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 3.4% on payments for goods and 8.5% on payments for services (increased from 2024).
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.
Offshore companies are subject to an annual lump-sum tax of LBP 50 million.

Capital Gains Taxation

According to local regulations, companies are allowed to reassess their fixed assets every five years. Any capital gains resulting from this reassessment, as well as profits from selling fixed assets, are subject to a 15% capital gains tax.
When a Lebanese corporate entity sells shares or stakes in both Lebanese and foreign companies, any capital gains realized are taxed at 15%, provided those financial assets are classified as non-current assets on the company’s balance sheet, excluding holding, offshore, or trading in financial investments.
For resident companies primarily involved in investment acquisition, income from selling shares is subject to a 17% Corporate Income Tax.
Non-resident companies are subject to a 10% movable capital tax on income from selling shares when those shares are not classified as financial non-current assets on the company’s balance sheet.

Main Allowable Deductions and Tax Credits

Organisation and start-up expenses are amortised over a period of three to five years. Moreover, start-up companies enjoy a five-year exemption from income tax on profits from their inception if at least 80% of their employees are Lebanese nationals.
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. Provisions for bad debts are deductible if a debtor has been declared bankrupt. 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 (extended to four years for taxable losses related to 2020, indefinitely for oil and gas companies). The carryback of losses is not permitted.
Payments to foreign affiliates are typically subject to withholding tax. According to guidance from the Ministry of Finance, recharges, including advertising, from the head office located abroad are deductible up to a specific limit. This limit is determined by the following formula: (Assets of the branch in Lebanon / Consolidated assets) x Central administrative expenses. However, there is a cap of 3% of the branch’s revenues applied to these deductions.
With the exception of the corporate income tax, taxes and duties incurred in the course of business are deductible.

Other Corporate Taxes

Lebanon mandates three social security schemes: (i) a family scheme requiring a 6% contribution from employee earnings up to LBP 12 million monthly; (ii) a medical scheme with an 11% contribution from earnings up to five times the minimum official wage, where the employee contributes 3%; and (iii) an end-of-service indemnity scheme with an 8.5% contribution from total earnings. Employers are responsible for covering these contributions.

A built property tax is levied on rental income from Lebanese real property, at rates ranging between 4% and 14%. The 2024 Budget Law introduced amendments to the net income brackets subject to built property tax, which now range from LL 1.2 billion to LL 6 billion starting from 2024.
When transferring ownership of real estate, registration fees of approximately 6% are applicable. A 5% transfer tax is imposed on the fair value of real estate transferred.

A 0.4% stamp duty is levied on most contracts. A fixed stamp duty ranging between LBP 1,000-2 million is applicable on documents in accordance with schedules appended to the stamp duty law. 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. The 2024 Budget Law raised the fixed stamp duty amount to LL100,000 for contracts lacking a specified amount, and LL20,000 for unpaid invoices.
Offshore companies are subject to an annual lump-sum tax of LBP 50 million, the same as for holding companies.

Other Domestic Resources

Ministry of Finance

Tax Rate

Allowable Deductions and Tax Credits

Effective January 1, 2024, adjustments to family deductions for tax considerations concerning either assumed or real profits of taxpayers will be implemented as follows: LBP 450,000,000 for individual taxpayers, LBP 225,000,000 for non-working spouses or husbands, and LBP 45,000,000 for each legitimate dependent child, with a maximum limit of five children.

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 250,000/day (LB 450,000/day for the private sector as of 2024); annual schooling allowance of a maximum total amount of LBP 6 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 3.4% of the revenue in the case of sale of materials and equipment and 8.5% in the case of sale of services.
Instead of being included in the annual income tax filing, nonresident tax is required to be paid on a quarterly basis, with payment due within 15 days following the end of each quarter.
Foreign staff salaries typically incur all contributions except those designated for the end-of-service indemnity fund. Nevertheless, foreign employees are ineligible for family allowance benefits and medical reimbursements.