
Registering foreign company branches in Jordan is the legal procedure that allows a company registered outside the Kingdom to open a branch or office in Jordan in accordance with the Companies Law. This registration differs depending on whether the company will carry out business or execute a contract inside Jordan, or whether it will use Jordan only as a representative or regional headquarters.
If you are considering establishing a separate legal entity in Jordan instead of registering a foreign branch, you may also read about Incorporating a Business in Jordan for Foreign Investors.
What Is the Difference Between an Operating and a Non-Operating Foreign Company in Jordan?
| Item | Operating Foreign Company | Non-Operating Foreign Company |
|---|---|---|
| Nature of presence | Carrying out work or contracts inside Jordan | Representative or regional office for activities conducted outside Jordan |
| Conducting business inside Jordan | Yes | No |
| Practical basis | Contract, tender, agreement, or license depending on the case | No local contract is required |
| Tax position | Subject to profits generated from its work inside Jordan | Benefits from exemptions on profits generated from abroad |
| Relationship with the Jordanian market | Direct | Representative / coordinative only |
Registering an Operating Foreign Company in Jordan
What Is an Operating Foreign Company?
An operating foreign company is a company or entity registered outside Jordan that carries out work inside the Kingdom. Its presence may be linked to a specific project that ends upon completion of the work and settlement of its rights and obligations, or it may operate on a continuing basis if properly licensed by the competent authorities.
Requirements for Registering an Operating Branch
The main requirements include:
- The existence of a contract, tender, agreement, or approval from the competent authority depending on the nature of the activity
- Appointment of a resident general agent in Jordan authorized by a duly certified power of attorney to conduct the company’s business
- Submission of the parent company’s documents, including the Memorandum of Association, Articles of Association, and Certificate of Registration, duly legalized by the Jordanian Embassy in the country of origin and the Jordanian Ministry of Foreign Affairs
- Submission of the financial statements for the last financial year certified by a legal auditor
- Submission of details of the owners, partners, board members, and authorized signatories
Obligations of the Operating Branch After Registration
After registration, the operating branch is generally required to:
- Submit the balance sheet and profit and loss account for its work in Jordan within three months from the end of the financial year
- Publish financial statements as required by law
- Notify the Controller before completion of the work and apply for deregistration after settlement of obligations
Registering a Non-Operating Foreign Company in Jordan
What Is a Non-Operating Foreign Company?
A non-operating foreign company is a company or entity that has a headquarters or representative office in Jordan for activities carried out outside the Kingdom. The office is used to direct business, coordinate with the parent company, or manage regional operations, without carrying out any commercial activity inside Jordan.
When Is a Representative or Regional Office Suitable?
A representative or regional office is suitable when the parent company aims to:
- Manage its external operations from Jordan
- Open a regional office
- Conduct market studies
- Handle administrative and logistical coordination
- Represent the company in the region without carrying out sales or direct business activities inside the Kingdom
Benefits of a Non-Operating Foreign Company
The main benefits include:
- Exemption from income tax and general sales tax on profits generated from outside Jordan
- The possibility of opening a non-resident account in Jordanian dinars or foreign currencies, provided that the funds are transferred from abroad
- Advantages related to maintaining a regional or representative office environment
If your branch or regional office will rely on foreign staff, you may also read about Work Permits and Residency for Expatriates in Jordan.
Restrictions on the Non-Operating Branch
The main legal restriction is that it may not carry out any commercial activity or business inside the Kingdom. Otherwise, it would lose its legal characterization as a non-operating representative or regional office.
Requirements for Registering a Representative or Regional Office in Jordan
In practical terms, this route differs from the operating branch because it does not require a local contract inside Jordan. Instead, it requires the parent company’s decision to open the office, together with its basic corporate information, official documents, and details relating to capital and management.
Tax Position of Operating and Non-Operating Foreign Companies
The tax position differs according to the type of branch:
- Operating branch: As a general rule, it is subject to the Jordanian tax system with respect to profits generated from its work inside Jordan.
- Non-operating branch / regional office: It does not carry out business inside the Kingdom, and it is treated differently with respect to profits generated from abroad.
Which Is More Suitable for You: an Operating Branch or a Representative Office?
If the company intends to execute a contract, project, or direct business activity inside Jordan, the closer route is an operating foreign branch.
If the company wants an administrative, representative, or regional presence in Jordan to manage activities conducted outside the Kingdom, without carrying out business inside Jordan, then the more suitable route is a non-operating foreign company / representative office.
Common Mistakes When Registering Foreign Company Branches in Jordan
Common mistakes include:
- Confusing the incorporation of a Jordanian company with the registration of a foreign company branch
- Confusing the operating branch with the representative office
- Assuming that the regional office may carry out business activities inside Jordan
- Ignoring legalization requirements for the parent company’s documents
- Ignoring tax implications and post-registration obligations
- Overlooking the employment ratio requirements applicable to non-operating foreign companies
The Role of a Lawyer in Registering a Foreign Company Branch in Jordan
A lawyer’s role in this process includes:
- Determining the correct legal characterization: operating or non-operating
- Reviewing the parent company’s documents
- Verifying the formal requirements for legalization and translation
- Drafting powers of attorney and authorizations
- Following up on registration and subsequent amendments
- Reducing the risk of rejection or registration under an unsuitable legal category
Frequently Asked Questions
What is the difference between an operating and a non-operating foreign company in Jordan?
An operating foreign company carries out business or executes contracts inside Jordan, while a non-operating foreign company serves as a representative or regional office for activities conducted outside the Kingdom and may not carry out commercial activities inside it.
Is a local contract required to register an operating foreign branch in Jordan?
Yes, the existence of a contract, tender, agreement, or another legal basis for carrying out work inside Jordan is one of the key elements for registering an operating foreign branch.
Can a representative office carry out commercial activity inside Jordan?
No, a non-operating foreign company or representative office may not carry out any commercial activity or business inside the Kingdom.
What is the main advantage of a regional or representative office?
Its main advantage is that it allows the foreign company to use Jordan as a representative or regional base for its external business while benefiting from the legal and tax treatment applicable to profits generated from abroad.
How do I decide whether I need an operating branch or a representative office?
The choice depends on the nature of the intended presence in Jordan. If the company will execute work inside the Kingdom, the operating branch is usually the appropriate route. If it only needs a regional or representative presence without local commercial activity, the non-operating office is usually more suitable.
Conclusion
In conclusion, registering foreign company branches in Jordan does not follow a single route. It differs according to whether the company will carry out work inside the Kingdom or will maintain only a representative or regional presence. Understanding this distinction from the outset helps in choosing the correct legal structure, preparing the proper requirements, and avoiding the registration of an entity that does not match the company’s actual business model.
For more information, contact us.
Read Also:
- Incorporating a Business in Jordan for Foreign Investors.
- Work Permits and Residency for Expatriates in Jordan.
- Jordanian Citizenship & Residency by Investment.
Mohammad Jaser Al-Atasi is a lawyer and legal consultant based in Amman, Jordan, with over 20 years of experience in litigation and legal advisory services. He holds a Bachelor of Laws and a Master’s degree in Civil Law, in addition to specialized qualifications in Sharia and Arbitration. He is the founder of Al-Atasi Law Firm and Legal Consultations, where he provides legal services to individuals and businesses in civil, commercial, and criminal matters, as well as contract drafting, legal appeals, and representation before Jordanian courts.