TAX

LEBANONS’ TAX SYSTEM

At Beirut Practice, we provide tax advice for local and cross-border transactions, owing to our international experience and presence in many European and MENA countries, and to the excellent relations we have developed over the years with leading audit and consultancy firms in Cyprus, Malta, Gibraltar, London, Poland, Hong Kong, and Singapore. We strive to understand each Client's specific business needs and design tailored structures to help them achieve their commercial objectives.

TAX

COMMERCIAL

Our Commercial Team advises clients on a vast range of commercial matters, from the more straightforward Terms and Conditions of Business Agreements to the complex multi-party documentation.

Our work requires us to have an appreciation, not just of the legal issues, but also the underlying commercial objectives. Therefore, we have a highly developed understanding of many industry sectors worldwide.

TAX

LEBANON’S TAX STRUCTURE BY TYPE OF BUSINESS

Lebanon offers local and foreign investors the option of establishing a broad range of business structures, including holding companies, offshore companies, joint stock and limited liability companies. Listed below are the main tax rates and exemptions by type of business entity:

  • HOLDING COMPANY
    • (10%) on the interest on loans issued to companies operating in Lebanon, if the loan maturity is less than three years.
    • (10%) tax on capital gains received from the sale of holding company shares or its participation in Lebanese companies it has owned for less than two years.
    • (10%) on amounts collected from renting patents and on the reserved rights it possesses on a Lebanese company.
    • Graduated tax on capital and reserves.
    Holding Companies are exempted from:
    • Income tax on profits.
    • Income tax on profit distribution.
  • OFFSHORE COMPANY
    • LBP 1 million (USD 666) fixed annual tax.
    • (10%) tax on profit received from the sale of fixed assets in Lebanon.
    • Payroll tax on the salaries of company employees working in Lebanon.
    Offshore Companies are exempt from paying:
    • Income tax on profits.
    • Income tax on profit distribution.
    • (30%) of foreign employees' basic salary is exempt.
    • Stamp duties on overseas business contracts signed in Lebanon.
  • JOINT STOCK AND LIMITED LIABILITY COMPANIES
    • (15%) tax on corporate profit.
    • (5%) tax on profits received from the development or sale of real estate.
    • A withholding tax at a rate of 10% is levied on all proceeds derived from movable capital assets generated in Lebanon, this tax essentially concerns:
      • Distributed dividends, interest and income on shares.
      • Directors' fees as well as amount payable to them from profits.
      • Distribution of reserve or profits in form of additional shares or under any form.

TAX

LEBANONS’ TAXATION SCHEMES

The following is an overview of the different taxes and exemptions that may be encountered by a local or foreign investor operating a business in Lebanon:

  • - Income Taxes include:
    • • Corporate Tax on Profits: Stands at (15%) for corporations and (4%) to (21%) for individuals
    • • Taxes on Wages and Salaries or the Payroll Tax: Currently between (2%) and (20%)
    • • Taxes on Income from Movable Capital: Currently stands at (10%).
  • - Other Types of Taxes include:
    • • Social Security Contribution: Currently stands at (21.5%) for employers and (2%) for employees
    • • Property Tax: Between 0 and (14%)
    • • Value Added Tax (VAT): Currently stands at (10%)
    • • Stamp and Custom Duties: A stamp duty of (3%) charged on most contracts and custom duties ranging from 0 to (70%).
  • - Exemptions and Reliefs include:
    • Exemptions from corporate tax on profits for holding companies, offshore companies, education institutes, hospitals, cooperative associations, trade unions, local air and sea transport companies, and touristic establishments
    • • A (30%) reduction on the taxable salary of foreign employees at offshore companies when working in Lebanon.
    • • Exemption from paying social security contributions for foreigners if they are working in Lebanon, pursuant to a contract concluded abroad with foreign enterprises. and if they are covered by a similar benefit at home.

In addition, investors can benefit from the multiple double taxation agreements that the Lebanese government has concluded with more than 32 countries, which not only avoid double taxation, but also protect against fiscal evasion.

For more information on the Double Taxation Agreements signed by the Lebanese government, please Click Here.