Taxation

Principal Taxes

The principal taxes in Libya are:-

  • Revenue Duties
  • Corporate Tax
  • Salaries and Wages Tax
  • Jehad Tax and
  • Withholding taxes

Taxation issues in Libya are important, particularly to the foreign investor.

Rules are not always interpreted consistently and practices are prone to change with little notice. Further, significant changes to the tax legislation are being considered by the government.

Local tax advice and assistance is therefore essential. For more information contact us

Revenue Duty
According to Law No 7/2010 any contract negotiated in Libya for anything other than a direct supply must be registered with the Tax Department within 60 days of signing the contract.

This amounts to a 1% Stamp Tax on the value of the contract plus 0.05% on the 1% Stamp Tax. All invoices must bear the tax department stamp to show that the registration duty has been paid.

Corporation Tax
Corporation tax is charged under the Law No 7 of (2010) previously Law 11 of (2004). This is done in two stages:

  • Preliminary assessment
  • Final assessment

Corporation tax set at flat rate 20% on all net profits. All companies are required to submit to the TAX DEPARTMENT an annual tax declaration on their income on the relevant form certified by an external auditor (certified Libyan accountant) within no later than four months from the end of their fiscal year.

Companies are assessed to tax in two stages, a preliminary assessment when the company’s accounts are submitted and a final assessment when the tax department examines the accounts submitted (usually within two years of the submission of the accounts)

The taxpayer can accept the Tax Department’s assessments or can object. The objection can be made to:-

  • An arbitration committee or
  • Court

Penalties for late payment
Tax not paid by due date becomes immediately due, together with all other taxes that may not yet be due for payment, and is subject to a penalty of 1% per month on the amount due plus collection charges.

Salaries and Wages Tax
Libyan Salaries and Wages tax applies to all salaries, wages, bonuses and benefits which arise from employment in Libya. Tax rates range from 5% to 10%.

Foreign nationals employed and paid in Libya can remit 50% of the net salary in foreign currency to his or her home country.

Foreign companies choosing to pay their foreign nationals overseas may do so but are required to account for these payments and to deduct the Libyan tax due and pay it to the Tax Department.

Jehad Tax
This tax is payable under Law 44 of 1970 and is levied on personal incomes at 3% and corporate profits at 4%.

Withholding Taxes
Government bodies withhold a stamp duty of 0.05 % from all payments made by them. Further 0.2 % is also payable on any official receipt including receipts for contract registration duties, corporation tax, personal tax etc.