Libya: Business Environment

Accounting Rules

Tax Year: The fiscal year begins on January 1st and ends on December 31st of the same year. A different year may be used, subject to previous approval.
Accounting Standards: Most entities apply International Financial Reporting Standards (IFRS).
Accounting Regulation Bodies: The Dewan of Audit
Accounting Reports: Financial statements should include:
- Directors’ report
- Profit and loss account
- Balance Sheet
- Cash flow statement
- Control committee report
- Notes to the above.
Publication Requirements: All business entities in Libya are required by Libyan law to maintain, in Arabic, a ledger and journal. These must bear revenue stamps on each page before use and must be registered at the commercial court.
Professional Accountancy Bodies: List of accounting organizations
Certification and Auditing: Financial statements of foreign companies are required to be audited by qualified auditors annually.
You can contact an external auditor: Deloitte, Ernst & Young and PricewaterhouseCoopers.
Accounting News

Tax Rates

Consumption Taxes

Nature of the Tax: There is no VAT in Libya.
Tax Rate: Not applicable
Reduced Tax Rate: Not applicable
Other Consumption Taxes: Libya has no excise taxes, and customs duties were abolished in 2005, except for tobacco and tobacco products.
A service fee of 5% on the value is levied on most imports. Other dues and taxes on importation are estimated at 0.5%.

Corporate Taxes

Company Tax: Flat rate of 20%
Tax Rate For Foreign Companies: Income generated in Libya from assets held in the country or work performed therein is subject to income tax in Libya. Branches are subject to the same taxes as subsidiaries.
A“deemed profit” basis of taxation may apply where a foreign entity is not registered at the time of contracting, it does not hold statutory books in Libya, or the books are not maintained in accordance with local regulations. The level of deemed profit applied to turnover varies according to the branch's type of business activity.
Qualifying companies under the Investment Law are exempt from the income tax for a period of five years (along with customs and stamp duties). Strategic infrastructure projects may be eligible for similar exemptions.
Capital Gains Taxation: Capital gains are treated as income and taxed at the standard rate of 20%.
For entities assessed on a deemed profit basis, capital gains should be added to the deemed taxable income.
Main Allowable Deductions and Tax Credits: Depreciation of tangible and intangible property can be deducted at rates varying from 2% (building without fixed machines) to 50% (software). Goodwill and start-up expenses can be amortised over five years on a straight-line basis. Bad debts that are legally recognised can be deductible.
Charitable contributions to institutions recognised by the state can be deductible up to 2% of the net income.
Net operating losses can be deducted for up to five years. However, losses incurred by upstream oil and gas companies may be carried forward for 10 years.
The Libyan Income Tax Law has no provision for the carryback of losses and the deduction of interest expenses, fines and taxes.
Other Corporate Taxes: Social security contributions payable by the employer amount to 10.5% of the gross salary (11.25% for foreign companies).
Contracts for the provision of services or supply are generally subject to stamp duty (between 1% and 3%). The duty on main contracts is 1% and on subcontracts is 0.1%. A duty of 0.5% is payable to the tax authorities.
Libya does not levy property or transfer taxes.
Other Domestic Resources: Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

	Libya	Middle East & North Africa	United States	Germany
Number of Payments of Taxes per Year	19.0	20.8	10.6	9.0
Time Taken For Administrative Formalities (Hours)	889.0	204.0	175.0	218.0
Total Share of Taxes (% of Profit)	32.6	32.1	36.6	48.8

Source: Doing Business - Latest available data.

Individual Taxes

Tax Rate

Personal Income Tax (wages and salaries)	from 5 to 10%
Up to LYD 12,000 (yearly income)	5%
Over LYD 12,000 (yearly income)	10%
Income from commercial activities	15%
Income from handicrafts	10%
Jehad Tax on individuals (defense tax)
Up to LYD 50 (monthly income)	1%
Up to LYD 100 (monthly income)	2%
Above LYD 100 (monthly income)	3%
Additional tax on Palestinian nationals	7% of income

Allowable Deductions and Tax Credits: Social security contributions, direct expenses incurred in relation to the working activity and disciplinary fines are deductible.
A lump-sum deduction of LYD 1,800 per year applies to single taxpayers (goes up to LYD 2,400 for married couples with no children, married, widowed or divorced taxpayers with children are eligible for an additional deduction of LYD 300 per child).
Special Expatriate Tax Regime: Individuals are taxed on Libya-source income. There is no special regime for expatriates.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: Libya has entered into a double taxation agreement with several countries, including Algeria, Egypt, India, Italy, Kuwait, Malta, Pakistan, Singapore, Sudan, Saudi Arabia, Tunisia and the UK.
Withholding Taxes: Libya does not levy withholding taxes, except on interest paid on bank deposits, which are subject to a 5% WHT.

Sources of Fiscal Information

Tax Authorities: Overview of Libya's tax measures in response to Covid-19
Libyan Customs
Other Domestic Resources: Libyan Tax Department (social media ppage)

Intellectual Property

National Organisations: The Industrial Research Center (IRC).
Libya is a member of the WIPO Convention (convention instituting the World Intellectual Property Organisation). It is also a signatory to the Paris Convention on industrial property, as well as the Berne Convention on the protection of literary and artistic works.
Regional Organisations: The Secretariat of the People's Public Committee - National Board for Scientific Research
International Membership: Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property

National Regulation and International Agreements

Type of property and law	Validity	International Agreements Signed
Patent law n° 8 of 1959 on patents and on industrial designs and models. 1959	Protection is for a period of 15 years from the date of registration. It can be renewed once for a period of 5 years. Payment is made by annual increments.	Patent Cooperation Treaty (PCT)
Trademark Paris Convention on industrial property 1967	10 years from registration. There is a 3 months' wait after the date of registration during which anybody can oppose the request for protection. This can be renewed every 10 years.
Copyright Law number 7 of 1984 based on law number 9 of 1968 on copyright protection.	Protection is valid for the lifetime of the author plus a period of 50 years.	Berne convention For the Protection of Literary and Artistic Works

Legal Framework

Independence of Justice: As the country is currently experiencing a political transition, justice should undergo major transformations.
Equal Treatment of Nationals and Foreigners: As the country is currently experiencing a political transition, justice should undergo major transformations.
The Language of Justice: Arabic is the judicial language in the country.
Recourse to an Interpreter: Having an interpreter is possible.
Sources of the Law and Legal Similarities: The main source of the law is the constitution of 1969 (amended in March 1977). The country's legal system is based on the Italian civil law system and Islamic law. Libya has not accepted compulsory ICJ jurisdiction.

Standards

National Standards Organisations: LNCSM (in Arabic), Libyan National Centre for Standardization and Metrology
Integration in the International Standards Network: Libya is part of the Arab industrial development and mining organization, the African Electrotechnical Standardization Commission (AFSEC), the International Electrotechnical Commission (IEC), and the International Organization for Standardization (ISO).
Classification of Standards: The Libyan standards are the LNCSM.
Online Consultation of Standards: The standards certified by Libya can be found on the website of the Libyan National Centre for Standardization and Metrology (LNCSM).
Certification Organisations: LNCSM (in Arabic) Libyan National Centre for Standardization and Metrology

Business Practices

General Information: Libyaonline, Various documents required for commercial or practical transactions
Opening Hours and Days: The banks are open from Sunday to Wednesday from 8 am to 1 pm, then from 4 pm to 6.30 pm. On Thursday, banks are open from 7 am to 2 pm.

Public Holidays

Jamahiriya Day	2 March
British Evacuation Day	28 March
Army Day	9 August
National Day	1 September
Italian Evacuation Day	7 October
1911 Deportation Memorial Day	26 October
Independence Day	24 December

Periods When Companies Usually Close

Aïd al-Mawlid commemorates the birth of the Prophet Mohammed	Variable but lasts one day
Aïd al-Fitr corresponds to the end of the Ramadan fast period	Variable but lasts one day
The Anniversary of the Revolution is the most important civil festival in the country	1 September

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