VAT on Professional Fee Invoice (Jordan 16%)
Adding 16% Sales Tax to a professional services invoice issued to a Jordanian corporate client.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accounts Receivable (VAT-Inclusive Invoice) | Asset (+) | 11,600.00 | - |
| Professional Fee Revenue | Revenue (+) | - | 10,000.00 |
| VAT Output Tax Payable (16%) | Liability (+) | - | 1,600.00 |
💡 Accountant's Note
Professional services (legal, accounting, consulting, engineering) are subject to Jordan's 16% General Sales Tax when supplied to registered businesses. The VAT collected is a liability to the ISTD and is not the firm's revenue.
Practitioner & Systems Framework
💻 ERP Architecture
The billing module must be configured with the correct GST rate (16% in Jordan) applied to each taxable service line. Services supplied to non-resident clients (exported services) may be zero-rated — ensure the ERP flags the client's residency status and applies the correct rate automatically. VAT output tax collected from clients is remitted to the ISTD on a monthly basis (by the 30th of the following month). The VAT return reconciles output tax collected against input tax recoverable on the firm's own expenses — the net is the payment due or refund receivable. Credit notes issued to clients must include a corresponding negative VAT line to reduce the previously declared output tax.
⚠️ Audit Flags
(1) Rate application — is 16% consistently applied to all taxable services? Some professional services firms have mixed supplies (taxable fees + exempt consulting to certain government clients); the correct rate per supply type must be applied. (2) Zero-rating documentation — for exported services claimed as zero-rated, evidence of non-residency (client registration, contract address, service delivery location) must be maintained. (3) Reconciliation to GST return — the total output tax per the accounting records must match the output tax declared on the monthly GST return; discrepancies create ISTD exposure.
📄 Required Documentation
Client invoices with GST breakdown, GST registration certificate, monthly GST return filings, ISTD payment confirmations, input tax invoices, zero-rating evidence for exported services, and credit note register.
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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.