Company registration in Libya is both difficult and expensive, due to the country’s complex regulatory environment. That said, the country is a major oil producer, a member of the Organisation of Petroleum Exporting Countries (OPEC), and is slowly opening its doors to foreign investment. As a result, some international entrepreneurs are now looking seriously at incorporating a Libya company.

Libya business setup summary

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• Advantages and disadvantages

  Advantages of Libya company registration

  

  1. The Libyan government has stated its intentions to reform its economy and join the World Trade Organisation (WTO), both likely to encourage investors interested in Libya company formation;
  2. Libya’s continued economic reforms are making it an attractive venue for foreign investment;
  3. The Foreign Investment Law of 1997 opens up various sectors previously closed to the private sector and foreign investment along with certain exemptions from customs duties and tax;
  4. With Libya company incorporation, the corporate tax rate is on a sliding scale and ranges from 15 – 40%. There is also a tax jihad of 4% that applies to annual taxable income;
  5. There is opportunity for 100% foreign equity ownership of companies licensed under the Foreign Investment Law. However, there are restrictions on what industry sectors the business can operate in and the minimum capital requirements can be very high;
  6. Libyan banks are increasingly open to supporting company formation in Libya. Foreign investors can now borrow up to 50% of their investment capital from local banks;
  7. It is easy to open global corporate bank accounts to support a Libyan company. Healy Consultants works with internationally recognised banks such as HSBC, Standard Chartered and Citibank to provide corporate bank account services.
  8. Libya has signed double tax agreements and social security reciprocal agreements with UK, India, Italy, Malta, Pakistan, Tunisia, France, and Eastern Europe;
  9. Libya corporate tax rate is 20% and there is no withholding tax other than on wages and salaries;
  10. Libya is accessible by land and sea, therefore businesses can utilize the most cost effective mode of transportation;
  11. The Libyan economy has extensive reserves of natural resources in natural gas, petroleum and gypsum. 82% of its exports are carried out by the oil sector which further contributes to 60% of the country’s GDP. Moreover, Libya proves to be an attractive destination for foreign investors willing to conduct business in the oil-sector since it has the reputation of holding the largest proven oil reserves in Africa producing 1.3 million barrels of oil per day.

  Disadvantages of Libya company registration

  1. Libya company incorporation is complex and time-consuming due to the country’s heavy bureaucracy. Libya dropped to the 170^th least corrupt country in the world, according to the 2018 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians;
  2. Under Libya company law, a company can have a maximum foreign shareholding of 65%. However, the board of directors may now be comprised of a foreign majority;
  3. All documentation related to registering a company in Libya is in Arabic. Investors planning a Libyan company should therefore factor the additional time and expense of translating documents into the overall engagement;
  4. The most lucrative markets in Libya – telecommunications, the financial sector, retail and wholesale operations – are closed to foreign investors planning Libya company formation. Libya was not included in the Heritage Foundation’s 2019 Index of Economic Freedom, due to the political turmoil in Libya;
  5. Available qualified local workers in Libya must replace foreign investor’s own technically qualified staff;
  6. A Libya resident company is required to submit its accounts to the Foreign Investment Board;
     
  7. Investors planning to start a business in Libya should note that Libyan business culture is heavily reliant on personal contacts;
  8. Libyan registered companies find difficulty in securing visas for foreign staff;
  9. Since 2014, Libya has been divided and ruled by several political and military factions who are based majorly in Tripoli and the East. As a result, the country faces widespread political clashes and threats from followers of the Islamic State which poses major functional challenges to the business incorporated in the country.

• Best uses for a Libyan company

  1. Mining and resources companies: Libya is rich in natural and mineral resources, a possible basis for many potential industrial, mining and agricultural. However, the limits on foreign investment holdings make it difficult for foreign businesses to enter these industries effectively.