Lebanon is rapidly becoming a jurisdiction interesting for international business, with great potential for tax planning and a stable banking system ensuring the confidentiality of customer data. The local government implements strategies for the promotion of investment and simplifies the process of starting and ruining a business. It especially supports startups. If you are among interested foreign investors who wish to start one’s operation in this jurisdiction, it is possible to arrange that in one of these forms.
Major Forms of Legal and Business Presence
If you intend to incorporate a company in Lebanon, these most widespread registration forms are worth your consideration:
- Limited Liability Company – a body corporate where members bear limited liability that doesn’t exceed the amount of funds contributed to such an entity. The number of members may be from 1 to 20. This company requires statutory capital in the amount of LBP 5 million. It is allowed to carry out any types of activities for it, except for banking, finance, insurance, and organized freight. The participatory shares in this company may not be freely offered to the public and are transferred subject to certain conditions.
- Joint-Stock Company – a body corporate where the liability of shareholders is also limited to the value of shares owned by them. But, such shares may be freely offered to the public and transferred without excessive restrictions. A minimum of 3 shareholders and statutory capital in the amount of LBP 30 million are required for this type of company. There are no restrictions concerning the allowed types of activities this entity is allowed to conduct.
- Offshore Company – an entity suitable for operating abroad and worldwide. For instance, it may be suitable for carrying out international transactions and signing agreements abroad as well as managing companies. It requires a minimum of 1 shareholder and statutory capital in the amount of LBP 30 million.
- General Partnership – a form of doing business that can be started and carried out by at least two persons who are jointly and severally liable for all debts and other obligations incurred during carrying out joint activities. This partnership has to be registered and there are no capital requirements for starting its operation.
- Limited Partnership – a form of doing business where can be also at least two persons who are either (i) general partners who manage this joint activity and are personally liable for its results, or (ii) limited (silent) partners who don’t participate in the management of such a partnership and potentially risk to lose their contributed funds only.
- Branch – a solution suitable for a foreign company that intends to carry out in Lebanon the same types of business activities as abroad. A foreign company shall appoint one or more managers and a local lawyer for arranging its proper work in Lebanon.
- Representative Office – this option is associated with restrictions for doing business in Lebanon and may carry out marketing and promotional activities only. One or more managers and a lawyer are required to be appointed by a parent company to run the work of a representative office in Lebanon.
Registration Requirements and Steps
Company incorporation in Lebanon generally covers these preliminary registration steps:
- Clarifying business objectives you intend to realize through the Lebanese enterprise (forming a description of the business area, partners, scheme of work, mutual settlements of the organization, etc.).
- Choosing and verifying a company’s name.
- Collecting details about its beneficiaries and top management.
- Arranging a registered business address for a future Lebanese company.
- Opening an account at a bank. This is made before starting a business, providing business partners recommendations upon a request and confirming a deposit is placed there. The bank issues a certificate, which is enclosed with the registration and statutory documents.
- Submission of a package to the Trade Register and a certificate to the Lebanese Bar Association that appoints a registrar.
- Payment of stamp duty at the Ministry of Finance.
- Obtaining a certificate and filing an application for work commencement at the Ministry of Finance.
- Obtaining a company’s tax number.
- Provision of a constituent package of documents to the bank to defrost the sum on the deposit.
- Obtaining licenses and permits that may be required for certain types of regulated activities.
The founders provide a documentation package in English or Arabic and draw up a power of attorney for a Lebanese lawyer who will handle their cases. If the documents are not in English or Arabic, they are translated, certified in the country of issue and the Lebanese consulate. The founders and shareholders make copies of travel passports, stitch them with a translation made by a sworn translator, and notarize it in a notary’s office. These are basic legal formalities founders should follow during the process of company registration in Lebanon. Prifinance specialists will be glad to consult you more precisely on how to start and complete the registration process right.
Legal and Regulatory Framework
The local legislation for the company incorporation and attracting of investments is simple and transparent. With the purpose to improve the local investment climate, Lebanon has signed 54 bilateral investment promotion agreements and various trade agreements. This country ensures its legal framework is compliant with recognized international standards and treats equally both local and foreign investors. The jurisdiction introduces a suitable platform for doing business both in the country and worldwide.
Precisely, in a French-speaking, fairly secular Arab country, there is a law on offshore enterprises and holdings, according to which non-resident companies can undertake a ten percent income tax rate and don’t pay VAT and a share of dividends to the budget. Foreign business is entitled to work outside Lebanon or in one of its special zones where conditions are created to attract foreign investment – there is no tax burden, export-import duties, stamp duty (only annual duty, in a fixed amount of about 670 US dollars). Only non-resident of the jurisdiction can own such a company. Offshore company in Lebanon:
- is exempt from capital gains taxes after the securities sale;
- can export currency and capital in the freeway;
- is exempt from taxation for 10 years when establishing a business with innovative products;
- may not hire local registered agents and involve directors and secretaries – legal entities;
- is not required to disclose information on beneficiaries.
It is also convenient to establish companies in Lebanon in the form of holdings. They are exempt from dividends and profits taxation. A foreign company in Lebanon may be engaged in licensed activities, having received permission from the financial regulator.
Tax System of Lebanon
Company formation in Lebanon may be beneficial for you in view of the following tax highlights associated with the jurisdiction:
- Corporate income tax rate – 17%
- Personal income tax rate – 25%
- Value-added tax rate – 11%
- Withholding tax rates (for non-residents) – (i) dividends – 10%, (ii) interests – 10%, (iii) royalties – 7.5%, (iv) interests on bank deposits may vary – from 7% to 10%
- Capital gains tax rates – (i) corporate – 15% (ii) personal – 15%
Advantages of the Jurisdiction
Company incorporation in Lebanon is potentially promising if the following advantages are taken into account:
- Lots of opportunities and support for running a business
- No restrictions for foreign investors in the commercial sphere
- Fast process of establishing a company
- Beneficial conditions for running offshore companies
- Openness to local and world markets
- Skilled workforce at moderate employment-related costs
How Prifinance Specialists May Help You
Prifinance experts will help you to pass the registration steps without time and effort loss. Our lawyers undertake organizational issues, representation in Lebanon and provide all consultations.
We offer prompt company registration and bank account opening services in Lebanon and worldwide. New registration and ready-made options. Provide extensive details for more precise consultations and suggestions that can be effective for your future project.