In Lebanon, employers have a responsibility to contribute to the National Social Security Fund (NSSF) to provide benefits to their employees. The contributions are as follows:

Maternity and Sickness Benefit

Employers are required to contribute 8% of an employee's gross salary towards maternity and sickness benefits. There is a maximum monthly ceiling for these contributions.

Family Benefits

Family benefits require a contribution of 6% of an employee's gross salary, also with a maximum monthly ceiling.

End-of-Service Indemnity

Employers must contribute 8.5% of the employee's total annual earnings towards an end-of-service indemnity. There is no ceiling for this contribution.

Employers are also responsible for withholding Personal Income Tax (PIT) from employees' salaries. This is based on a progressive tax rate structure. The specific tax brackets and rates can be found on reliable resources.

Corporate Tax

Businesses in Lebanon are subject to a corporate tax rate. The latest rate can be found on reliable resources.

Regular Updates

Tax laws and regulations in Lebanon are subject to change. Employers should regularly consult reliable sources for updates.

Foreign Employees

Exemptions or special rules may affect how employer social security contributions are calculated for foreign employees.

Professional Guidance

Consulting with a tax advisor or accountant specializing in Lebanese tax law is recommended for a precise understanding of an employer's specific tax obligations.

In Lebanon, employee income is subject to a progressive tax system, meaning that the tax rate increases as earnings increase. The most recent tax brackets for wages and salaries, according to the 2022 Budget Law and maintained into 2024, are as follows:

• 2% on annual income between LBP 18 million and LBP 45 million
• 4% on annual income between LBP 45 million and LBP 90 million
• 7% on annual income between LBP 90 million and LBP 150 million
• 11% on annual income between LBP 150 million and LBP 225 million
• 15% on annual income between LBP 225 million and LBP 450 million
• 20% on annual income between LBP 450 million and LBP 675 million
• 25% on annual income exceeding LBP 675 million

Retirement pensions and similar benefits are taxed at half of the above rates.

Social Security Contributions

Employees in Lebanon are also subject to mandatory Social Security contributions. These contributions cover:

• Maternity and Sickness Benefit Scheme: 8% of gross pay
• Family Benefit Scheme: 6% of gross pay
• End-of-Service Indemnity: 8.5% of gross pay

The employee pays roughly 3.5% of their gross pay while the employer contributes the remaining 22.5%.

Personal Allowances

Lebanese tax law provides for personal allowances that reduce your taxable income. These allowances are adjusted often, so it's best to check with the Lebanese tax authorities for the most up-to-date figures.

Exemptions

Certain types of income may be exempt from taxation in Lebanon. These can include:

• Representation Allowances: A percentage of basic salary may be exempt, typically up to 10%.
• Transportation Allowances: Employers often provide transportation allowances, which can be up to a certain amount and are exempt from income tax and Social Security contributions. The current rate is adjusted periodically.

Important Notes

Tax laws and regulations in Lebanon change periodically. Always consult with the official tax authorities or a tax professional for the most accurate and up-to-date information.

The standard Value Added Tax (VAT) rate in Lebanon is currently 11%. This rate applies to most supplies of services, unless they are specifically zero-rated or exempt.

Zero-Rated Services

Zero-rated services are those that are taxable but taxed at a rate of 0%. This treatment is often applied to exports and related services to encourage international trade. Services that fall under this category include the export of services from Lebanon, services related to the export of goods such as freight costs and insurance, and international transportation of passengers or goods.

Exempt Services

Certain services are exempt from VAT in Lebanon. VAT is not charged on these services, and businesses providing these cannot reclaim input VAT on costs related to the service. Examples of VAT-exempt services in Lebanon include financial services like banking and insurance, educational services, healthcare services, and certain cultural and artistic services.

Place of Supply for Services

The place of supply rules determine whether a service is taxable in Lebanon. For Business-to-Business (B2B) transactions, the place of supply is considered where the customer is established, subject to potential exceptions such as services related to immovable property. For Business-to-Consumer (B2C) transactions, the place of supply is usually where the supplier is established.

Reverse Charge Mechanism

Lebanon applies a reverse charge mechanism. This means that if a Lebanese business receives services from a foreign supplier, where the supply would be taxable in Lebanon, the Lebanese business must self-assess and account for the VAT.

Input VAT Recovery

Businesses can generally recover input VAT, which is paid on purchases related to making taxable supplies. However, input VAT on exempt services is not recoverable. There may also be restrictions on VAT recovery for certain expenses, such as entertainment costs.

VAT Registration and Compliance

Businesses exceeding a specific annual turnover threshold must register for VAT. The current threshold is subject to change, so it's important to check the latest requirement with the Lebanese tax authorities. VAT-registered businesses must file periodic VAT returns and remit the VAT collected.

Investment Development Authority of Lebanon (IDAL) offers several tax incentives to attract investment into Lebanon. These incentives are available via the Package Deal Contract (PDC) for projects in certain priority sectors that meet specific criteria. The incentives include up to 100% exemption from Corporate Income Tax (CIT) for up to 10 years, up to 100% exemption from the tax on dividends related to the project for up to 10 years, up to 100% exemption from land registration fees, up to 50% reduction on work and residence permit fees, and up to 50% reduction on construction permit fees.

Holding Company Incentives

Lebanon provides tax advantages for holding companies, making it an attractive location for regional headquarters. These advantages include dividends received from foreign subsidiaries being generally exempt from CIT, interest income received by holding companies from abroad being exempt from tax in Lebanon, holding companies paying a 10% tax on interest received from loans granted for less than three years to companies operating in Lebanon (subject to conditions), and a 5% tax applying to management fees received by holding companies from companies operating in Lebanon (subject to conditions).

Industrial & Agricultural Sector Incentives

Industrial companies using operating profit to finance certain capital investments can benefit from a CIT exemption of up to 50% for up to four years, provided the exemption doesn't exceed the original investment. Projects in designated development zones may be eligible for up to 75% CIT exemption. Specific tax incentives and custom duty exemptions are available for the agricultural sector.

Offshore Companies

Offshore companies in Lebanon benefit from a complete exemption from corporate income tax. They pay a fixed annual tax of approximately LBP 1,000,000. Dividends distributed by offshore companies are exempt from withholding tax. Foreign employees receive a tax reduction on their salaries.