Lump sum license fee
A new Decision no. 993/1, dated 21 November 2016, relating to imposing an annual lump sum license fee was introduced. The annual lump sum license fee for individual taxpayers assessed based on real profit is LBP 550,000, for individual taxpayers assessed based on deemed profits is LBP 250,000, and for taxpayers assessed on assumed profits is LBP 50,000. The above-mentioned license fees apply to local head offices, branches, outlets, and to any place in which the taxpayer carries on its activity or receives customers. For income tax purposes, the lump sum license fee is considered as a non-deductible expense.
Decision No. 260/1, dated 31 May 2019, states that, as of FY 2021, the annual lump sum fee will be applicable for all taxpayers subject to income tax as per the above.
Principal forms of doing business
Lebanon's commercial law provides for a range of business entities available to both local and foreign investors. These are:
- 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.
Joint ventures are commonly used for specific projects in the construction industry and other sectors, but are not recognised as separate corporate entities under local laws.
Although local commercial law is based on the French model, no mechanism exists for an individual or legal entity to incorporate himself or itself. One-shareholder companies are not allowed. The use of nominee share holdings, on the other hand, is commonly accepted practice. Unless Lebanese shares nominees are used to circumvent minimum local shareholding requirements (in real estate for example), the authorities do not normally object to their use.
With only a few exceptions in areas such as commercial representation, real estate, insurance, and banking, foreign investors are allowed to own 100% in a Lebanese company. Investors may acquire shares of existing local firms or establish their own companies in Lebanon. Every legal entity established in Lebanon will be treated as a Lebanese company.
Legal structures commonly used by foreigners in conducting business in Lebanon are SAL, SARL, and branch offices.