Lebanon

Tax is levied on all corporeal/natural and incorporeal/artificial persons, resident in Lebanon or outside, on all profits that they generate in Lebanon. The main premise for considering profits to have been realised in Lebanon is when such profits have occurred from an effort exerted in Lebanon, irrespective of the identity of the taxpayer or place of residency.

Tax is levied on profits generated by two categories of taxpayers: resident taxpayers and non-resident taxpayers.

Resident taxpayers

The Lebanese Parliament legislated a new Law no. 60, dated 3 November 2016, relating to the amendment of Law no. 44, Tax Residency in Lebanon, including that any company is considered tax resident in Lebanon if it has:

• been established according to the Lebanese laws
• been registered according to the Lebanese laws, or
• a place of business in Lebanon.

Non-resident taxpayers

Non-resident taxpayers can consist of persons residing in Lebanon and persons residing outside Lebanon. A corporeal person residing in Lebanon is subject to the non-resident WHT (see the Withholding taxes section for more information) if neither of the following two terms are satisfied:

• Practise a certain trade in a normal and repetitive manner in Lebanon, irrespective of whether or not they have a known registered place of business.
• Have a known registered place of business in Lebanon.

A person residing outside Lebanon is subject to the non-resident WHT on the amounts, revenues, profits, or proceeds obtained from Lebanon as a result of undertaking an activity in whole or in part on Lebanese territory or as a result of exploiting rights in Lebanon.

Permanent establishment (PE)

Based on the Lebanese income tax laws and regulations, every person, establishment, or company that satisfies either of the following two conditions (listed below), even if not resident in Lebanon, is considered, no matter the length of the period, to be resident in it for tax purposes (i.e. having a PE in Lebanon):

• Has an office or a fixed place of business in its name in Lebanon even when it is not undertaking its business activity in a normal and repetitive manner.
• Is practising a profession or business activity in a normal or repetitive manner even if it does not have a known registered place of business in Lebanon. 

Decree no. 3692, dated 12 July 2016, clarified the definition of a ’non-resident‘, which also provided additional insights into what would constitute a PE from a Lebanese perspective. The main criteria introduced was that ’provision of taxable services in a normal and repetitive manner’ through individuals in Lebanon will constitute a PE. The term ’normal and repetitive manner‘ indicates that the person provides taxable activities more than once during a 12-month period.

The Decree also clarified that the term ’place to practise the profession‘ means any location used by the taxpayer (owned, rented, or put at their disposal) for a period exceeding six months in any 12-month period for public or private works and for a period exceeding three months for the remaining activities.