How to Withhold and Record 5% Rent Tax When Paying an Individual Landlord in Jordan
Deducting the 5% withholding tax from rent payments to an individual (non-corporate) landlord and remitting to ISTD.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Rent Expense | Expense (+) | 1,000.00 | - |
| Withholding Tax Payable (ISTD) | Liability (+) | - | 50.00 |
| Cash / Bank | Asset (-) | - | 950.00 |
💡 Accountant's Note
When a company rents from an individual (not a company), Jordanian law requires withholding 5% of the gross rent and paying it to the ISTD on behalf of the landlord.
Practitioner & Systems Framework
💻 ERP Architecture
The withholding obligation applies when the landlord is an individual (not a company). Verify the landlord's status (individual vs. company) from the lease agreement. Deduct 5% from each monthly payment and remit to ISTD by the 10th of the following month. Issue an annual withholding certificate to the landlord confirming the tax withheld on their behalf.
⚠️ Audit Flags
Failure to withhold rent tax is a primary compliance failure in ISTD audits of commercial tenants. ISTD may assess the full unpaid withholding tax plus penalties against the restaurant even if the landlord should bear the tax. When in doubt, withhold — the risk of not withholding is entirely on the tenant.
📄 Required Documentation
Lease agreement identifying the landlord as an individual, monthly rent payment records (gross and net), ISTD withholding tax remittance receipts (Form 103 or equivalent), annual withholding certificate issued to landlord, and landlord National ID or TIN confirming individual status.
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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.