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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.
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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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