HOW TO DO BUSINESS IN LIBYA :

Under this page , we provide our clients with summary of  the important laws and regulations related to their business and help them start new business as follows :

Summary of New
Tax Laws ( No. 7& 8 of 2010 )
And Some Other Unchanged Laws Compared to Old Laws
(Note: All amounts are in Libyan Dinar)
 

Prepared By

Prof. Dr. Abdussalam Sultan

I - Income TAX:

On the 28th of January 2010 the General People Congress issued a new income tax law no. (7) Of the year 2010 which replaced the income tax law no. (11) of the year 2004 and has come into force as from 28/04/2010 , the date of its publishing in MUDAWANAT AL TASHRI-AT ( The Official Gazette ) no. 4 of the year 2010.

Hereunder is a summary of some important points of this law which have to be observed by all local and foreign tax-payers whether they are individuales or companies.

1 . Tax on Salaries and Wages:

A. New Tax Rates :

The following new salary tax rates have to be deducted from the gross salary less employee social insurance contribution, employee social solidarity fund contribution and income tax exemptions mentioned below:

No. Gross Salary Brackets Tax Rate
  Per Year Per Month  
1 12,000 1,000 5%
2 Over 12,000 Over 1,000 10%

B. Old Rates:

Old rates were as follows:

No. Gross Salary Brackets   Tax Rate
  Per Year Per Month  
1 4,800 400 8%
2 4,200 400 10%
4 Over 9,600 Over 800 15%

Tax exemptions deductible from gross salaries are as follows:

A. New Tax Exemptions:

Social Status Per Year Per Month
Single 1,800 150
Married man with no children 2,400 200
Married or widower or divorced with children 2,400 +300 per each child 200 + 25 per each child

B. Old Tax Exemptions

Social Status Per Year Per Month
Single 1200 100
Married man with no children 1800 150
Married or widower or divorced with children 2400 200

Notes:

For calculating the exemptions the year is considered to be 360 days divided to 12 equal months.

II. Tax on Companies – Corporate Tax :

A. New Tax Rates

Bracket Income Tax Rate Jehad Tax Rate
All net profit Flat rate of 20% 4%

B. Old Tax Rates were as follows :

No. Brackets Income Tax Rate Jehad Tax Rate
First 200,000 15% 4%
Following 300,000 20% 4%
Following 500,000 25% 4%
Following 500,000 30% 4%
Following 500,000 35% 4%
Following Over 2,000,000 40% 4%

Note : Responsibility of the Company's Manager for its Taxes:

According to the new tax law , all companies are required to submit to the TAX DEPARTMENT an annual tax declaration on their income on the relevant form certified by an external auditor ( certified accountant ) within no later than four months from the end of their fiscal year.

 

II - Jehad Tax Rates:
A: Jehad tax rates on Salaries and Wages:

This tax remained the same (unchanged).

The Jehad Tax Rate of 3% is deductible from gross salaries less Employee Social Insurance Contribution and Employee's Social Solidarity Fund.

B: Jehad tax rates on Companies:

This tax also remained the same (unchanged), The Jehad tax rate on companies is 4 % of the net profit.

III - Stamp Duty Law No. (8) Of the year 2010:

On the 28th of April 2010 the General People Congress issued also a new stamp duty law no. (8) of the year 2010 concerning amendment of tax rates of some items subject to stamp duty according to the tax table attached with the income tax law no. (12) of the year 2004 . Law no(8) referred to has come into force from 28/04/2010 , the date of its publishing in MUDAWANAT AL TASHRI-AT ( The Official Gazette ) no. 4 of the year 2010 referred to above.

The following important items and their tax rates extracted from the law may be of general interest:

No. Details Item no. Old rate New tax rate
1 Invoices ( purchase of cars and alike to be paid by the buyer ) 24 A 3% 2%
2 Invoices ( purchase of materials ) over 100 Libyan Dinar to be paid by the buyer 24 B 2% 1%
3 Rental Contracts to be paid by the tenant 27 1% 1%
4 Contracts for supplies , services ,Contracting , Public works ... etc. to be paid by the contractor 28 A 2% 1%
5 Sub- contracts to be paid by the sub-contractor 28 B 0.10% 0.10%
6 Opening of Letters of credit 33A 0.20% 0.20%
7 Guarantee , Insurance etc. of Value 35 0.50% 0.50%
8 Receipts 36 0.50% 0.50%
9 Amounts paid by public organizations financed from the general budget of the STATE to others to be paid by the receivers 43 0.50% 0.50%

1V. Social Security Contributions (INAS) - Laws No. 13 of 1981

Details Rate
Employee contribution 3.75 % of gross salary
Employer contribution 11.25 % of gross salary
Total Contribution 15 % of gross salary

The total social security contribution of employees and employer should be paid by the employer directly to the Pension Department.

V. Employee Social Solidarity Fund Contribution:
A rate of 1 % of the gross salary should be deducted from the gross salary of each employee and should be paid to the Social Solidarity Fund Department.


I hope that the above summary is useful to foreign as well as local companies and individuals operating in Libya.

For those who need more details they are advised to contact the author on his following address:
 

Dr. Abdussalam Sultan
Fellow of Arab Society of Certified Accountants (ASCPA)
CERTIFIED ACCOUNTANT & TAX CONSULTANT
P.O. Box 3685 Tripoli , Libya
Tel & Fax : 00 218 21 4440193
Mobile : 00 218 91 2138370
E-mail: sultan@sat.ly
www.sat.ly

 

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