Libya flag Libya: Business Environment

Tax rates in Libya

Tax Rates

Consumption Taxes

Nature of the Tax
There is no VAT in Libya.
Tax Rate
Not applicable
Reduced Tax Rate
Not applicable
Other Consumption Taxes
Libya has no excise taxes, and customs duties were abolished in 2005, except for tobacco and tobacco products.
A service fee of 5% on the value is levied on most imports. Other dues and taxes on importation are estimated at 0.5%.

Return to top

Corporate Taxes

Company Tax
Flat rate of 20%
Tax Rate For Foreign Companies
Income generated in Libya from assets held in the country or work performed therein is subject to income tax in Libya. Branches are subject to the same taxes as subsidiaries.
A“deemed profit” basis of taxation may apply where a foreign entity is not registered at the time of contracting, it does not hold statutory books in Libya, or the books are not maintained in accordance with local regulations. The level of deemed profit applied to turnover varies according to the branch's type of business activity.
Qualifying companies under the Investment Law are exempt from the income tax for a period of five years (along with customs and stamp duties). Strategic infrastructure projects may be eligible for similar exemptions.
Capital Gains Taxation
Capital gains are treated as income and taxed at the standard rate of 20%.
For entities assessed on a deemed profit basis, capital gains should be added to the deemed taxable income.
Main Allowable Deductions and Tax Credits
Depreciation of tangible and intangible property can be deducted at rates varying from 2% (building without fixed machines) to 50% (software). Goodwill and start-up expenses can be amortised over five years on a straight-line basis. Bad debts that are legally recognised can be deductible.
Charitable contributions to institutions recognised by the state can be deductible up to 2% of the net income.
Net operating losses can be deducted for up to five years. However, losses incurred by upstream oil and gas companies may be carried forward for 10 years.
The Libyan Income Tax Law has no provision for the carryback of losses and the deduction of interest expenses, fines and taxes.
Other Corporate Taxes
Social security contributions payable by the employer amount to 10.5% of the gross salary (11.25% for foreign companies).
Contracts for the provision of services or supply are generally subject to stamp duty (between 1% and 3%). The duty on main contracts is 1% and on subcontracts is 0.1%. A duty of 0.5% is payable to the tax authorities.
Libya does not levy property or transfer taxes.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

  Libya Middle East & North Africa United States Germany
Number of Payments of Taxes per Year 19.0 20.8 10.6 9.0
Time Taken For Administrative Formalities (Hours) 889.0 204.0 175.0 218.0
Total Share of Taxes (% of Profit) 32.6 32.1 36.6 48.8

Source: Doing Business, Latest available data.

Return to top

Individual Taxes

Tax Rate

Personal Income Tax (wages and salaries) from 5 to 10%
Up to LYD 12,000 (yearly income) 5%
Over LYD 12,000 (yearly income) 10%
Income from commercial activities 15%
Income from handicrafts 10%
Jehad Tax on individuals (defense tax)
Up to LYD 50 (monthly income) 1%
Up to LYD 100 (monthly income) 2%
Above LYD 100 (monthly income) 3%
Additional tax on Palestinian nationals 7% of income
Allowable Deductions and Tax Credits
Social security contributions, direct expenses incurred in relation to the working activity and disciplinary fines are deductible.
A lump-sum deduction of LYD 1,800 per year applies to single taxpayers (goes up to LYD 2,400 for married couples with no children, married, widowed or divorced taxpayers with children are eligible for an additional deduction of LYD 300 per child).
Special Expatriate Tax Regime
Individuals are taxed on Libya-source income. There is no special regime for expatriates.

Return to top

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Libya has entered into a double taxation agreement with several countries, including Algeria, Egypt, India, Italy, Kuwait, Malta, Pakistan, Singapore, Sudan, Saudi Arabia, Tunisia and the UK.
Withholding Taxes
Libya does not levy withholding taxes, except on interest paid on bank deposits, which are subject to a 5% WHT.
Bilateral Agreement
The United Kingdom and Libya are bound by a double taxation treaty.

Return to top

Return to top

Any Comment About This Content? Report It to Us.

 

© Export Entreprises SA, All Rights Reserved.
Latest Update: November 2022

Return to top