In addition to the incentives granted by the Investment Development Authority of Lebanon, a series of incentives are available by the government for local and foreign investors to operate their project in Lebanon.
TRIPOLI ECONOMIC ZONE
The Tripoli Economic Zone was created through Law No 18 dated 5/9/2008 which grants local and foreign investors located in the Tripoli area with a series of exemptions including:
- Profits of companies established in the TSEZ are exempt from taxation provided that the capital or investment in fixed assets is above the equivalent of US$300,000 in Lebanese pounds, and that Lebanese individuals constitute at least half of employees in a firm.
- All inputs, machinery, and equipment needed for a project are exempt from VAT, customs duties, and excise taxes, provided the equipment and supplies stay within the boundaries of the TSEZ.
- All salaries of individuals employed in the TSEZ are exempt from income tax.
- Buildings of businesses inside the TSEZ are exempt from paying land and property taxes.
- The issuance of shares and bonds is exempt from taxation.
- Joint stock companies which objects are to manage investment project in the TSEZ are exempted from the obligation to have Lebanese individuals or entities as member of their board of directors.
The TSEZ Law provides some incentives concerning labor regulations:
- The TSEZ Authority has the responsibility for issuing Work Permits to foreigners. The latter need to obtain an authorization from the Authority before traveling to Lebanon. Once in the country, a foreigner submits an application for a Work Permit within 15 days. The TSEZ Authority supplies a copy of the file to the Ministry of Labor.
- Foreign investors wishing to establish a business in the TSEZ can acquire a Work Permit provided that the capital or investment in fixed assets is above the equivalent US$ 300,000, and that Lebanese individuals constitute at least half of employees.
- Investors visiting the TSEZ can obtain a visa for three months, which can be extended for up to a year, at the port of entry.
- Foreigners who obtain a Work Permit can get a Residency Permit for one to three years.
- Employers and employees in the TSEZ draft specific labor contracts, specifying the conditions under which a worker’s employment can be terminated. The TSEZ law also specifies that employers and employees in the zone do not pay contributions to the NSSF. However, employers have to offer their employees an equal or better scheme than the NSSF.
For more information on the zone incentives please click here.
INCENTIVES IN THE INDUSTRIAL SECTOR
Lebanese law (Decree Law number 144/159) provides tax exemptions on profits generated by industrial companies upon such companies meeting certain requirements.
Industrial companies can receive a 10 year income tax exemption if the entity is:
- Established in Lebanon after 1980
- Established in an area the government is seeking to develop. Such areas are defined in decrees. Decree number 11991/1998 have included Nabatyeh, Majdal Anjar, hasrayel, taanayel
- Produce products not produced in Lebanon before January 1, 1980
- Own more than 500,000,000 Lebanese pounds (approx.: 333,333 USD) in production assets
Industrial companies that want to benefit from such exemptions should send a written notice to the financial administration with all the documentation related to the value of its production assets and the nature of its production.
The exemptions will require a government decree based on a recommendation by the ministry of finance and industry and oil.
Moreover, according to the decree number 11991/1998 any industrial company already established in an area that is not considered as an area the government is seeking to develop can also benefit from a six years (6) income tax exemptions in case it relocates in one of the area mentioned above. And according to the decree law number 124/1983 the government might provide financial support by taking on its charge part of the interests related to any loan agreement provided by a local bank for the purpose of re-localization.
In addition to the following:
- 50% exemption on tariff duties at export
- 2% custom duties for machinery, equipment, spare parts and building material imported for the setting up of new industrial firms
- 0% custom duties for textiles, semi-manufactured goods and raw materials