Libya

No specific rules apply on income determination for the following categories:

• Interest income.
• Partnership income.
• Rent/royalties income.
• Foreign income.

The Income Tax Law allows entities to account on an accrual basis or on a cash basis.

Inventory valuation

The Commercial Code allows inventory to be valued at the lower of cost and net realisable value.

Capital gains

Any chargeable gains on the sale of capital assets are taxed as ordinary income. For entities assessed on a deemed profit basis, capital gains should be added to the deemed taxable income.

Dividend income

Historically, dividend income has not been subject to any additional taxes.

Inter-company dividends

Libyan taxation laws do not contain any special provisions regarding inter-company dividends.

Stock dividends

Stock dividends are not specifically dealt with in Libyan taxation laws. The current practice is for dividend distributions not to be taxed.