Libya is an African state that has a huge potential for growth and, among others, arranging different production processes. The agricultural and oil sectors are well-developed as well. Incorporating a new business in Tripoli or any other city of this state may appear to be a good idea in view of the next features of the state.
Why Set up a Company in Libya?
If you consider the options to create or buy a ready-made company in Libya, either of those can make available these must-have benefits:
- plenty of deposits of natural resources;
- low-cost manpower involvement;
- beneficial terms of taxation;
- signed double-tax treaties with multiple states.
Legal and Organizational Forms
If you wish to form a company in Libya or establish your official presence in any alternative way, these registration solutions are available:
- Joint venture – a business form that is allowed for non-resident investors and requires the involvement of a local partner who should own at least 51% of the company’s capital. The obligations of shareholders are narrowed in this case to the extent of their investments only. A minimal starting capital of LYD 1,000,000 is expected.
- Branch – this option is suitable for a non-resident company that is going to conduct in Libya the same types of commercial activities as abroad. A branch will help to arrange business relations with local contractors and customers but it will require LYD 250,000 to be invested at least. 100% liability over the debts and obligations of a branch will be reserved after its parent company.
Steps for Company Incorporation in Libya
Establishing a company in Libya generally requires these steps to pass:
- Selecting and verifying a trading name for a future enterprise.
- Collecting the details about promoters, final beneficiaries, managers, and a mother company (if any).
- Depositing at least 30% of the declared starting capital.
- Drafting and formalizing statutory documents and application forms for a perspective company.
- Contributing obligatory registration fees and submitting the set of registration documents for consideration to the local Ministry of Economy and Trade. Entering the information about a newly-formed company in the Commercial Registry.
- Registration of a new enterprise for tax and social security purposes.
- Opening corporate bank accounts.
- Applying for and obtaining a license or special permit that may be needed for a specific type of regulated activity.
Legal and Regulatory Aspects
The Libyan approach to business regulation is protectionist in nature. It requires a local partner to be present in the list of shareholders and his/her minimal share of 51%. The single exception when even one foreign businessman may incorporate and manage a company in Libya is when such an investor contributes more than LYD 5,000,000 to a local enterprise.
There are also certain bureaucratic formalities that have to be addressed properly. Getting a license or permit may be required in certain cases. Prifinance attorneys are prepared to guide you in the course of incorporating a new entity in Libya.
Taxation in Libya
Your suggested business goal of buying or starting a company in Libya should be assessed along with the next points of taxation:
- Profit tax (for businesses) – 24%
- Income tax (for individuals) – 13%
- Value-added tax – not applicable
- Withholding tax (for non-residents) – not applicable
- Capital gains tax – (1) for business forms – see profit tax (1) for individuals – see income tax.
How Prifinance Attorneys Can Assist You
If your supposed business objective is to create or buy a company in Libya, Prifinance attorneys are prepared to assess this option comprehensively taking into account the background of your case. Share the details and enjoy professional legal assistance gained through more than 11 000 projects completed worldwide.