Libya
Tax Obligations Detailed
Discover employer and employee tax responsibilities in Libya
Employer tax responsibilities
Employers have several tax responsibilities, including withholding and contributing social security on behalf of all employees, both Libyan and expatriate. The total social security rate is 14.25% of the gross salary, with the employer responsible for 10.5% of this amount.
Social Solidarity Fund
Employers also have a responsibility to withhold and contribute 1% of an employee's gross monthly salary to the Social Solidarity Fund.
Jihad Tax
The Jihad Tax is a specific tax applicable to Palestinian nationals working in Libya. This is a progressive tax with rates of 1% on monthly income not exceeding 50 LYD, 2% on monthly income not exceeding 100 LYD, and 3% on monthly income exceeding 100 LYD.
Employee tax deductions
In Libya, there is currently no personal income tax for residents or expatriate employees. However, this is subject to change.
Social Security Contributions (INAS)
Employees are required to contribute 3.75% of their gross monthly salary to social security.
Social Solidarity Fund
There is also a requirement for employees to contribute 1% of their gross monthly salary to the Social Solidarity Fund.
Jihad Tax
This tax is specifically applicable to Palestinian nationals working in Libya. It's a progressive tax with the following rates:
- 1% on monthly income not exceeding 50 LYD
- 2% on monthly income not exceeding 100 LYD
- 3% on monthly income exceeding 100 LYD
VAT
Libya, at present, does not have a Value Added Tax (VAT) system implemented. Any updates regarding the implementation of VAT can be found on the PwC Worldwide Tax Summaries for Libya.
Tax incentives
Businesses may be eligible for an income tax exemption for a period of five years from when they start operations. This incentive is often available to companies engaged in priority sectors or projects. Additionally, companies in certain sectors may benefit from exemptions from customs duties on the import of equipment and raw materials necessary for their business operations.
Investment Law Incentives
The Investment Law (Law 9/2010) provides incentives for investments in specific sectors, like manufacturing, agriculture, tourism, and infrastructure. These incentives may include tax exemptions, customs duty exemptions, and other benefits.
Tourism Sector Incentives
Businesses operating in the tourism sector may also be eligible for particular incentives. These incentives are designed to encourage growth and investment in the tourism industry.
