Accounting and legal

Accounting and tax

For an active trading company, these accounting and tax fees are an estimate of Healy Consultants fees to efficiently and effectively discharge your annual company accounting, auditing and tax obligations. Following receipt of a set of draft accounting numbers from your company, Healy Consultants will more accurately advise accounting and tax fees. For a dormant company, Healy Consultants fees are only US$950.

    Lebanon legal company obligations
  1. The standard corporate tax rate in Lebanon is 15%. Tax returns must be filed annually before May the 31st;
  2. The standard VAT rate is 10%. Returns are to be filed on a quarterly basis. Incorrect filing will result in a fine of up to 20% of the difference between tax declared and tax due;
  3. Capital gains and dividends received from Lebanese companies and global subsidiaries are subject to a withholding tax of 10%;
  4. A Lebanese company paying dividends to both Lebanese and foreign companies suffers from a withholding tax of 10%, unless reduced via a tax treaty;
  5. A Lebanese company paying interest to both Lebanese and foreign entities suffers from a withholding tax of i) 5% if the receiving entity is a bank or ii) 10% otherwise, unless reduced via a tax treaty;
  6. Branches must also pay an additional “contribution tax” of 10% on all earnings, even not remitted to their foreign parent company;
  7. Employers must withhold and remit to the tax authorities payroll tax due on all employees’ wages and benefits. Payroll tax rates are progressive and range between 2% and 20% of an employee’s total remuneration;
  8. Employers are also required to pay Social Security contributions of 13% on their Lebanese employees’ gross salaries, with an annual cap fixed at US$24,000. Foreign employees with Social Security coverage in their home country are exempted from this requirement;
  9. All Lebanese PLCs, offshore companies and holding companies are required i) to go through an annual audit and ii) to appoint at least one internal auditor for that purpose. LLCs are exempted from audit requirements;
  10. Lebanon-based companies can carry forward their business losses for up to three years. Carry back of losses is however not allowed;
  11. Companies receiving earnings from rentals of Lebanese real estate are subject to a property tax with rates of up to 14%;
  12. Lebanon has signed double taxation treaties with 29 countries including France, Italy, Malaysia, Qatar and the United Arab Emirates to reduce withholding tax on payments abroad;
  13. Healy Consultants Compliance Department will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budget and sensitivity analysis;
  14. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

Legal and compliance

Lebanon is ranked among the best regulated countries for businesses in the Middle East. The regulation’s actual implementation is however another matter, due to a slow and corrupt administration. Further information follows:

Company regulations

  1. All Lebanese LLCs and PLCs must appoint a company attorney whom must be a Lebanese lawyer. A retainer fee fixed by the Beirut Bar Association (at least US$6,000 as of 2014) must also be paid to that individual;
  2. Before proceeding with incorporation, the company’s M&AA must be executed before a Notary Public in the district where the company’s head office will be located;
  3. To proceed with incorporation, the authorities also request i) the minutes book of the 1st meeting of the company’s Board and ii) a registered Lebanese address;
  4. Foreign shareholders willing to manage a LLC from Lebanon are required to obtain a work permit, with requirements including i) ownership of at least US$66,000 in the company’s capital and ii) 3 Lebanese citizens hired;
  5. The majority of the members of a PLC’s Directors board must be Lebanese citizens. All PLC directors must also be provided with at least 1 symbolic, non-voting “guarantee” share;
  6. Financial statements and accounts must be translated into Arabic;
  7. Companies are not allowed to grant shareholders more than one vote per share, unless they have held company shares for at least 2 years;
  8. Israeli citizens are not allowed to be i) shareholders ii) directors and iii) employees of a Lebanese company. Please also note that passports with Israeli visa stamps may also not be considered as a valid I.D. by Lebanese authorities.

Reporting regulations

  1. All companies subject to audit requirements must submit their audited annual financial statements to the tax authorities before June of the following year;
  2. Lebanese PLCs and LLCs must publish their annual financial accounts in Lebanese Pounds (LBP). This requirement is waived for Lebanese offshore and holding companies;
  3. Foreign shareholders willing to manage a LLC from Lebanon are required to obtain a work permit, with requirements including i) ownership of at least US$66,000 in the company’s capital and ii) 3 Lebanese citizens hired;
  4. All companies are required to maintain and disclose, upon the authorities’ request, the following documents: i) a general daybook ii) inventory and liabilities books iii) a creditors’ list and iv) a payment book. These documents must also be kept for at least 10 years.

Staff regulations

  1. All written employment contracts must be translated in Arabic, for both expatriate and local staff;
  2. The probation period cannot exceed 3 months for all employees;
  3. The standard working time is i) 8 hours per day and ii) 40 hours per week. An employer can request his employee to do overtime work for up to 8 hours per week but must compensate him by an extra 50% rate of pay;
  4. All employees must be i) paid at least US$470 per month and provided with ii) 15 days of paid annual leave and iii) 2 public holidays on May the 1st (Labor Day) and November the 22nd (Independence Day);
  5. An employer must i) register all his employees with Social Security and ii) pay Social Security contributions representing 13% of their gross salaries. Employees are required to pay an additional 2% contribution;
  6. All dismissed employees are entitled to i) at least 1 month of notice or equivalent compensation and ii) up to 3 additional months for the employees with the most seniority;
  7. An employer may dismiss an employee for misconduct without notice nor compensation, if he has previously i) provided the employee with 3 written warnings or ii) notified the Social Affairs Department of serious misconduct within 3 days of the act;
  8. All companies with more than 15 employees must i) put in writing their rules regarding working conditions and ii) submit them for approval to the Ministry of Labor.

Collective bargaining and labor unions regulations

  1. Employers seldom have to abide by collective agreements, as it is required only if i) 60% of employees have agreed to design an union delegate and ii) the agreement has been agreed upon by 2/3 of unionized employees.

Trade regulations

  1. All companies operating in Lebanon are forbidden to buy or sell Israeli products. Our Clients must be aware that this ban is enforced stringently in Lebanon and that noncompliance will likely lead to prosecution by the authorities;
  2. Only companies with sales over US$100,000 are required to obtain a VAT number. However, Healy Consultants recommends all our Clients to register, as unregistered businesses cannot claim for input VAT refunds.

Contact us

For additional information on our accounting and legal services in Lebanon, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Karen Lee, directly:
client relationship officer - Karen
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