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Tax System

Our regional experts are on hand to answer all your tax law questions.

Lebanon has one of the most competitive corporate tax rates on a regional and international level. The corporate tax rate in Lebanon stands at 17 percent (according to the latest regulations), making Lebanon's business environment one of the most attractive and competitive for foreign and national companies. The corporate tax rate in Lebanon averaged 15.13 percent from 2004 to 2018, reaching an all-time high of 17 percent in 2018 and a record low of 15 percent in 2005.

 

There is no double taxation agreement (DTA) between the Federal Republic of Germany and the Republic of Lebanon. However, Lebanon offers tax incentives, special regulations and simplifications that can promote investment activity.

 

Tax-friendly regulation for corporate income tax
Companies operating in Lebanon benefit from favorable tax structures, low tax rates and a large number of double taxation agreements.
The Lebanese tax structure does not differentiate between foreign investments. Branches of foreign companies are subject to the same business tax as local companies if profits are made in Lebanon. No taxes are payable at the local/regional level. In addition, the tax system provides for various tax exemptions and reductions.

 

Tax relief and incentives
Lebanese legislation offers investors special tax breaks for the establishment and development of their companies in Lebanon:

  • Exemptions from corporation tax on profits apply to: Holding companies, offshore companies, educational institutions, hospitals, cooperative associations, trade unions, local air and sea transport companies, tourist institutions
  • 30% reduction on the taxable salary of foreign employees at offshore companies in Lebanon. Accordingly, employers are subject to reduced social security contributions and payroll taxes.
  • The salaries of foreign employees in the Union of Arab Capital and Financial Markets are exempt from income tax.
  • Foreign employees are completely exempt from paying social security contributions if they work in Lebanon under a contract concluded with foreign companies abroad and receive a similar benefit in their home country

 

Local and foreign investors have the opportunity under Lebanese law to set up a wide range of business structures, the most common of which are for foreign companies (holding companies, offshore companies, joint stock companies and limited liability companies)

The most important taxes and exemptions are listed below according to the type of business:

TAXES OF JOINT STOCK COMPANIES (S.A.L)

Joint stock companies are subject to:

  • 17% tax on company profits
  • 15% tax on profits from the sale of fixed assets including financial assets (shares)
  • A withholding tax of 10% on all income from movable capital assets (fixed assets) generated in Lebanon.
  • This tax mainly concerns:
    • Distribution of dividends, interest and income from shares
    • Assurances by members of the Board of Directors and the amount payable to them from profits
    • distribution of reserves or profits in the form of additional shares or in any other form

TAXES OF LIMITED LIABILITY COMPANIES (S.A.R.L)

  • 17% tax on company profits
  • 15% tax on profits from the sale of fixed assets including financial assets (shares)
  • A withholding tax of 10% on all income from movable capital assets (fixed assets) generated in Lebanon.
    This tax mainly concerns:
    • Distribution of dividends, interest and income from shares
    • Distribution of reserves or profits in the form of additional shares or in any other form

TAXES OF HOLDING COMPANIES

A gradual taxation of capital and reserves from LBP 1.8 million to a maximum of LBP 5 million.

  • 10% on interest on loans to companies operating in Lebanon if the loan term is less than three years
  • 10% tax on capital gains (capital gains) from the sale of shares or their participation in Lebanese companies in which it has held a stake for less than two years
  • 10% on amounts collected from the rental of patents and on the reserved rights in a Lebanese company
  • 5% on amounts collected from management fees

 

Holding companies are exempt from the following payments:

  • Income tax on profits
  • Income tax on profit distribution

 

Note: Holding companies are stock corporations with the legal status of a holding company. They are therefore subject to the taxation and penalties of shares.

TAXES OF OFFSHORE COMPANIES

Offshore companies are subject to:

  • LBP 1 million (USD 663) fixed annual tax
  • 15% tax on the profit from the sale of fixed assets in Lebanon
  • Wage tax on the salaries of company employees working in Lebanon

 

Offshore companies are exempt from paying the following fees:

  • Income tax on profits
  • Income tax on profit distribution
  • Stamp duties for foreign business contracts signed in Lebanon
  • Income tax on 30% of the basic salary of foreign employees

 

Note: Offshore companies are public limited companies that have the legal status of an offshore company and are therefore subject to corporation tax and penalties.

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