Withholding Tax Deducted by Client (Jordan)
Recording the WHT deducted by the client before remitting payment for professional services.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash / Bank (Net Payment Received) | Asset (+) | 9,500.00 | - |
| WHT Receivable / Prepaid Tax (ISTD) | Asset (+) | 500.00 | - |
| Accounts Receivable (Invoice Cleared) | Asset (−) | - | 10,000.00 |
💡 Accountant's Note
In Jordan, companies paying professional fees to individuals or certain entities must withhold 5% income tax and remit it to the ISTD. The firm records the full revenue, receives the net cash, and holds the WHT as a prepaid tax asset creditable against its annual income tax.
Practitioner & Systems Framework
💻 ERP Architecture
Configure the accounts receivable module to accommodate partial payments where the shortfall is a WHT deduction, not a client dispute. When the net cash is posted, the WHT amount should automatically be routed to a WHT Receivable account — not written off as a bad debt or revenue reduction. At year-end, the accumulated WHT Receivable is claimed as a prepaid tax credit on the income tax return, reducing the income tax liability payable. The firm must obtain a WHT certificate (Form 9 in Jordan) from each client who deducted tax — these certificates are submitted with the annual tax return as evidence of the credit. Maintain a WHT certificate tracker to ensure all deductions are documented.
⚠️ Audit Flags
(1) WHT certificate collection — are certificates obtained from every client who deducted WHT? Without the certificate, the ISTD may disallow the credit on the tax return. (2) WHT rate verification — the standard rate for professional services is 5% in Jordan; some contract types or non-resident payments may attract different rates. Confirm the rate matches the invoice and the certificate. (3) Timeliness of credit application — WHT credits that are not applied within the allowable period may lapse. Confirm that accumulated WHT receivables are applied against the current year's tax liability.
📄 Required Documentation
Client WHT certificates (Form 9), accounts receivable aging showing WHT deductions separately, annual income tax return (showing WHT credit applied), and reconciliation of WHT receivable balance to certificates received.
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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.