Lebanon

Foreign ownership of real estate restrictions

The following restrictions apply to foreign ownership of real estate:

• Up to 3,000 square metres does not require Council of Ministers approval.
• Exploitation and normal lease right extending for a period of more than ten years cannot be attained without obtaining approval.
• Real estate owned by foreigners, for which approval has been obtained, cannot exceed, over all of the Lebanese territory, 3% of the total area of Lebanon. In each province, the total area owned should not exceed 3% of its area. With respect to Beirut, the total area owned should not exceed 10% of its area.
• The approval is nullified if not acted upon during a period of one year.
• When approval is granted, the building on the real estate should be constructed within a period of five years (renewable once by the Council of Ministers).

Choice of business entity

Lebanon’s commercial law provides for a range of business entities available to both local and foreign investors. These consist of the following:

• Sole proprietorships.
• General partnerships.
• Limited partnerships.
• Joint-stock companies (SAL).
• Limited liability companies (SARL).
• Holding companies.
• Offshore companies.
• Representative offices and branches of foreign companies.

Legal structures commonly used by foreigners in conducting business in Lebanon are SALs, SARLs, and branch offices.

Joint-stock companies (Société anonyme libanaise or SAL)

Lebanese joint-stock companies are permitted to engage in all kinds of business activity. Shareholders of a SAL have no liability beyond their actual capital subscriptions.

With a small number of exceptions (such as real estate companies and banks), there are no limits on the amount of capital that can be held by foreign investors.

The management of a SAL is entrusted to a board of directors with a minimum of three and a maximum of 12 members. The majority of board members must be Lebanese, but the chairman may be a foreign national.

Certain types of businesses, such as banks and insurance companies, are required to incorporate as joint-stock companies.

The minimum capital is LL 30 million, and the applicable CIT rate is 17%, in addition to a WHT on dividends of 10%.

Limited liability companies (Société à responsabilité limitée or SARL)

Members of a limited liability company are partners, and the company's capital is divided into parts rather than shares. Partners are liable only to the extent of their parts, and individual partners' claims on the company's capital are fixed in the partnership deed.

All partners may be foreigners, with the exception of companies seeking to engage in commercial representation.

Limited liability companies may not be active in certain sectors of the economy, such as in insurance, banking, fund management, or air transportation.

The transfer of parts in a limited liability company is subject to the consent of partners representing at least three-quarters of the capital. Existing partners enjoy priority in the purchase of parts offered for transfer.

A limited liability company is managed by one or several directors (managers) who may or may not be selected from among the partners.

The minimum capital is LL 5 million, and the applicable CIT rate is 17%, in addition to a WHT on dividends of 10%.

Intellectual property (IP)

The law in Lebanon does not contain a clear definition of author’s rights. It protects all products of the human intellect whether written, pictorial, sculptural, scriptural, or oral, regardless of its value, importance, destination, or form of expression.

The law provides patent protection for inventions and plant varieties and a sui generis protection for layout designs of integrated circuits. Furthermore, the law provides protection for undisclosed information. According to an assessment conducted by the World Intellectual Property Organization (WIPO) in July 2002, the Patent law is in complete conformity with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). It was also pointed out that the provisions of the Plant Varieties exceed the minimum requirements of the TRIPS Agreement.

The law does not explicitly protect notorious trademarks and geographical indications. However, those are provided protection via Lebanon’s membership to the Paris Convention. Moreover, geographical indications are provided protection under the provisions of the Law on Customs, the Law on Fraud Control, and the Criminal Law.

The copyright protection originally available to literary and artistic works is now extended to computer software, video films, and all kind of audio-visual works. The law provides stiffer penalties for offenders and better compensation to the persons whose rights have been infringed. The manner in which the copyright is breached has also been extended.

Exchange of information agreements

The Lebanese Parliament legislated a new Law no. 55, dated 27 October 2016, relating to the implementation and execution of exchange of information agreements used for tax purposes. Under Law no. 55, exchange can occur under several scenarios. Exchange of Information on Request (EIOR) or Automatic Exchange of Information (AEOI) based on the Common Reporting Standard (CRS) or in the context of signed DTTs. This legislation authorised the Finance Minister of Lebanon on behalf of the Lebanese government to sign the Multilateral Convention on Mutual Assistance in Tax Matters (MAC) and the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange on Financial Account Information related to the commitment to the implementation of CRS. Under the EIOR approach and upon receiving a request to share information, the Lebanese Competent Authority will assist the requesting country based on the agreement signed. It has the right to request additional information before sharing the information or reject the request in case it conflicts with the signed agreement. Failure to abide by this legislation will result in penalties ranging from LL 100 million to LL 200 million. These penalties are in addition to penalties set by the related regulatory authorities. It is worth noting that information exchanged under the AEOI and EIOR, each under the related agreement or this legislation, will be treated as confidential/secret as per Article no. 25 of the Tax Procedure Law.

On 12 May 2017, the MAC and the MCAA were officially signed by the Lebanese authorities. On 7 July 2017, the CRS guidance notes were issued in the Official Gazette under Decree No. 1022. On 25 October 2017, under Circular No. 3222/LMD/2017, the Insurance Control Commission (ICC) issued the CRS guidance notes to help the insurance companies implement the CRS requirements.

It’s worth noting that, recently, tax evasion has been defined under Article 57 of Budget Law 2019. Tax evasion is the deliberate action of a taxpayer to undeclare one's taxes and fees due to the government through the use of illegal methods. The law included a list of examples:

• Non-disclosure of revenues subject to tax.
• Performing activities subject to tax without declaring commencement of work (inception of activities filed with the relevant tax authority).
• Maintaining double books.
• Performing activities without booking them in the records or not properly booked.
• Booking false expenses.
• Recording false financial obligations.
• The use of forged documents.
• Destruction of documents before the defined statute of limitation.
• Non-submission of declaration and documents related to the turnover or related to the taxable basis.
• Unlawful tax rebate or deduction.
• Carrying out transactions and procedures that results in false duties and burdens towards others even if it is in a legal form.
• Non-declaration of the real value of imports and exports.
• Non-declaration of all employees.
• Non-issuance of invoices or similar documents in accordance with the law.
• Covering up beneficial owners as defined in the law.