Lebanon Tax Regime

Lebanon operates a schedular income tax system rather than a single unified income tax: the income tax law divides income into three chapters — profits from industrial, commercial and non-commercial professions (Chapter I), salaries, wages and pensions (Chapter II), and revenues from moveable capital including dividends and interest (Chapter III) — with each type of income taxed under its own chapter and rate structure. Corporate profits under the real-profit method are taxed at a flat 17% rate. The regime reflects a small, open, dollarised economy with a comparatively low headline corporate rate, a distinct deemed/lump-sum regime for defined categories of business, and no local or governorate income taxes. Administration is undertaken by the Ministry of Finance, and the system has been in a period of active modernisation, including a shift of certain deemed-profit taxpayers to the lump-sum method from 2026 and periodic upward adjustments to non-resident withholding rates.

1.1 Sources

Primary legislation includes the Lebanese Income Tax Law (as amended by successive Budget Laws), the Value Added Tax Law, the Code of Money and Credit, and Ministry of Finance decisions and notifications implementing annual Budget Law changes.

1.2 Recent developments

The 2024 Budget Law increased non-resident withholding tax rates effective 1 April 2024, to 8.5% on payments for services (from 7.5%) and 3.4% on payments for goods and other amounts (from 2.25%). Interest withholding tax, temporarily raised from 7% to 10% for the period 1 August 2019 to 31 July 2022, has reverted to being assessed under the standard framework. The Ministry of Finance issued Notification No. 4913 (24 December 2025) announcing that taxpayers currently taxed under the deemed-profit method — insurers, savings institutions, transport companies, oil refineries and public-work contractors — will transition to the lump-sum method effective 1 January 2026, with registration and filing through the Ministry's online portal and CIT returns due before February of the following year. The non-resident withholding tax on services and goods is now collected quarterly, within 15 days of each quarter-end, rather than annually alongside the income tax filing.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

2.1 Rates and residence

Lebanon taxes profits under the territoriality principle: a profit is generally considered Lebanese-source, and therefore taxable, where it results from an effort or activity exerted in Lebanon, regardless of the taxpayer's place of incorporation. Resident corporate entities — including corporations (SAL), limited liability companies (SARL), partnerships and branches of foreign companies — that use the mandatory real-profit method are taxed at a flat corporate income tax (CIT) rate of 17% on accounting profit after adjustments required by the tax rules. The real-profit method is mandatory for SAL and SARL companies, companies of individuals, branches of foreign companies, and any entity employing more than four employees or importing goods; smaller entities may elect the real-profit method voluntarily but cannot revert once elected.

Capital gains on the disposal of fixed assets are taxed separately at 15%. There is no separate minimum tax regime of the kind found in many OECD jurisdictions, though deemed-profit and lump-sum methods effectively impose a floor on tax collected from defined sectors regardless of accounting results.

2.2 Dividends and participation exemption

Dividend income falls within Chapter III of the income tax law (revenues from moveable capital), which also covers board-member profit appropriations and interest income including on bonds and treasury bills. Distributions by a Lebanese company are subject to dividend distribution withholding tax at 10%, generally withheld at source by the distributing company. Lebanon does not operate a formal participation exemption regime comparable to EU-style holding regimes; intercompany dividend flows are taxed under the Chapter III withholding framework rather than exempted, though treaty relief can reduce the rate for treaty-resident recipients. There is no separate capital gains exemption for disposals of shareholdings; such gains are assessed under the applicable chapter depending on the nature of the disposal.

2.3 Income determination and deductions

Taxable profit for real-profit taxpayers is computed from the statutory accounts, adjusted through a schedule reconciling accounting profit to taxable profit under Lebanese tax rules. Ordinary and necessary business expenses are deductible when properly substantiated and connected to the taxpayer's Lebanese activity; non-deductible items typically include unsubstantiated expenses, certain provisions not meeting statutory conditions, and taxes that are not creditable. Depreciation is computed on a straight-line basis over rates reflecting the useful life of the asset class (typically 2–5% for buildings and higher rates for machinery, vehicles and equipment), with tax depreciation schedules maintained alongside the accounting-to-tax reconciliation. Entities not using the real-profit method are instead assessed under the deemed-profit method (insurance and savings institutions, transport companies, oil refineries and public-work contractors, at rates of 5–15% of defined receipts depending on activity) or, from 1 January 2026, the lump-sum method, and under the separate lump-sum regime for small and medium businesses with annual turnover of LBP 400 million or less that do not maintain Lebanese accounting books, at rates from 0% up to 3% of turnover depending on sector and turnover band.

2.4 Interest limitation

Lebanon does not apply a codified EBITDA-based interest-limitation rule of the ATAD or OECD BEPS Action 4 type. Interest expense is deductible where it is incurred wholly for business purposes and properly evidenced, subject to the general anti-avoidance and arm's-length principles applied by the tax administration on review, and to withholding tax considerations on interest paid to related non-resident lenders (see Section 4). Thin-capitalisation-style scrutiny is applied administratively rather than through a statutory fixed-ratio rule, and taxpayers with material related-party financing should expect the deductibility of interest to be tested against commercial substantiation on audit.

2.5 Losses

Tax losses incurred by real-profit taxpayers may generally be carried forward to offset future taxable profits, subject to the taxpayer maintaining proper books and the loss being substantiated under the accounting-to-tax reconciliation; there is no indefinite statutory carryforward comparable to some OECD regimes, and taxpayers should confirm the applicable carryforward period and any percentage-offset restriction with the Ministry of Finance at the time of filing. There is no loss carryback in Lebanon. Losses of businesses taxed under the deemed-profit or lump-sum methods are not relevant, as those methods tax defined receipts rather than accounting profit.

2.6 Group taxation

Lebanon does not operate a group taxation or fiscal consolidation regime. Each Lebanese company, branch or partnership is assessed separately for CIT purposes, and there is no mechanism for offsetting the profits of one group company against the losses of another Lebanese affiliate. Groups operating multiple Lebanese entities must therefore plan financing, intercompany pricing and loss positions on a stand-alone entity basis, with any consolidation benefit obtainable only through corporate restructuring (such as merging loss-making and profit-making entities) rather than through an elective tax-grouping regime.

2.7 Controlled foreign companies

Lebanon does not have a controlled foreign company (CFC) regime. Because Lebanese tax is levied on a territorial basis by reference to activity exerted in Lebanon, undistributed profits of foreign subsidiaries are not attributed to Lebanese parent companies for Lebanese tax purposes. Foreign-source profits are generally brought into charge only when repatriated as dividends to a Lebanese recipient, at which point they are treated as Chapter III revenue from moveable capital in the hands of the Lebanese recipient, rather than being taxed on an accrual basis at the level of the foreign subsidiary.

2.8 Transfer pricing

Lebanon does not yet operate a comprehensive statutory transfer pricing documentation regime of the OECD three-tier (master file / local file / country-by-country report) type, and Lebanon is not a signatory to the OECD's multilateral BEPS instruments in the same manner as many advanced economies. Related-party transactions are nonetheless subject to review under general anti-avoidance and arm's-length principles applied by the Ministry of Finance, particularly for cross-border payments of interest, royalties, management fees and services that reduce the Lebanese tax base, and non-resident withholding tax obligations attach to many such payments (Section 4). Taxpayers with material related-party dealings should maintain contemporaneous documentation supporting pricing and commercial rationale in anticipation of audit.

2.9 Incentives

Investment incentives are principally available under Lebanon's investment promotion framework administered by the Investment Development Authority of Lebanon (IDAL), offering exemptions or reductions from income tax, built-property tax and customs duties for qualifying projects in priority sectors and zones, calibrated by project size, sector and location (with more generous packages for larger investments and for projects outside greater Beirut). Public-work contractors, insurers and other deemed-profit-method taxpayers benefit from a lower effective tax base (5–15% of defined receipts) than the 17% real-profit rate applied to net accounting profit. There is no research and development tax credit or patent box regime of the kind found in many OECD jurisdictions.

2.10 Pillar Two

Lebanon has not enacted Pillar Two legislation implementing the OECD/G20 15% global minimum tax (income inclusion rule, undertaxed profits rule or a qualified domestic minimum top-up tax). Large multinational groups with a Lebanese presence and consolidated revenues above the EUR 750 million threshold should nonetheless monitor exposure under the Pillar Two rules of the jurisdictions where their ultimate or intermediate parent entities are resident, since those rules can impose top-up tax abroad by reference to the low effective Lebanese tax rate on in-scope entities, notwithstanding the absence of a domestic minimum tax in Lebanon itself.

2.11 Branch income and reorganisations

A Lebanese branch of a foreign company is taxed in the same manner as a resident real-profit taxpayer, at 17% on profits attributable to activity exerted in Lebanon, and branches are required to use the real-profit method regardless of size. Branch profits do, however, bear a second charge. Under article 72 bis of the Income Tax Law (Decree-Law No. 144 of 12 June 1959, as amended), the profits of a foreign capital company operating in Lebanon are considered distributed in their entirety and are subject to the 10% proportional tax on distributions, assessed after deduction of the Title I profits tax charged on those profits and, where applicable, of the 10% reserve required of banks by article 133 of the Code of Money and Credit. The charge arises annually on that deemed distribution and does not depend on profits actually being remitted to the head office, so on the current 17% Title I rate the combined Lebanese burden on branch profits approaches 25.3%, being 17% plus 10% of the balance, against the 17% borne by a subsidiary that retains its earnings, before the effect of the article 133 reserve deduction. That materially favours the subsidiary form where earnings are to be reinvested in Lebanon. Corporate reorganisations — mergers, demergers and changes of legal form — are not governed by a dedicated reorganisation tax law comparable to EU member state regimes; such transactions are reviewed under general principles, and gains arising on asset transfers in the course of a reorganisation may be taxable unless specific administrative relief or a ruling is obtained, making pre-transaction engagement with the Ministry of Finance advisable for material restructurings.

3.1 Residence and rates

Individuals are taxed under the same schedular structure as corporate taxpayers, with employment income (salaries, wages and pensions) taxed under Chapter II at progressive rates, and business or professional income taxed under Chapter I. Payroll tax on employment income is progressive, running from 2% up to 25% across the statutory income bands, with the rate applying marginally to each bracket of monthly or annual salary. Residents are generally taxed on Lebanese-source income under the territoriality principle described in Section 2.1; there is no comprehensive worldwide-income assessment of the kind applied in many OECD personal tax systems, and foreign-source employment or business income not connected with activity in Lebanon generally falls outside the scope of Lebanese payroll and income tax.

3.2 Capital income and real estate

Dividend income received by individuals is subject to the 10% dividend distribution withholding tax described in Section 2.2, generally withheld at source and final. Interest income (including on bonds and treasury bills) falls under Chapter III and is subject to withholding tax, historically 7%, which was temporarily increased to 10% for the period from 1 August 2019 to 31 July 2022. Capital gains realised by individuals on the disposal of fixed assets are taxed at 15%, aligning with the corporate capital gains rate. Rental and real estate income is assessed separately under the built-property tax framework rather than as ordinary business income, with its own progressive rate schedule and deductions for maintenance and finance costs.

3.3 Social security and payroll

Employers and employees contribute to the National Social Security Fund (NSSF), covering end-of-service indemnity, sickness and maternity, and family allowances, with contribution rates set by reference to a capped salary base and split between employer and employee (the employer bearing the larger share, historically in the range of 21–23.5% of capped salary, with a modest employee contribution). Payroll tax under Chapter II is withheld monthly by the employer on a progressive basis (2% to 25%) and remitted to the tax administration, with an annual reconciliation where required. Lebanon's currency and banking-sector conditions in recent years have led many employers to structure part of compensation in US dollars, though tax withholding and reporting obligations continue to apply regardless of the currency of payment.

3.4 Inbound individuals

There is no comprehensive net wealth tax in Lebanon, and Lebanon does not levy inheritance tax in the form found in some jurisdictions, although estate-transfer duties apply on the transmission of Lebanese estates at rates that vary with the relationship between deceased and beneficiary and the value transferred, alongside a separate gift-registration duty on inter-vivos transfers of Lebanese real estate. There is no specific expatriate or inbound-assignee tax regime offering a reduced flat rate or exemption comparable to those found in some European or Gulf-adjacent jurisdictions; non-resident individuals working in Lebanon are generally subject to payroll tax on Lebanese-source employment income under the same Chapter II schedule as residents, subject to any applicable double tax treaty relief.

Lebanon applies withholding tax on dividend distributions (10%), on interest income (7%, temporarily 10% from August 2019 to July 2022), and on payments to non-residents for goods and services, most recently increased with effect from 1 April 2024 to 8.5% for services (from 7.5%) and 3.4% for goods and other payments (from 2.25%). Non-resident withholding tax on goods and services is remitted quarterly, within 15 days of each quarter-end, rather than annually. Lebanon has a moderate network of double tax treaties, generally reducing withholding on dividends, interest and royalties for treaty-resident recipients, though rates vary materially by treaty partner and relief is not automatic — claims typically require residence certification and, in practice, close engagement with the Ministry of Finance. There is no participation-exemption-style directive relief of the EU Parent-Subsidiary Directive type, since Lebanon is outside the EU/EEA framework.

Because non-resident withholding rates were increased mid-2024 and are collected quarterly, groups making recurring cross-border payments to Lebanon-based counterparties (or from Lebanese entities to foreign affiliates) should reconfirm the applicable rate and filing cadence for each payment type before year-end planning, since Lebanon's withholding framework has changed more frequently in recent years than in many comparator jurisdictions. Treaty relief claims should be supported by residence certificates and, where relevant, beneficial-ownership documentation, as the Ministry of Finance applies substance-based scrutiny to reduced-rate claims.

5.1 General anti-abuse and hybrids

Lebanese tax law does not contain a codified general anti-abuse rule (GAAR) or hybrid-mismatch regime comparable to the EU Anti-Tax-Avoidance Directive. The Ministry of Finance nonetheless applies substance-over-form principles administratively when reviewing related-party and cross-border arrangements that appear structured principally to reduce Lebanese withholding or income tax, particularly where payments are re-characterised between the goods, services and royalty categories that attract different non-resident withholding rates. There is no domestic hybrid-instrument or hybrid-entity neutralisation rule, so cross-border arrangements involving hybrid instruments should be assessed primarily by reference to the counterparty jurisdiction's own anti-hybrid rules.

5.2 Exit taxation and disclosure

Lebanon does not operate a codified exit tax on the migration of corporate residence or on the transfer of assets or functions out of Lebanon, reflecting the absence of an EU-style ATAD framework. There is no DAC6-style mandatory disclosure regime for cross-border tax arrangements, no public country-by-country reporting requirement, and no multilateral instrument-driven principal purpose test of the kind embedded in many modern treaty networks. Cross-border restructurings and asset transfers should nonetheless be documented carefully, as gains realised on disposals connected with a change of ownership or corporate form can be assessed under the ordinary capital gains and income tax rules described in Sections 2 and 3.

6.1 VAT

Value added tax is levied at a standard rate of 11%, applying to most supplies of goods and services in Lebanon and to imports, with a defined list of exemptions (including certain financial services, healthcare, education and basic foodstuffs) and zero-rating for exports. Registration is mandatory for businesses exceeding the statutory annual turnover threshold, with voluntary registration available below it. VAT returns are generally filed quarterly, with payment due alongside the return; input VAT incurred on taxable business activity is recoverable against output VAT, subject to standard restrictions on non-business and exempt-supply-related input tax. VAT compliance sits alongside, rather than replacing, the income tax and withholding tax obligations described in Sections 2 to 4.

6.2 Transaction, payroll and other taxes

Lebanon levies a built-property tax on rental and deemed rental value of real estate, at progressive rates after statutory deductions, assessed separately from business income tax. Registration duties apply to the transfer of real estate and to certain corporate transactions (such as capital increases and share transfers in some cases), typically calculated as a percentage of the transaction or property value. Stamp duty applies to a range of contracts, invoices and official documents at nominal fixed or ad valorem rates. Payroll tax under Chapter II (2% to 25%, Section 3.1) and NSSF contributions (Section 3.3) apply to employment costs. There is no net wealth tax, no VAT-style digital services tax, and excise duties apply to fuel, tobacco and alcohol at specific rates set by the Ministry of Finance and periodically adjusted for currency conditions.

7.1 Filing, assessment and audit

The Lebanese tax year is generally the calendar year, and CIT returns for real-profit taxpayers are filed with supporting financial statements and the accounting-to-tax reconciliation schedule; deemed-profit and, from 2026, lump-sum taxpayers file under the timelines set by the relevant Ministry of Finance notification, with CIT returns for lump-sum taxpayers due before February of the following year under Notification No. 4913. Non-resident withholding tax on goods and services is remitted quarterly within 15 days of quarter-end. The Ministry of Finance conducts risk-based audits of filed returns, with particular scrutiny applied to related-party transactions, non-resident payments, and the correct characterisation of income between Chapters I, II and III. There is no online real-time reporting regime of the kind found in some European VAT systems, though the Ministry has progressively expanded electronic filing and online registration, including for the new lump-sum method taxpayers from 2026.

7.2 Rulings, appeals and penalties

Taxpayers disputing an assessment may lodge an administrative objection with the Ministry of Finance and, if unresolved, escalate to the competent tax litigation courts under Lebanese administrative and judicial procedure. Advance rulings are available on a discretionary basis from the Ministry of Finance for significant or novel transactions, though a formal binding-ruling regime comparable to those in OECD jurisdictions is not codified. Late filing and late payment attract statutory interest and penalties calculated by reference to the amount and duration of the default, with more severe penalties for under-declaration identified on audit; voluntary disclosure ahead of an audit notice is generally viewed favourably in penalty mitigation, consistent with the administration's general practice.

Because several deadlines (notably for lump-sum taxpayers and non-resident withholding) have changed in the last two Budget Laws, taxpayers should confirm the current filing calendar with the Ministry of Finance or a local adviser each fiscal year rather than relying on prior-year timetables, given the pace of recent procedural change.

9.1 Entity choice

The SARL (limited liability company) is the most common vehicle for small and medium-sized investors, offering limited liability with comparatively light capital and governance requirements, while the SAL (joint-stock company) suits larger enterprises, regulated activities and businesses anticipating external capital raising. Both are subject to the mandatory real-profit method and the 17% CIT rate. Branches of foreign companies are permitted for many activities and are taxed identically to resident real-profit companies, and their profits are additionally considered distributed in full and charged the 10% distribution tax under article 72 bis as described in section 2.11, so the branch form does not avoid the second layer that a subsidiary's distributions bear. Partnerships and sole proprietorships remain common for smaller domestic businesses, particularly where turnover falls under the lump-sum or lower deemed-profit thresholds.

9.2 Structuring and incentives

Investors should evaluate IDAL-administered investment incentives (Section 2.9) early in project planning, since exemptions from income tax, built-property tax and customs duties are calibrated by sector, project size and location and are more readily available for projects outside greater Beirut. Groups with recurring cross-border payment flows should model the current non-resident withholding rates (8.5% services / 3.4% goods) into pricing, since these rates have moved upward in each of the last several Budget Laws. Because Lebanon has no group relief regime (Section 2.6) and no CFC regime (Section 2.7), holding-company and financing structures should be designed around stand-alone entity results and treaty-supported withholding relief rather than around consolidation or deferral mechanics common elsewhere.

9.3 Worked effective-rate illustration

A Lebanese SARL taxed under the real-profit method reports EBITDA of USD 1,000,000, depreciation of USD 100,000, and net interest expense of USD 50,000, all fully deductible on the facts (no interest-limitation rule applies in Lebanon, Section 2.4). Taxable profit is 1,000,000 − 100,000 − 50,000 = USD 850,000. CIT at 17% is 850,000 × 0.17 = USD 144,500. If the company also disposes of a fixed asset during the year for a gain of USD 60,000, capital gains tax at 15% adds 60,000 × 0.15 = USD 9,000, bringing total corporate-level tax to 144,500 + 9,000 = USD 153,500. If the remaining after-tax operating profit of 850,000 − 144,500 = USD 705,500 is fully distributed as a dividend, dividend distribution withholding tax of 10% applies: 705,500 × 0.10 = USD 70,550, leaving the shareholder USD 634,950 net of both corporate tax and dividend withholding — a combined effective burden on distributed operating profit of (144,500 + 70,550) / 850,000 = 25.3%.

9.4 Compliance

Real-profit taxpayers should expect to maintain statutory books reconciled to a formal accounting-to-tax schedule, file annual CIT returns with supporting financial statements, operate monthly Chapter II payroll withholding and NSSF contributions, remit quarterly non-resident withholding within 15 days of quarter-end, and file quarterly VAT returns where registered. Lump-sum method taxpayers transitioning from the deemed-profit method in 2026 should register through the Ministry of Finance's online portal ahead of the February filing deadline. Given the frequency of recent Budget Law changes to withholding rates and filing methods, groups operating in Lebanon should build an annual compliance-calendar review into their local finance function rather than treating prior-year procedures as static.