Income Tax in Libya
Personal Income Tax:
Libyan and foreign
nationals are only subject to tax on income derived from employment in Libya.
Personal income tax rates:
The personal income tax
(PIT) rates listed below are deducted from gross salary after deducting the
social insurance contribution, employee social solidarity fund contribution,
and personal exemptions (see the Deductions section).
Income Per
Year
|
Tax Rate
|
12000
|
5%
|
Above
12000
|
10%
|
Jehad Tax:
Jehad Tax is also
assessed on taxable income of individuals at the following rates:
· 1% if income does not exceed LYD 50 per
month.
· 2% if income does not exceed LYD 100 per
month.
· 3% on incomes over LYD 100 per month.
Jehad Tax was
established by Law 44 of 1970.
Additional tax on Palestinian
nationals:
Palestinian nationals
are subject to an additional 7% tax on income.
Taxable Income:
Taxable income is based
on income derived from employment in Libya but not on worldwide income.
Exempt
income
PIT shall not be applied
to the following:
· Amounts paid against accumulated
vacation, in the case of termination.
· End of service indemnity.
Deductions from Income:
Employment expenses:
The following expenses
are deductible against PIT:
· Taxpayer's social security contribution
or equivalent approved scheme.
· Direct expenses incurred by the taxpayer
in the performance of work.
· Any amount deducted from the taxpayer as
a disciplinary fine.
Personal exemptions:
Social Status
|
Per Year (LYD)
|
Per Month
(LYD)
|
Single
|
1,800
|
150
|
Married
man with no children
|
2,400
|
200
|
Married,
widower, or divorced with children
|
2,400
+ 300 per child
|
200
+ 25 per child
|
Corporate Income tax:
Libyan companies and
foreign branches are subject to tax on their worldwide income. A national
company or foreign branch is considered to be resident in Libya if it is
registered with the Ministry of Economy. A foreign company that does not
register but engages in activities in Libya is deemed to immediately have de
facto permanent establishment status in Libya and is subject to tax on its
income.
Tax rates:
Corporate income tax is
imposed at a flat rate of 20% of profits.
In addition, Jihad Tax
is payable at a rate of 4% of profits.
Oil companies are
subject to a composite rate of 65%, which includes income tax, Jihad Tax and
surtax.
Companies established
under Law 9/2010 (Investment Law) or Law 7/2003 (Tourism Law) are exempt from
corporate taxes for up to 5 years and a possible additional 3 years or 10
years, respectively, as well as from stamp duty and import duties.
Capital gains:
Capital gains are
included in ordinary income and are taxed at the regular corporate income tax
rate.
Administration:
The financial year is
the calendar year, but, on application, the Tax Department may allow a
different financial year.
An annual tax return
must be filed within one month after approval of the company or branch accounts
or four months after the year-end, whichever is earlier. Consequently, for
companies using the calendar year as their financial year, tax returns must be
filed by 30 April.
Tax is payable in four
quarterly installments beginning with the first quarterly due date after the
issuance of an assessment. The quarterly due dates are 10 March, 10 June, 10
September and 10 December.
Dividends:
Tax on dividends has
been reinstated, but regulations relating to rates and rules of collection have
not yet been issued.
Royalties:
Subject to the
provisions of double tax treaties, royalties are treated as trading income.
Foreign tax relief:
Libya does not grant
any relief for foreign taxes unless a double tax treaty applies.
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Note:
Information
placed here in above is only for general perception. This may not reflect the
latest status on law and may have changed in recent time. Please seek our
professional opinion before applying the provision. Thanks.
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