Lebanon is a country with a market economy, in which government intervention has been reduced to almost zero. The country’s economy is highly dollarized, with no restrictions on capital flow. At the same time, the instability and unreliability of the economies of the rest of the region’s states can spread to Lebanon, where today the amount of external debt is 1.5 times greater than the volume of national wealth and is the cause of serious imbalances in the trade balance. Residents of Lebanese cities usually run family shops and live off-trade. In general, the service sector provides almost 70% of GDP. Despite the fertility of the local soil and the availability of water resources, agriculture employs only 12% of the population. Lebanese grow cereals, grapes, olives, fruits and vegetables, sugar beets, and tobacco.
How to open a company in Lebanon
Lebanon is rapidly becoming an interesting jurisdiction for international business with great potential for tax planning and a stable banking system that ensures the confidentiality of client data. In a French-speaking, a rather secular Arab country, there is a law on offshore enterprises and holdings, according to which non-resident firms can take advantage of a 10 percent income tax rate and not pay VAT and a share of dividends to the budget.
The foreign business has the right to operate outside Lebanon or in one of its special zones, where conditions have been created to attract foreign investment – there is no tax burden, export-import duties, or stamp duty (only annual, in a fixed amount of about 670 US dollars). Only a non-resident of the jurisdiction can own such a company. Offshore company in Lebanon:
- exempt from taxes on capital gains after the sale of securities;
- can freely export currency and capital;
- exempt from taxation for 10 years based on a case with innovative products;
- may not hire local registered agents and employ corporate directors and secretaries;
- is not required to disclose information about the beneficiaries.
It is convenient to open companies in Lebanon and the form of holdings. They are exempt from the taxation of dividends and profits. In general, joint-stock companies (including offshore and holding companies), closed enterprises and limited partnerships, foreign representations, and branches are allowed in the country. All of them, upon registration, submit documents to the Trade Register, and offshore businesses also to a special register. A foreign company in Lebanon can engage in licensed activities by obtaining a permit from a financial regulator.
Founders provide a documentation package in English or Arabic and issue a power of attorney for a Lebanese lawyer who will handle their cases. Founders and shareholders make copies of passports, stitch them together with a translation made by a sworn translator, and certify them at a notary office. Registration documents include:
- information about the name of the company, its beneficiaries, and top management;
- notarized copies of the share certificate, power of attorney for corporate directors – if any;
- samples of signatures of owners;
- copies of the minutes of the meeting, the charter of the legal entity;
- certificate of the founders of the company;
- description of the business area, partners, work scheme, organization’s mutual settlements – with the signature of the agent.
If the documents are not in English or Arabic, they are translated and certified by the issuing country and the Lebanese consulate. Before opening a business, they draw up a bank account, provide recommendations from business partners upon request, and place a deposit there. A capital of about 20 thousand US dollars is enough for him. The bank issues a certificate that is attached to the documents.
Direct company registration in Lebanon includes:
- submission of the package to the Trade Register and the certificate to the Lebanese Bar Association, which appoints the registrar;
- payment of stamp duty at the Ministry of Finance;
- obtaining a certificate and applying to start work with the Ministry of Finance;
- obtaining a company tax number;
- provision of a constituent package to the bank for defrosting the sum on the deposit.