JoFotara Exemption: Who Is Exempt and at What Threshold

A grocer in Irbid, a popular restaurant in Zarqa and a craftsman working in a small governorate all ask the same question now that the National Invoicing System (JoFotara) has to be applied. Am I required to issue invoices through the system, or am I exempt? This article answers that question about JoFotara exemption, and only that question.

The short answer is that JoFotara exemption is an activity-based exception tied to an annual sales ceiling, not a general exemption granted according to the size of the business. The text names specific activities and sets a ceiling in dinars for each group of them. If your activity is not one of those named, low sales will not help you.

Any figure you read about exemption ceilings should be traced back to two texts before you base a decision on it. The first is Article 11 of Regulation No. 34 of 2019 on Organizing and Controlling Invoicing Affairs, as amended. The second is Article 4 of Instructions No. 1 of 2019 on Invoicing Affairs and Their Control, as amended. A vendor’s page or a competitor’s article is not a source for a figure of this kind.

This article explains one thing, namely who is exempt, under which ceiling and on what conditions. It does not cover the steps for registering in the system, the penalties for non-compliance, or invoice types and their fields. For the wider question of which businesses fall under the obligation, read our article Who Must Use E-Invoicing in Jordan?

The rule before the exception: who the obligation covers

The obligation starts with a sale worth at least one dinar. Article 5(a) of Regulation No. 34 of 2019 requires the seller of any goods or service worth no less than one dinar to issue an invoice in at least two copies. Article 2 of Instructions No. 1 of 2019 repeats the same duty and adds an important qualifier to its wording. A proper invoice (فاتورة أصولية) is required unless the seller is exempt under Article 11 of Regulation No. 34 of 2019 or under the instructions themselves.

This means the exception is never assumed. It has to be found in the text. Registration for General Sales Tax (GST) is not the test either. A taxpayer that is not registered for GST is not exempt from invoicing. It issues an income invoice, which carries no tax. The obligation covers sellers of goods and providers of services alike, including members of the professions.

Where the exception sits, and how it is split between two texts

The exception is spread over two levels. Understanding the split explains why the lists in circulation differ.

• Article 11(a) of Regulation No. 34 of 2019 directly names a business whose purpose, as recorded in the commercial register, the companies register or the professions license, is a grocery, a mini market, a supermarket or a small shop, where the sales of each are below JOD 75,000 a year. It also names craftspeople whose sales or revenue from the craft are below JOD 30,000 a year. It then expressly leaves the door open to any other bodies or categories specified under the instructions.
• Article 4 of Instructions No. 1 of 2019 uses this delegation and widens the list. It adds other activities under the 75,000 ceiling, and it adds a third category with a ceiling of its own.

The regulation sets the frame and the instructions fill it in. That is why reading the regulation alone is not enough when you are looking for a specific activity.

The JOD 75,000 ceiling: the named licensed activities

Article 4(a) of Instructions No. 1 of 2019 lists licensed activities whose annual sales are each below JOD 75,000. The text we hold names nine activities.

• Groceries, including mini markets, supermarkets and small shops.
• Bookshops selling books and stationery.
• Fruit and vegetable shops.
• Household goods shops.
• Bakeries.
• Popular restaurants.
• Home-based businesses.
• Dairy shops.
• Sewing supplies shops.

Note that this list describes the text of the instructions as issued, not the list in force today. Other commercial sectors were later added to the exempt categories under the same ceiling by amendments to the instructions. Our source for those additions is secondary, not official, so we do not name them here. The practical meaning is the same either way. Do not read the list as closed. If your activity is close to one of the items and you cannot find it in the list, the reference is the text in force and the Income and Sales Tax Department (ISTD).

The JOD 30,000 ceiling: licensed crafts

The second category, in Article 4(b) of Instructions No. 1 of 2019, covers licensed crafts in any of the Kingdom’s governorates whose annual revenue is below JOD 30,000. The wording here refers to annual revenue from the craft. It does not refer to capital, to the number of workers or to the value of a single invoice.

The licensing condition is essential. An unlicensed craft does not fall into this category at all, because the text describes the crafts as licensed.

The JOD 150,000 ceiling: bakeries that sell bread only

The third category, in Article 4(c) of Instructions No. 1 of 2019, is narrower in description and higher in ceiling. It covers bakeries that sell bread only and whose annual sales are below JOD 150,000.

«المخابز التي تبيع الخبز فقط وتقل مبيعاتها السنوية عن 150000 دينار»

In English, Article 4(c) of Instructions No. 1 of 2019 covers bakeries that sell bread only and whose annual sales are below JOD 150,000. No official English translation of this instruction was found; the English here is our rendering, and the Arabic text is the authority.

What separates this category from the bakeries in the 75,000 category is the description of the activity, not the figure. A bakery that sells sweets, pastries or drinks alongside bread does not fit the description sells bread only, so its position is read against the first category and its ceiling. This is a direct example of how the exception is measured against the description of the activity first, and against the figure second.

Two conditions that keep the exception from being read as permanent

The ceiling is not the whole story. The text makes the exception depend on two further conditions, and both break the impression that an exemption is a fixed status.

• Actually carrying on the activity. Article 11(a) of Regulation No. 34 of 2019 requires the business to actually carry on this activity. The license alone does not carry the exception. A business that holds a grocery license but in practice works in another trade cannot read its position against this text.
• The Director’s power to impose the obligation. Article 11(b) of Regulation No. 34 of 2019 allows the Director, whom the regulation defines as the Director General of ISTD, to require a person to comply when there is sufficient evidence that the person’s sales exceed the limit. The provisions of the regulation then apply to that person. In other words, exceeding the ceiling is not only something the taxpayer declares about itself. It is a fact on which ISTD can act.

«وتمارس فعلياً هذا النشاط»

In English, Article 11(a) of Regulation No. 34 of 2019 makes the exception apply only to a business that actually carries on the named activity. No official English translation of this regulation was found; the English here is our rendering, and the Arabic text is the authority.

The takeaway for a business owner is that the exception describes a situation that can change from one year to the next. It is not a status you acquire once and keep.

The exception works in one direction only

Article 11(c) of Regulation No. 34 of 2019 allows exempt bodies to submit a written request to ISTD to issue invoices voluntarily. The door is open for leaving the exception. Article 11 of Regulation No. 34 of 2019 has no matching procedure for entering the exception on request.

The reason for taking this path can be commercial rather than tax-driven. A business customer may need a proper invoice to deduct its input tax, and a business that does not issue one may lose that kind of customer.

Lawyers: a separate mechanism with a different ceiling

Article 6 of Instructions No. 1 of 2019 gives lawyers a treatment of their own, which does not fall under any of the three ceilings above.

• For a lawyer whose collected revenue does not exceed JOD 50,000 a year, a receipt for amounts received, or any receipt voucher, is accepted in place of an invoice.
• A lawyer whose collected revenue exceeds JOD 50,000 issues invoices in accordance with Article 5 of Regulation No. 34 of 2019, within forty-five days of the date the limit is reached. The same period is given for putting the position right, and if revenue later falls, the lawyer’s position is adjusted.
• For non-compliance, Article 6 of Instructions No. 1 of 2019 refers to the fines set out in Article 64 of Income Tax Law No. 34 of 2014.

Note that the figure here depends on collected revenue, meaning amounts actually received. It does not depend on the fee agreed with the client, or on amounts that are due but have not yet been received.

A common mix-up: the JoFotara exemption ceiling is not the sales tax registration threshold

The figure 75,000 appears in two entirely different places, and confusing them leads to a wrong decision.

• A ceiling for exemption from issuing invoices, in Instructions No. 1 of 2019, which applies to named activities.
• A threshold for registering for General Sales Tax for goods, under Article 13 of the General Sales Tax Law. Its threshold for services is JOD 30,000 of taxable sales a year. Where a business has more than one activity, the lowest threshold applies.

The two figures happen to be equal here, but each one answers a different question. The first asks whether you issue an invoice at all. The second asks whether you register for sales tax and collect it. It is entirely possible to be required to issue invoices without being registered for sales tax, in which case you issue an income invoice.

What these two texts do not cover

Being straight with the reader on this topic means marking the limits of what we have read. The two texts this article is built on, Regulation No. 34 of 2019 and Instructions No. 1 of 2019, do not contain any of the following.

• A set procedure by which a taxpayer proves that it is within the ceiling, or a specific document it must produce for that purpose.
• A rule on the year over which sales are measured, whether the tax year or a rolling twelve months.
• A general period for moving from exempt status to compliance once the ceiling is exceeded. The period in Article 6 of Instructions No. 1 of 2019 applies to lawyers by its own wording, and it should not be extended to anyone else.

On each of these points the reference is the text in force and ISTD, not a reading built on the silence of the text.

What to do if you are close to the ceiling

The hardest practical case is not the clear one. It is the business whose sales approach the ceiling, or exceed it in one year but not in another. Three practical consequences follow from everything above.

• Track your sales monthly, not yearly. The ceiling is annual, but finding out at the end of the year that you have exceeded it means you were working outside your obligation for months without knowing it.
• Settle the description of your activity before the figure. If your activity is not one of those named in the text in force, the ceiling does not concern you at all, and you are required to invoice from a sale of one dinar.
• Weigh the commercial effect, not only the tax effect. A customer registered for sales tax may need a proper invoice, and voluntary compliance through Article 11(c) of Regulation No. 34 of 2019 may suit your business better than the exception itself.

How Qoyod helps

Whether you are exempt is a legal decision you make yourself by going back to the text. What comes after, once the obligation applies to you, is the operational work, and this is where Qoyod Cloud Accounting Software comes in. Qoyod is integrated with the National Invoicing System (JoFotara).

• Qoyod builds the invoice file in UBL 2.1 format with its unique identifier (UUID) and sends it to the National Invoicing System without any manual intervention. Once ISTD accepts the invoice it returns a QR code, and Qoyod shows that code on the invoice.
• Qoyod checks each invoice at field level as it is created, covering the tax number, the document type and payment method, the General Sales Tax rate and whether the lines are complete, and alerts you to any error before the invoice is sent, to reduce rejections.
• ISTD returns the invoice status and any error message, and Qoyod shows them in its status panel, with states that include sent (مرسلة), previously sent (مرسلة مسبقًا) and not sent (لم تُرسل) together with the error message. The status panel lists invoices that were not sent and need to be resent, and when you resend one it keeps the same UUID.

One point of accuracy. The pre-send check is an alert, not a guarantee. It helps reduce rejections, and the decision to accept an invoice rests with ISTD alone.

Where to go next

This article covered a single question, namely who is exempt from the National Invoicing System and under which ceiling. To complete the picture, follow the related topics below.

• The invoice type that applies to you. The difference between the income invoice and the general sales tax invoice is explained in our article Invoice Types in the National Invoicing System.
• Registering once the obligation applies. The steps are in our article JoFotara Registration and the Registration Document.
• Whether you are ready at all. Use the JoFotara Readiness Check for Jordan.

For a wider view of the system and how to connect your business to it, read our article Jordan’s National E-Invoicing System.

Frequently asked questions

What are the JoFotara exemption ceilings?

Article 4 of Instructions No. 1 of 2019 sets three ceilings. Named licensed activities are exempt when the annual sales of each are below JOD 75,000, licensed crafts when their annual revenue is below JOD 30,000, and bakeries that sell bread only when their annual sales are below JOD 150,000. Other sectors were added under the 75,000 ceiling by later amendments, so check the text in force and ISTD for your activity.

Is the exemption granted according to the size of the business?

No, the exception depends on the activity, not on size. The text names specific activities and then sets a ceiling for them. If your activity is not one of those named in the text in force, low sales will not help you, and you remain required to invoice from a sale worth one dinar.

Is the exemption permanent?

No, it is not. The text makes it depend on actually carrying on the activity, and Article 11(b) of Regulation No. 34 of 2019 allows the Director to require a person to comply when there is sufficient evidence that the person’s sales exceed the limit, after which the regulation applies to that person.

I am not registered for General Sales Tax. Does that mean I am exempt from invoicing?

No, it does not. Registration for sales tax is a separate matter from the obligation to invoice. A business that is not registered is not exempt. It issues an income invoice, which carries no tax.

How are lawyers treated?

Lawyers have a separate mechanism in Article 6 of Instructions No. 1 of 2019. A receipt for amounts received, or a receipt voucher, is accepted in place of an invoice for a lawyer whose collected revenue does not exceed JOD 50,000 a year, and a lawyer whose revenue exceeds that issues invoices within forty-five days of the date the limit is reached.

How do I prove that I am within the ceiling?

Neither Regulation No. 34 of 2019 nor Instructions No. 1 of 2019 sets a specific procedure or a specific document for proving it, and neither says which year sales are measured over. On these points the reference is the text in force and ISTD.

References

• Regulation No. 34 of 2019 on Organizing and Controlling Invoicing Affairs, as amended, consolidated text (in Arabic), Articles 2, 5 and 11.
• Instructions No. 1 of 2019 on Invoicing Affairs and Their Control, as amended (in Arabic), Articles 2, 4 and 6.
• General Sales Tax Law No. 6 of 1994, as amended, Article 13.
• Income Tax Law No. 34 of 2014, as amended, Article 64.