Lebanon Tax Guide 2013

Transcription

1 Lebanon Tax Guide 2013

2 FOREWORD A country s tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed? Foreword Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. This handy reference guide provides clients and professional practitioners with comprehensive tax and business information for over 90 countries throughout the world. As you will appreciate, the production of the WWTG is a huge team effort and I would like to thank all tax experts within PFK member firms who gave up their time to contribute the vital information on their country s taxes that forms the heart of this publication. I hope that the combination of the WWTG and assistance from your local PKF member firm will provide you with the advice you need to make the right decisions for your international business. Richard Sackin Chairman, PKF International Tax Committee Eisner Amper LLP richard.sackin@eisneramper.com I

3 IMPORTANT DISCLAIMER Disclaimer This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms. II

4 PREFACE The (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of the world s most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current on 1 January 2013, while also noting imminent changes where necessary. On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country s personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. Preface In addition to the printed version of the WWTG, individual country taxation guides are available in PDF format which can be downloaded from the PKF website at PKF INTERNATIONAL LIMITED MAY 2013 PKF INTERNATIONAL LIMITED ALL RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION III

5 ABOUT PKF INTERNATIONAL LIMITED PKF International Limited (PKFI) administers the PKF network of legally independent member firms. There are around 300 member firms and correspondents in 440 locations in around 125 countries providing accounting and business advisory services. PKFI member firms employ around 2,270 partners and more than 22,000 staff. PKFI is the 11th largest global accountancy network and its member firms have $2.68 billion aggregate fee income (year end June 2012). The network is a member of the Forum of Firms, an organisation dedicated to consistent and high quality standards of financial reporting and auditing practices worldwide. Services provided by member firms include: Introduction Assurance & Advisory Insolvency Corporate & Personal Financial Planning/Wealth management Taxation Corporate Finance Forensic Accounting Management Consultancy Hotel Consultancy IT Consultancy PKF member firms are organised into five geographical regions covering Africa; Latin America; Asia Pacific; Europe, the Middle East & India (EMEI); and North America & the Caribbean. Each region elects representatives to the board of PKF International Limited which administers the network. While the member firms remain separate and independent, international tax, corporate finance, professional standards, audit, hotel consultancy and business development committees work together to improve quality standards, develop initiatives and share knowledge and best practice cross the network. Please visit for more information. IV

6 STRUCTURE OF COUNTRY DESCRIPTIONS A. TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX/VALUE ADDED TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES B. DETERMINATION OF TAXABLE INCOME CAPITAL ALLOWANCES DEPRECIATION STOCK/INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES Structure C. FOREIGN TAX RELIEF D. CORPORATE GROUPS E. RELATED PARTY TRANSACTIONS F. WITHHOLDING TAX G. EXCHANGE CONTROL H. PERSONAL TAX I. TREATY AND NON-TREATY WITHHOLDING TAX RATES V

7 INTERNATIONAL TIME ZONES Time Zones AT 12 NOON, GREENWICH MEAN TIME, THE STANDARD TIME ELSEWHERE IS: A Algeria pm Angola pm Argentina am Australia - Melbourne pm Sydney pm Adelaide pm Perth pm Austria pm B Bahamas am Bahrain pm Belgium pm Belize am Bermuda am Brazil am British Virgin Islands am Guernsey noon Guyana am H Hong Kong pm Hungary pm I India pm Indonesia pm Ireland noon Isle of Man noon Israel pm Italy pm J Jamaica am Japan pm Jordan pm C Canada - Toronto am Winnipeg am Calgary am Vancouver am Cayman Islands am Chile am China - Beijing pm Colombia am Cyprus pm Czech Republic pm D Denmark pm Dominican Republic am E Ecuador am Egypt pm El Salvador am Estonia pm F Fiji midnight Finland pm France pm G Gambia (The) noon Germany pm Ghana noon Greece pm Grenada am Guatemala am VI K Kenya pm L Latvia pm Lebanon pm Luxembourg pm M Malaysia pm Malta pm Mexico am Morocco noon N Namibia pm Netherlands (The) pm New Zealand midnight Nigeria pm Norway pm O Oman pm P Panama am Papua New Guinea pm Peru am Philippines pm Poland pm Portugal pm Q Qatar am R Romania pm

8 Russia - Moscow pm St Petersburg pm S Singapore pm Slovak Republic pm Slovenia pm South Africa pm Spain pm Sweden pm Switzerland pm T Taiwan pm Thailand pm Tunisia noon Turkey pm Turks and Caicos Islands am U Uganda pm Ukraine pm United Arab Emirates pm United Kingdom (GMT) 12 noon United States of America - New York City am Washington, D.C am Chicago am Houston am Denver am Los Angeles am San Francisco am Uruguay am Time Zones V Venezuela am Z Zimbabwe pm VII

9 Lebanon LEBANON Currency: Pound Dial Code To: 961 Dial Code Out: 00 (L ) Member Firm: City: Name: Contact Information: Beirut Elie Chartouni info@pkflb.com A. TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX 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, % on the income bracket between L 9,000,000 and 24,000,000 12% on the income bracket between L 24,000,000 and 54,000,000 16% on the income bracket between L 54,000,000 and 104,000,000 21% on the 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%. 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. SALES TAXES/VALUE ADDED TAX (VAT) VAT applies to imports and the supply of goods and services in Lebanon. The rate is 10% although there are many goods and services exempted from the tax. FRINGE BENEFITS TAX There is no fringe benefits tax in Lebanon. LOCAL TAXES There are no local taxes in Lebanon. OTHER TAXES STAMP DUTY 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. TAXATION ON TEMPORARY LABOUR Lump sum wages are subject to 3% tax, regardless of its amount and without any deductions. What is meant by lump sum wages of temporary labour is the amount paid to perform temporary quantitative work based on pieces or quantity. TAXATION OF PUBLIC CONTRACTORS All contractors awarded public works are taxed, regardless of their entities legal status, on a 10% deemed profit basis at a maximum tax rate of 15%. NSSF 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 per month out of which the employee pays 2% Termination indemnity: 8.50% of the employee s total monthly salary. 1

10 Lebanon B. 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. DEPRECIATION 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. DIVIDENDS 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 DEDUCTIONS Interest on business loans is normally deductible. LOSSES 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. INCENTIVES 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%. C. FOREIGN TAX RELIEF There are no unilateral measures for the avoidance of double taxation. D. CORPORATE GROUPS Corporate groups are not generally recognised in Lebanon. 2

11 Lebanon E. 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 an arm s length transaction. F. WITHHOLDING TAX Remuneration paid to non-residents for services rendered in Lebanon are subject to a withholding tax at a rate of 7.50%. This rate is reduced to 2.25% when the sums paid relate to business activities. G. EXCHANGE CONTROL There are no restrictions concerning the repatriation of profits, income and capital nor are there any restrictions on the convertibility of currency. Residents can freely import and export national banknotes. They may own, deal in, export and import gold. Residents may own foreign currencies and foreign securities, and may maintain bank balances abroad. Non-residents can freely import and export national banknotes. They may maintain foreign currency accounts with banks in Lebanon. H. PERSONAL TAX 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. Individual income tax rates on wages and salaries are as follows: Income (L ) 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 to 120,000,000 15% More than 120,000,001 20% Every traveller leaving Lebanon through airports or harbours is subject to a departure fee of L 50,000 for economy class and L 70,000 for business and first class. I. TREATY AND NON-TREATY WITHHOLDING TAX RATES In order to avoid double taxation of some income, treaties have been entered into with various countries to regulate bilateral relations. The Lebanese double taxation treaty network is one of the widest in the Middle East region with more than 30 treaties signed with different countries. Title Signed Algeria 26 March 2002 Armenia 16 September 1998 Bahrain 7 August 2003 Belarus 19 June 2001 Bulgaria 1 June 1999 Cuba 4 February 2001 Cyprus 18 February 2003 Czech Republic 28 August 1997 Egypt 17 March 1996 France 24 July

12 Lebanon Title Signed Gabon 20 February 2001 Iran 22 October 1998 Italy 22 November 2000 Jordan 31 October 2002 Kuwait 21 January 2001 Malaysia 20 January 2003 Malta 23 February 1999 Malta - Amending Protocol 16 April 2009 Morocco 20 October 2001 Pakistan 31 August 2005 Poland 26 July 1999 Qatar 23 November 2005 Romania 28 June 1995 Russia 7 April 1997 Senegal 19 October 2002 Sudan 9 March 2004 Sultanate of Oman 12 April 2001 Syria 12 January 1997 Tunisia 24 June 1998 Turkey 12 May 2004 UAE 17 May 1998 Ukraine 22 April 2002 Yemen 29 September

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