Libya Tax & Business Guide - Deloitte

Basic facts
Population 6m Inflation 2.7% (2006)*
Main languages Arabic GDP per head US$8,000 (2006)*
Currency Libyan dinar (LYD) GDP growth 6.1% (2006)*
GDP sources 2.3% agriculture, 75.3% industry, 22.4% services
*Economist Intelligence Unit estimates.
Political environment

Libya is a Jamahiriya (a state of the masses). Colonel Muammar Qadhafi was appointed supreme leader by the General People's CongressÛthe highest legislative bodyÛin March 1990.
Foreign trade and investment
Exports US$33.7bn (2006)* Imports US$12.3bn (2006)*
*Economist Intelligence Unit estimates.

Leading export markets: Italy, Germany and Spain.

Major exports: Oil, liquefied natural gas and various agricultural products.

Foreign investment is partially liberalised in limited sectors. Most foreign investment is in the hydrocarbons sector.
Business and financing
Business forms Joint stock company, limited liability company

Foreign entities intending to do business in Libya must form a Libyan joint stock company with a local Libyan entity. In certain sectors, approval may be granted by the General PeopleÌs Committee to establish a branch in Libya.
Labour environment
Unemployment rate Not recorded Minimum wage LYD 85/or Various

The government employs all but approximately 30% of the labour force, and sets most wages.

Foreign workers constitute about half of the 3.2m workforce, may reside in the country only for the duration of their work contracts, and must not send more than half of their earnings to their home countries.
Taxation
Corporate tax
Main rate 15Ò40%

Resident companies and branches of foreign companies are taxed only on their worldwide income. Corporate tax rates are at progressive as follows:

* First LYD 200,000 of taxable income 15%
* Next LYD 300,000 of taxable income 20%
* Next LYD 500,000 of taxable income 25%
* Next LYD 500,000 of taxable income 30%
* Next LYD 500,000 of taxable income 35%
* Amount exceeding LYD 2m 40%

Jihad tax is levied at an additional 4% on taxable income.
Individual tax
Progressive rates to 20% on salaries

Resident individuals are taxed on worldwide income; non-resident individuals are subject to Libyan tax only on Libyan-source income. The income of individuals is subject to varying tax rates depending on the category of income: agricultural activities (5%); commercial, industrial and handicraft activities (15Ò35%); professional activities (15Ò30%); employment income (8Ò15%); partnership income (10Ò20%); foreign income (20%); and income from deposits in banks and financial institutions (5%).
Capital gains
Taxed as business income

Capital gains are taxed as normal business income.
Indirect tax
VAT None

Libya does not impose value-added tax (VAT).
Tax administration and compliance
Tax year Companies: accounting/calendar year; Individuals: calendar year

Tax is assessed on income of the preceding year. Under Libyan tax law, a company is required to submit a tax declaration at the end of its financial year, which usually runs from January to December. A company can choose a different financial year if it has obtained approval from the Libyan tax authorities, and if so stated in its article and memorandum of association.
Additional tax information
Withholding taxes There are no withholding taxes in Libya.
Tax treaties Libya has concluded seven tax treaties.
Dividends There are no taxes on dividends in Libya.
Revenue protection There is no transfer-pricing or anti-haven (CFC) legislation.
Groups There is no provision for group taxation.
Incentives A free-trade zone has been set up, but is not yet operational; the relevant law is being drafted.
Other taxes Stamp duty, Customs duty.