Referral / Introducer Fee Paid
Paying a referral fee to a third party who introduced a new client to the firm.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Referral Fee Expense (Business Development) | Expense (+) | 3,000.00 | - |
| Cash / Accounts Payable (Introducer) | Asset/Liability (−) | - | 3,000.00 |
💡 Accountant's Note
Referral fees paid to introducers are a business development expense. They cannot be capitalized as contract acquisition costs under IFRS 15 because they are paid to a third party, not an employee of the firm. Ethical rules for legal and accounting firms must be observed.
Practitioner & Systems Framework
💻 ERP Architecture
Referral fees paid to third-party introducers are business development expenses, not contract acquisition costs, because IFRS 15.91 requires the contract acquisition cost to be an incremental cost of obtaining the contract (typically an employee sales commission). Third-party referral fees — even if they are directly linked to winning a specific client — do not qualify for IFRS 15 capitalization. Code to Business Development Expense and track referral fees by introducer to monitor the return on referral relationships. In Jordan, WHT may apply to referral fees paid to non-resident introducers — withhold the applicable rate and remit to the ISTD.
⚠️ Audit Flags
(1) Professional ethics compliance — legal and accounting professional bodies typically restrict fee-sharing and referral arrangements. Confirm that the referral arrangement complies with the relevant professional conduct rules (Jordan Bar Association, JICPA). (2) WHT on non-resident introducers — referral fees paid to foreign entities require WHT deduction at the applicable treaty rate. (3) 1099 / tax reporting for domestic introducers — in applicable jurisdictions, third-party referral fee payments above a reporting threshold must be reported to the tax authority (1099-MISC in the USA; equivalent in other jurisdictions).
📄 Required Documentation
Referral agreement, invoice from introducer, payment record, WHT deduction and remittance (if non-resident), professional ethics compliance confirmation, and related client engagement documentation.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.