1. Income Tax on profit:
All types of business entities (self-employed individuals, partnerships, corporations…) are subject to income tax on all business income derived in Lebanon.
There are three methods for the determination of the tax base, depending on the legal status of the entity and/or its size.
- Real Profit: Capital companies such as joint stock corporations and limited liability companies are taxed at a flat rate of 15%.
- Lump-Sum Profit: Lump-Sum profit tax is levied depending on the legal nature of an Establishment. The taxable income is a percentage of sales, determined annually by the MOF and based on sales figures reported by the taxpayer. The tax rate range from 4% to as high as 21% on the taxable income and after family exemptions, as follows:
4% - below LBP 9,000,000
7% - between LBP 9,000,000 and LBP 24,000,000
12% - between LBP 24,000,000 and LBP 54,000,000
16% - between LBP 54,000,000 and LBP 104,000,000
21% - above LBP 104,000,000
- Estimated Profit: the principle of estimated profits is most commonly employed for small businesses and merchants. Rates under the estimated profit tax are set by the government committees.
Capital Gain: arises from the disposition of immovable assets and taxed at a rate of 10%.
Non-Residents: non-residents are defined as any business that doesn’t have a permanent business address registered in Lebanon. An effective tax rate of 7.5% is levied on gross income that generated from services rendered and 2.25% on income generated from goods sold.
Foreign Branches: branches of foreign companies are subject to the Lebanese income tax as per the type of the branch. In addition, all branch profits are considered distributed profits subject to a distribution tax rate of 10%.
Holding Companies and Off-Shore Companies: holding and offshore companies are exempt from the business income tax but are subject to a variety of other taxes.
- Holding companies are levied according to the following:
| Rate |
Paid up Capital and Reserve
|
6%
|
Up to 50 million Lebanese Liras
|
4%
|
From 50 million up to 80 million Lebanese Liras
|
2%
|
For amounts in excess
|
If capital is above 120 million Lebanese Liras, the total tax payments in any given tax year are capped at 5 million Lebanese Liras. Holding companies are also subject to other taxes regarding interest, management fees, capital gains and royalties.
- Offshore Companies: are subject to a lump-sum annual tax of 1 million Lebanese Liras.
2. Personal Income Tax:
It is a tax imposed on all employees’ salaries, wages, bonuses, allowances and other benefits being derived in Lebanon despite the fact that the employee may not be domiciled in the country. Taxable income is taxed at a progressive rate ranges between 2% to as high as 20%.
2% - below LBP 6,000,000
4% - bracket between LBP 6,000,000 and LBP 15,000,000
7% - bracket between LBP 15,000,000 and LBP 30,000,000
11% - bracket between LBP 30,000,000 and LBP 60,000,000
15% - bracket between LBP 60,000,000 and LBP 120,000,000
20% - above LBP 120,000,000
Piece-meal workers: subject to withholding tax of 3%
3. Build-Up Property Tax:
It is a tax on all building income, in any form, existed in the Lebanese territories. It is levied on land that is used for non-agricultural investment purposes being a car parking, exhibition center or playgrounds. The tax is calculated as indicated below:
4% - below LBP 20,000,000
6% - bracket between LBP 20,000,000 and LBP 40,000,000
8% - bracket between LBP 40,000,000 and LBP 60,000,000
11% - bracket between LBP 60,000,000 and LBP 100,000,000
14% - above LBP 100,000,000
4. Value Added Tax:
VAT is a tax on domestic consumption. The tax is paid by the consumer on transaction of goods and services whether imported or locally produced. A fixed tax rate of 10% is levied on taxable services and goods.
5. NSSF:
The National Social Security Fund (NSSF) provides employees with insurance coverage for sickness and maternity care. It also covers family allowance, end of service pension, and work related accidents and diseases. Employers need to register in NSSF all employees working for local and international firms. Foreign employees with a valid work permit and residence permit are entitled to join NSSF but are not entitled for end-of-service subscriptions, however they don’t benefit from NSSF services.
Contributions:
6% of the taxable salary toward family allowances (with a ceiling of 1,500,000 LBP of the salary), contributed by the employer.
9% of the taxable salary toward health indemnity (with a ceiling of 2,500,000 LBP of the salary), 7% contributed by the employer, and 2% by the employee.
8.5% of the taxable salary toward end of service fund (with no ceiling).
Family allowances:
A married employee registered in NSSF receives a spouse allowance of LBP 60,000 and an additional LBP 33,000 for every child (up to 5 children), to be paid, monthly, by the NSSF through the employer.