Lebanon individual income tax is progressive up to 20%.
Individual income tax rates on wages and salaries are as follows:
Income (L£) Tax Rate
1 to 6,000,000 2%
6,000,001 to 15,000,000 4%
15,000,001 to 30,000,000 7%
30,000,001 to 60,000,000 11%
60,000,001 to120,000,000 15%
More than 120,000,001 20%
Income tax law imposes a tax on all wages, salaries and other remuneration and consideration of services rendered in Lebanon. The tax is imposed on an income received in a preceding year after deduction of family allowances. The fiscal year is a Gregorian calendar year.
Every traveller leaving Lebanon through airports or harbours is subject to a departure tax of L£ 50,000 for economy class and L£ 70,000 for business and first class.
Lebanese resident companies are subject to Lebanese corporate tax on profits of any business carried on in Lebanon at a tax rate of 15%.
Individuals and Partners in a private company are subject to tax on profits, after deduction of family allowances, on a progressive scale as follows:
4% on income below L£9,000,000
7% on income bracket between L£9,000,000 and L£24,000,000
12% on income bracket between L£24,000,000 and L£54,000,000
16% on income bracket between L£54,000,000 L£104,000,000
21% on income bracket above L£104,000,000
Business income tax is imposed on net business income earned in the preceding year. Tax Returns of limited liability companies must be filed by 31 May in the year following the year of income.
CAPITAL GAINS TAX
Gains on the sale of fixed assets are principally taxed at a rate of 10%. However, gains, or a proportionate part thereof, are exempt of tax where the proceeds are invested in the construction of flats for company staff. Both ordinary and capital losses may be used to off-set against capital gains.
BRANCH PROFITS TAX
Branches of foreign companies are liable to the same income tax as Lebanese companies in respect of their profits realised in Lebanon. Profits earned by branches of foreign companies are deemed to be distributed dividends and are subject to 10% distribution tax on the amount of the profit after deduction of business income tax.
FRINGE BENEFITS TAX
There is no fringe benefits tax in Lebanon.
There are no local taxes in Lebanon.
Stamp duty is payable on documents at a rate of 0.3% unless otherwise provided by law. The general rate applies to issue share capital, leases and other agreements, etc. The rate is reduced to 0.15% in respect of commercial bills.
Contributions to social security fund are as follows:
- Family allowances: 6% of the employee monthly salary with a ceiling of L£1,500,000 per month.
- Sickness: 9% of the employee monthly salary with a ceiling of L£1,500,000 month out of which the employee pays 2%.
- Termination indemnity: 8.50% of the employee's total monthly salary
DETERMINATION OF TAXABLE INCOME
Taxable profits consist of all revenues earned by the enterprise after deduction of all charges necessary for carrying out the business.
The amount of annual depreciation of fixed assets is fixed by the Ministry of Finance. The taxpayer may choose the rate he or she regards as appropriate, providing it falls within these minimum and maximum depreciation rates. Depreciation rates vary from 2% to 30% depending on the type of assets. Depreciation of land and goodwill is not acceptable for tax purposes.
STOCK / INVENTORY
Inventory of goods is valued at cost for tax purposes.
Income tax law provides tax on distribution of dividends by Lebanese limited liability companies at a rate of 10% of the dividend paid. The distribution tax is payable regardless of whether the paying company is exempt from business income tax. Under certain conditions the rate is reduced to 5%.
Interest on business loans is normally deductible.
Losses can be carried forward for a period of three years following the year in which they were incurred.
FOREIGN SOURCED INCOME
Income tax in Lebanon is territorial in general. Only profits realised in Lebanon and income derived from an activity in Lebanon is subject to Lebanese income tax.
The following enterprises are exempt from corporate tax: education institutions, co-operative associations, trade unions, Lebanese maritime and airline companies, public institutions which do not compete with the private sector, holding companies, and offshore companies.
Medium and long-term credit banks are exempted from corporate tax in respect of the first seven years of operation.
Offshore companies are liable to an annual lump sum of L£ 1,000,000 that is to be paid to the income tax department.
Holding companies are subject to an annual tax computed on its total share capital plus reserves as follows:
6% on the first L£50,000,000
4% on the second L£30,000,000
2% on amounts exceeding L£80,000,000 providing that the total tax amount does not exceed L£ 5,000,000.
In addition, certain industrial activities are exempt when they relate to the economical development of the country and they fulfil certain legal requirements.
TAXATION BASED ON TURNOVER
Certain enterprises are not taxed on the actual net profits realised but apply a percentage of the annual turnover to arrive at their taxable profits. This is the case for:
- insurance companies
- contractors, in respect of sums received from work undertaken for the account of governmental institutions.
TAX ON INTERESTS RECEIVED
Interest received from bank deposit accounts, certificates of deposit, Lebanese treasury bills, debentures, etc is subject to a tax of 5%.
FOREIGN TAX RELIEF
There are no unilateral measures for the avoidance of double taxation.
Corporate groups are not generally recognised in Lebanon.
RELATED PARTY TRANSACTIONS
Any income indirectly transferred abroad to an enterprise established outside Lebanon, which controls or is controlled by the Lebanese corporation, may be added back to taxable income by the tax authorities unless it is at arm's length transaction.
Remuneration paid to non-residents for services rendered in Lebanon are subject to a withholding tax at rate of 7.50%. This tax rate is reduced to 2.25% when the sums paid relate to business activities.
The VAT rate in Lebanon is 10% although there are many goods and services exempted from the tax.
VAT applies to imports and the supply of goods and services in Lebanon.
Income Tax Rate
Corporate Tax Rate
Sales Tax / VAT Rate
Last Update: Nov 2010
ANTIGUA & BARBUDA
BOSNIA & HERZEGOVINA
BRITISH VIRGIN ISLANDS
CENTRAL AFRICAN REP.
CONGO, DEM. REPUBLIC
CONGO, REPUBLIC OF
ISLE OF MAN
PAPUA NEW GUINEA
TURKS AND CAICOS
UNITED ARAB EMIRATES
© 2009-2012 TaxRates.cc
2011 - 2012 Tax Rate Guide and Tax Help Website