Libya

Taxable income is determined after deducting all expenditure and costs incurred in the realisation of the gross income (for more details on the deemed profit basis of assessment on branches of foreign companies, see the Branch income section).

For any entity (not a foreign branch) seeking to be assessed on an add-back basis, it should ensure, in accordance with Stamp Duty Law, that the majority of its costs can be supported by tax-registered documents (i.e. declared payrolls and registered contracts and invoices).

Depreciation

Depreciation should be calculated in accordance with the Executive Regulations of the law.

Goodwill

Purchased goodwill can be amortised on a straight-line basis over five years.

Organisation and start-up expenditure

Organisational and start-up expenditure can be capitalised and amortised over five years on a straight-line basis.

Interest expenses

No specific rules apply for the deduction of interest expenses.

Bad debt

Bad debts are only recognised to the extent that they have been recognised as such legally.

Charitable contributions

Donations to charities recognised by the state are permitted at up to 2% of net income.

Fines and penalties

No specific rules apply for the deduction of fines and penalties.

Taxes

No specific rules apply for the deduction of taxes.

Net operating losses

Losses may be carried forward and deducted from future profits, for up to five years. The Income Tax Law has no provision for the carryback of losses.

Payments to foreign affiliates

No specific rules apply for the deduction of payments to foreign affiliates.