Investment Environment Law No. 21 for 2022

The Investment Environment Law No. (21) of 2022 regulates investment in the Kingdom. Under this Law, the general investment policy is based on achieving economic and development objectives aimed at creating job opportunities, increasing economic growth, enhancing competitiveness, and improving the business environment.

The Law defines investment as the establishment of an economic activity in the Kingdom, including ownership, participation, development, or expansion. Economic activities include industrial, commercial, agricultural, service, tourism, information technology, and creative industry activities. Banking and financial activities, as well as professional activities regulated by special legislation, are excluded.

The general investment policy is based on a set of principles, most notably equal rights, privileges, and obligations for Jordanian and non-Jordanian investors; fair, equitable, and transparent treatment of all investors; protection of investments; a shift from prior approval and oversight to subsequent oversight; encouragement of investment in entrepreneurial projects, innovation, and research and development; creating a suitable environment for the growth of small and medium-sized enterprises; digitising and automating procedures and services provided to investors; promoting competition, preventing monopolies, and ensuring consumer protection.

The Law grants investors a range of fundamental rights and guarantees, including the right to invest in the Kingdom through full ownership, participation, or contribution to economic activities, subject to restrictions imposed on certain activities under applicable legislation.

The Law also guarantees investors the ability to transfer convertible currencies into and out of the Kingdom in accordance with applicable legislation. Furthermore, it protects investments against expropriation. No investment, or any part thereof, may be expropriated except in accordance with the Law, for a specific and legitimate public purpose, on a non-discriminatory basis, and against fair compensation in accordance with the provisions prescribed by the Law.

Companies and sole proprietorships are registered in accordance with the provisions of the relevant legislation. Prior approval from any other entity is not required for the registration of a company or sole proprietorship, unless otherwise provided for by law.

The Ministry of Investment provides the Comprehensive Investment Service for licensing economic activities through a shared electronic platform with the entities responsible for registration and licensing. This does not preclude submitting applications in person at the Ministry.

The relevant official entities must process transactions related to the Comprehensive Investment Service within a period not exceeding fifteen (15) working days from the date of receipt of a complete application. If an official entity fails to respond before the expiry of this period, approval shall be deemed granted automatically for the completion of the transaction.

The Law divides investment incentives into basic incentives and additional incentives.

Basic Incentives: These include customs exemptions for fixed assets, production supplies and inputs, and spare parts used in economic activities. The Law also provides for zero-rating certain assets, production supplies and inputs, and spare parts for tax purposes. In addition, it permits exemptions from or reductions in income tax for certain economic activities, subject to the specified terms and conditions.

Additional Incentives: Incentives, benefits, or exemptions may be granted to economic activities in accordance with the criteria and procedures set out in the Law. These may include incentives relating to land owned by the Public Treasury, energy and water costs, renewable energy projects, and the costs of establishing infrastructure services, as well as tax or customs exemptions or reductions.

The granting of additional incentives takes into account several criteria, including the employment of Jordanians, particularly Jordanian women; targeting export markets; generating local added value; transferring knowledge and technology and promoting digital transformation; engaging in strategic economic activities; implementing public-private partnership projects; and undertaking activities that target remote areas and areas of poverty, while promoting and serving local communities.

The Law regulates the establishment, management and development of Development Zones and Free Zones. It also governs the registration and licensing of establishments operating within these zones, as well as matters relating to the master developer, land, infrastructure and the conduct of economic activities therein.

The Law also sets out specific provisions governing incentives, exemptions, taxes and fees applicable to economic activities and establishments registered in Development Zones and Free Zones. It further provides that restrictions on foreign ownership percentages do not apply within these zones.

The Ministry of Investment is the principal reference point for investment in the Kingdom. It is responsible for implementing investment policy, preparing the draft investment map, promoting investment opportunities, and providing information and data to investors and prospective investors.

The Ministry also provides support services to investors, including aftercare services. It works to streamline procedures, address difficulties, and remove obstacles facing investors in commencing and continuing their economic activities. In addition, it prepares and updates investment and business guidance materials, and oversees and regulates the operation of Development Zones and Free Zones.

The Law allows investors to submit grievances to review the legality of procedures undertaken or decisions issued by official entities. One or more grievance committees are established within the Ministry of Investment to consider such applications in accordance with the provisions and procedures prescribed by regulation.

The Law also permits disputes arising from investment contracts between an official entity and an investor to be settled through arbitration in accordance with the rules agreed upon by the parties. Where an arbitration agreement exists but does not specify the applicable rules, the investor may choose to apply the Jordanian Arbitration Law, the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), or the Arbitration Rules of the International Chamber of Commerce (ICC).

For detailed provisions, please refer to the full text of the Investment Environment Law No. (21) of 2022, together with the regulations, instructions and decisions issued thereunder, and the relevant sector-specific legislation.