Lebanon

WHT on interest

The income, revenues, and interest earned from accounts opened at Lebanese banks and from treasury bonds are subject to a 7% WHT that is non-refundable and cannot be carried forward. The interest rate is increased from 7% to 10% for three years as of the date Law no. 144 (Budget Law for 2019) was published (i.e. 31 July 2019), after which the 7% rate is applied again.

WHT on dividends

Tax is withheld from dividends paid to resident and non-resident shareholders/partners at a rate of 10%.

Movable capital WHT

A 10% WHT is levied on income derived from movable capital generated in Lebanon. Taxable income is comprised of the following:

• Distributed dividends, interest, and income from shares.
• Directors’ and shareholders’ fees.
• Distribution of reserves or profits.
• Interest from loans to corporations.

Moreover, the MoF issued Decisions no. 322 and 323 dated 15 May 2023 related to tax on foreign movable capital income and the tax treatment of gains on disposal of shares or parts in joint stock and limited liability companies respectively.

Non-resident WHT

Revenues earned by non-residents in Lebanon are subject to an effective WHT of 2.25% on revenue from the sale of materials and equipment, and 7.5% on the revenue in the case of sale of services.

As per the 2022 Budget Law the deadline for the declaration of the non-resident tax to be due on a quarterly basis within 15 days from the end of each quarter instead of the annual submission done along with the income tax filing.

The 2024 Budget Law specifies that non-resident tax should be settled in the same currency as the payment made to the non-resident party. In addition, the Law amended the withholding tax rates to be 3.4% on goods and 8.5% on services. This amendment becomes effective starting Q2-FY24.

Petroleum rights WHT

New decisions have been issued related to the tax petroleum law.

Decision No. 2043/1, dated 31 December 2018 (which relates to the application of Section 2, Article 10 of Law No. 57 dated 5 October 2017), states that companies that hold petroleum rights and operating petroleum rights, operating companies that do not hold rights, subcontractors, and secondary contracting parties must withhold the tax declared and remit it to the tax authorities on a quarterly basis. Taxpayers should obtain a registration number for every non-resident party they are dealing with through a specific form used for this purpose.

On the other hand, Decision No. 2044/1, dated 31 December 2018 (which relates to the application of Section 3 and 4, Article 13 of Law No. 57 dated 5 October 2017), refers to the tax obligations of employees working in Lebanon for a non-resident party and of employers contracting with non-residents to engage in petroleum activities or supply services and materials for such persons in Lebanon.

Double tax treaties (DTTs)

DTTs provide the following WHT benefits. Note that treaty rates do not override lower non-treaty rates. Treaty members may take advantage of the non-treaty rates.

Notes

1. Shall not exceed:
   • 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that directly holds at least 25% of the equity capital of the company paying the dividends.
   • 10% of the gross amount of the dividends in all other cases.
2. Dividends, interest, or royalties arising in a contracting state and paid to a resident of the other contracting state shall be taxable only in that other state.
3. Shall not exceed:
   • 5% of the gross amount of royalties paid for the use of, or the right to use, any industrial, commercial, or scientific equipment.
   • 10% of the gross amount of royalties paid for the use of or the right to use, any copyright of literary, artistic, or scientific work, including cinematograph films and films or tapes for radio or television broadcasting any software, patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial, or scientific experience.
4. Where the dividends are paid by a company that is:
   • A resident of Lebanon to a resident of Malta who is the beneficial owner thereof, the Lebanese tax so charged shall not exceed 5% of the gross amount of the dividends.
   • A resident of Malta to a resident of Lebanon who is the beneficial owner thereof, the Malta tax on the gross amount of the dividends shall not exceed that chargeable on the profits out of which the dividends are paid.
5. Shall not exceed:
   • 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that directly holds at least 10% of the equity capital of the company paying the dividends.
   • 10% of the gross amount of the dividends in all other cases.
6. Shall not exceed:
   • 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that directly holds at least 20% of the equity capital of the company paying the dividends.
   • 10% of the gross amount of the dividends in all other cases.
7. Shall not exceed:
   • 10% of the gross amount of royalties paid for the use of or the right to use, any copyright of literary, artistic, or scientific work, including cinematograph films and films or tapes for radio or television broadcasting.
   • 5% of the gross amount of royalties paid in other cases.
8. Shall not exceed:
   • 10% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that directly holds at least 15% of the equity capital of the company paying the dividends.
   • 15% of the gross amount of the dividends in all other cases.
9. Shall not exceed:
   • 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that directly holds at least 20% of the equity capital of the company paying the dividends.
   • 15% of the gross amount of the dividends in all other cases.
10. Shall not exceed:
    • 5% of the gross amount of the dividends if the beneficial owner is a company that has owned at least 10% of the capital of the company paying the dividends for a period of at least 12 months preceding the date the dividends were declared.
    • 15% of the gross amount of the dividends in all other cases.