Personal Income Taxation in Libya
As per the Libyan tax regime, residents, as well as foreign nationals are subject to Personal Income Tax on income that has been derived from employment in Libya.
Personal Income Tax Rates in Libya
The Personal Income Tax Rates are applied on the gross salary after deductions have been made in the form of social insurance contribution, as well as employee social security fund contribution. Personal exemptions are also included in this regard. The following Personal Income Tax Rates are applicable in Libya:
- For an annual income of 12000 LYD (Libyan Dinar) (Alternatively, a monthly income of 1000 LYD (Libyan Dinar): Personal Income Tax is levied at a rate of 5%.
- For an annual income higher than 12000 LYD (Libyan Dinar) (Alternatively, a monthly income of greater than 1000 LYD (Libyan Dinar): Personal Income Tax is levied at a rate of 10%.
Jihad Tax is also levied in Libya on the following rates:
- If the income is less than LYD (Libyan Dollar) 50 per month: Jihad Tax is levied at a rate of 1%.
- If the income is less than LYD (Libyan Dollar) 100 per month: Jihad Tax is levied at a rate of 2%.
- If the income is higher than LYD (Libyan Dollar) 100 per month: Jihad Tax is levied at a rate of 3%.
Additional PIT on Palestinian Nationals: Palestinian Nationals settled in Libya are further subject to an additional 7% tax that is imposed on income.
Corporate Income Taxation in Libya
Corporate Income is taxed in Libya on both, income sourced from within Libya, as well as income sourced outside Libya. This implies that Libya follows a worldwide income tax regime. Corporate Income Tax is levied in Libya for controlled corporate entities, as well as other foreign entities.
Corporate Income Tax Rate in Libya
Corporate Income Tax is levied in Libya at a rate of 20%. This rate is applied in a flat manner, regardless of the volume of the profit generated.
Companies are also liable to pay Jihad Tax that is levied at a rate of 4% across all corporate profits.
Local Income Taxes
Other than the Corporate Income Taxes mentioned above, there are no other taxes that are paid in Libya.
Other Taxation in Libya
- Value Added Taxation (VAT): There is no VAT applied in Libya.
- Custom Duties: A service fee at a rate of 5% is levied on most imported goods and services. However, there are certain exemptions to this particular service fee, primarily under Investment Law and within Oil Sector. For certain goods and services, the custom duty levy is also estimated at 0.5%.
- Excise Taxes: There are no excise taxes levied in Libya.
- Property Taxes: There are no property taxes levied in Libya.
- Stamp Duty: Stamp Duty is levied across various documents and transactions. The duty on main contracts is set at 1%, and on subcontracts, it is set at 0.1%.
- Payroll Taxes: Payroll Taxes are withheld from salaries. The employer is entrusted with the responsibility of collecting taxes and contributions for the state.
- Social Security Contributions: Social Security Contributions are payable for all individuals employed in Libya. They are levied on gross income at the following rates:
- Employee’s Contribution: For a foreign company resident in Libya, the contribution is equivalent to 3.75%. For Libyan entities, the contribution is also 3.75%.
- Employer’s Contribution: For a foreign company resident in Libya, the contribution is equivalent to 11.25%. For Libyan entities, the contribution is also 10.5%.
- Contribution from public treasury: For a foreign company resident in Libya, the contribution is equivalent to 0%. For Libyan entities, the contribution is also 0.75%.
- Total Contributions: For both, foreign companies as well as resident companies in Libya, the total contribution is equivalent to 15%.
Social Security is mainly withheld by the employer and is supposed to be paid on a monthly basis. It is supposed to be settled within 10 days of month end. In case of delayed payment, 5% is levied in the form of the amount due.