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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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This blog is Created by CA Anil Kumar Jain.