Tax rates in Lebanon

Company Tax

17%

Tax Rate For Foreign Companies

Lebanon adopts a territorial tax system under which all income sourced in Lebanon is subject to tax in the country (while income derived from foreign sources is not subject to tax in Lebanon).
For resident companies, corporate income tax is computed at 17% based on the taxpayer’s accounting profits after adjustments resulting from tax rules (i.e. "real profit method"); while for non-resident companies a withholding tax applies at 2.25% on payments for goods and 7.5% on payments for services.
Branches in Lebanon are taxed in the same way as subsidiaries and branches of foreign entities are subject to an additional 10% remittance tax, regardless of whether profits actually are remitted.

Capital Gains Taxation

Capital gains on the sale of assets (tangible, intangible and financial) are taxed at a rate of 15%. The rate goes up to 20% for the assets of oil and gas companies.
Income from disposal of shares realised by a company whose main activity is the acquisition of investments is subject to 17% corporate income taxation.

Main Allowable Deductions and Tax Credits

Organisation and start-up expenses are amortised over a period of three to five years.
Interest on business loans is deductible (under certain conditions), while interest paid on the taxpayer’s capital is not. Bad debts are deductible if all means for collection of the debt did not succeed. Gifts given by the company in-kind to customers when the amount of each gift exceeds LBP 1 million/person/year and when the total value of gifts in kind exceeds 1% of the turnover are non-deductible.

Employees’ life insurance premiums are deductible as long as they are included in the employees’ benefits subject to payroll tax. Other deductible expenses include: rent of business premises or their depreciation if the premises are owned by the taxpayer; reserves for severance payments, pensions, and disability payments; advertising and publicity expenses (within certain limits); travel, telephone, and vehicle expenses; etc.
Charitable contributions are deductible when made to certain organisations.

Net operating losses can be carried forward up to three years (indefinitely for oil and gas companies). The carryback of losses is not permitted.
With the exception of the corporate income tax, taxes and duties incurred in the course of business are deductible.

Other Corporate Taxes

Employers are responsible for withholding and declaring payroll taxes on behalf of their employees. Payroll tax is levied at progressive rates of 2% to 25% (for the bracket in excess of LBP 225 million per year). Social security contributions are borne by the employer, as follows: 8% for the maternity and sickness benefit schemes (on a maximum of LBP 2.5 million per month), and 6% for the family benefit schemes (on a maximum of LBP 1.5 million per month), plus 8.5% of total annual earnings for the end of service indemnity (without any limit).

A built property tax is levied on rental income from Lebanese real property, at rates ranging between 4% and 14%. When transferring ownership of real estate, registration fees of approximately 6% are applicable.

A 0.4% stamp duty is levied on most contracts. Stamp duty is also levied on the capital subscription and capital increase. Fixed stamp duty of LBP 5 million is levied on oil and gas companies for exploration and production agreements.
An annual lump-sum license fee applies at the following rates: LBP 2 million for joint stock companies, LBP 750,000 for limited liability companies, LBP 550,000 for establishments assessed based on real profit, and LBP 50,000 for taxpayers assessed on assumed profits.

Other Domestic Resources

Ministry of Finance

Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Tax Rate

Allowable Deductions and Tax Credits

Individuals are entitled to family deductions from LBP 7.5 million to LBP 12.5 million, based on the taxpayer's family status.

Certain expenses are tax-deductible: payments to pension schemes; scholarships or payments granted by an employer on the birth of a child, on marriage, or death, provided they are granted to all employees and have been approved by the Ministry of Labour; end-of-service indemnities paid in accordance with the relevant laws and regulations; transportation allowances of LBP 8,000/day (LB 24,000/day for the private sector); annual schooling allowance of a maximum total amount of LBP 1.5 million and for a maximum of three children; reimbursements for expenses and representation allowances below 10% of the basic salaries of managerial staff.

Special Expatriate Tax Regime

Income tax in Lebanon is levied on all persons or entities, whether or not residing in Lebanon, on income or profits derived in Lebanon.
Revenues earned by non-residents in Lebanon are subject to a withholding tax at a rate of 2.25% of the revenue in the case of sale of materials and equipment and 7.5% in the case of sale of services.