2.
determining the company structure that meets investors needs
The choice of what kind of company to form depends on many
elements, such as kind of activity, number of partners, capital required,
taxation, projected turnover, etc. Then, a Contract of Association or
Articles of Incorporation must be drawn up.
2.1.
Partnership
The two categories of partnership:
General partnership (Societe en Nom Collectif- SNC)
Partnership in commendam (Societe en Commandite Simple - SCS).
Partnerships are
associations of two or more people. Partners may manage as well as own the
business. The main characteristic of such an entity is the intuitus persona,
i.e. the persona] involvement of each associate. There is no required
initial minimum capital but all partners are personally liable for the
company's obligations. The company name must include the names of some or
all of the partners and is usually followed by the words 'and Co.'. In
practice, a general partnership is commercial in nature, so it must be
registered with the Commercial Register. A partnership in commendam is a
limited partner- ship with two types of partners, General partners own and
manage the business and are liable for all its obligations. Limited - or
silent - partners are financial backers who take no management role. Their
liability is limited to their investment. The contract of association
usually defines the circumstances under which the partnership can be
terminated and what happens in case of death of one of the partners,
disputes, or a desire by one partner to sell out to one or more of the other
partners.
2.2.
Co-Partnership
A co-partnership is known only to the parties
concerned and, because it is secret, cannot be registered. An association
agreement sets down the partners' rights and obligations, as well as their
participation in profits and losses. Each party is responsible for their own
liabilities. Despite their secrecy, the agreements inherent in a Societe en
Participation are enforceable at law in cases of dispute.
2.3.
Corporation
The five categories of corporations are:
Joint Stock Company (Societe Anonyme Libanaise - SAL)
Limited liability company (Societe a Responsabilite Limitee - SARL)
Corporation in commendam (Societe en Commandite par action - SCPA)
Holding Company
Offshore Company
2.3.1.
Joint Stock Companies (SAL)
2.3.1.1.
characteristics
The main
characteristic of a joint stock company (Societe Anonyme Libanaise or SAL)
is the intuitus pecuniare, i.e. the financial involvement of each associate.
Partners are called shareholders and are legally liable only up to the
amount of their shares in the company, joint stock companies can issue
shares and bonds convertible to shares. No one with a criminal record (in
Lebanon or abroad) or who has been declared insolvent within the previous 10
years (unless rehabilitated) can participate in company activities. An SAL
has a minimum of three shareholders and capital of at least LI.30 million
(USD20,000), with one-fourth paid up at the time of registration. Capital
can consist of cash or in kind.
2.3.1.2.
registration
Every joint
stock company incorporated in Lebanon must have its registered office in the
country. Founders arc required to publish information regarding the setup of
the business in the Official Gazette, one daily newspaper, and one economic
publication. The share subscription form, as well as the share certificate,
posters, circular letters, and prospectus, must mention the notice and refer
to the issues of the journals where it was published. Before any call is
made to the public to buy shares, the founders are required to publish a
notice in the Official Gazette and two newspapers with their signature and
address, as well as the:
Company logo
Location of the head office and
any branches
Purpose of the business
Amount of capital
Nominal value of
the shares and the initial down payment
The value of the contributions
in kind
Policy on profits,
whether distributed or added to capital
Conditions of profit-sharing
The number of directors, their
statutory remunerations, and their powers.
2.3.1.3.
formation
If not already
designated in the Articles of Incorporation, the directors and auditors are
elected during the first general shareholders' meeting. A majority of hoard
members must he Lebanese citizens. They are chosen from those shareholders
who hold a 'guarantee share,' the exact size of which is stipulated in the
Articles. Though a director can hold more than the laid-down guar- antee
share, s/he must quit the hoard if the holding goes below the guarantee
level.
2.3.1.4.
management
The board of
directors, composed of at least three members and a maximum of 12, is
responsible for the company's operations. Members' compensation consists
either of an annual stipend or a percentage of net profits, or a
combination. The board elects one of its members to serve as chairman, who
is responsible for carrying out the board's resolutions. The chairman cannot
be the director of more than six Lebanese companies. If he is over 70, that
number is reduced to two. If the chairman is a foreign resident, he must
have a work permit.
Two auditors are
designated - one responsible to the general assembly and the other to the
Commercial Register. Depending on the conditions stated in the Articles, a
shareholder meeting must take place at least once a year. The number of
votes allotted to each member is equal to the number of shares owned.
Holders of nominative, or non-transferable, stock are granted double voting
rights after holding the shares for two years. Shareholders may appoint
proxies to attend meetings and vote on their behalf
The shareholders' ordinary meeting is convened shortly after
the end of each financial year to finalize accounts, approve management
actions, decide dividend distribution, and to re-appoint or designate new
administrators and/or auditors to replace those who are at the end of their
term.
2.3.1.5.
free transferability of shares
The interest of
the corporation's owners is divided into shares, and these shares may he
freely transferred: that is to say, another person may be fully substituted
in the place of the transfer or as the holder of shares in the corporation.
Shares are negotiable. In general, any shareholder may transfer his shares
without the consent of other shareholders. Shares are transferred by the
simplified means of commerce.
2.3.1.6.
No restriction on
activities
Lebanese
corporations may engage in all kinds of business activities, they may raise
capital by issuing shares in registered and bearer forms, bonds, and
convertible bonds. Shares' subscription can be open to the public and the
corporation may be listed at the stock exchange. All Lebanese corporations
are considered members of the Beirut Stock Exchange, even if the corporation
is not actually listed in the Beirut Stock Exchange.
2.3.1.7.
No limitation on
foreign participation
With a small
number of exceptions (such as real estate, insurance, media companies, and
banks), there are no limits on the amount of capital that can be held by
foreigners, 'the unlimited foreign participation principle is however
mitigated by requirements that majority of the hoard of directors is
Lebanese and each member of the board is holder of a limited number of
shares.
2.3.2.
Limited Liability Companies (Sarl)
2.3.2.1.
characteristics
A limited
liability company (Societe a Responsabilite Limitcc or SARL) combines traits
from both a partnership and a corporation. This type of hybrid company
consists of between three and 20 partners, except in the case of the
inheritance of shares when the number of partners may extend to a maximum of
30. If it exceeds that number, the company must register as a joint-stock
company (SAL) within two years or dissolve its operation. Because no shares
as such are issued, the partners own a fixed percentage of the company and
their personal liability for the company debt is strictly limited.
The name of the
company, followed by the phrase limited liability company' and the amount of
its capital are required to he placed on all printed matter, advertisements,
publications, and other documents issued by the company. A minimum capital
of LL5 million (USD 3,300) wholly paid at the time of registration is
required. A lawyer must be retained and an auditor appointed regardless of
the capital investment. Company results must be approved at an annual
meeting of the partners. Banking, insurance and air transport activities are
forbidden from registering as SARL companies.
2.3.2.2.
formation
The company is
formed when the partners' percentages are allocated, paid, and deposited in
the bank. The founders must state in the statutes that these conditions have
been met. A limited liability company is subject to the same publishing
regulations as a joint stock company.
2.3.2.3.
registration
The Articles of
Incorporation must be notarized or signed before the clerk of the Commercial
Register where it is filed.
2.3.2.4.
management
The
administration is entrusted to one or more managers, taken from the partners
or elsewhere and designated by the Articles or a rider to serve for a
specified period. Managers can lie dismissed by a genera] meeting decision
or by a court order. If there are no valid grounds for dismissal, managers
are entitled to damages. At the end of each year, managers provide a report
on the company's activities, including a full financial report. It is
presented to the partners within six months of the end of the fiscal year.
As well as approving the accounts at an ensuing general meeting, the
managers' own conduct of business is endorsed. Partners are informed of
company meetings by notices published in two local dailies or by registered
letters sent to them one month prior to the date of the meeting. Copies of
documents are made available at least 20 days prior to meetings, which are
held at the company's head office.
2.3.3.
Corporation in Commendam
2.3.3.1.
characteristics
A company in
commendam is a limited partnership company with no specific capital
requirements. The company's capital is divided into shares and the silent
partners are under the same legal obligations as a shareholder in a joint
stock company.
2.3.3.2.
formation
The first board of directors is appointed to a
one-year term. There must lie at least three supervisory commissioners, but
they cannot be capital partners. One of the commissioners must be a
chartered accountant designated by the
Commercial
Court.
2.3.3.3.
management
Administration of the corporation is the
responsibility of the partners, who are personally liable. Members of the
board are allowed to occupy administrative functions in the company and to
collect a salary set by the board. Laws governing the directors of joint
stock companies apply also to the managers of companies in commendam but
here directors have the specific title of Managing Partner.
2.3.4.
Holding Companies
2.3.4.1.
characteristics
Holding
companies are registered in the form of joint stock companies although the
word 'holding' must clearly appear in the company's name. A holding company
is limited to buying shares in existing Lebanese or foreign joint stock or
limited liability companies, or to holding intellectual property rights. It
may manage only those companies in which it owns shares. The company's
capital can be subscribed in a foreign currency. All accounts and balance
sheets are stated in the same currency as the capital. Holding companies
enjoy tax exemption on profits and dividend distribution.
Holding companies can also own patents, licenses,
trademarks, and other reserved rights, as well as the right to license them
to companies operating in
Lebanon and
abroad. They can grant loans to firms in which they own shares and guarantee
them to third parties. A holding company may also own real estate, provided
it is strictly for the needs of the company and in accordance with Lebanese
law. A holding company is not allowed to directly acquire more than 40% in
two companies operating in
Lebanon
in the same field of activity. This does not, however, apply to investments
outside I.ebanon.
2.3.4.2.
formation
These companies are structured like joint stock companies and must
abide by the same provisions (i.e. they are governed by directors and hold
annual shareholder meetings).
2.3.4.3.
registration
The registered
office mast he in Lebanon and house the company's accounts. The company is
required to list at the Commercial Register according to the rules of the
Code of Commerce. The company may limit itself to publishing- in the special
register for holding companies - the balance sheet of the fiscal year and
the names of directors and auditors.
2.3.4.4.
management
At least two
Lebanese citizens must sit on the board of directors. If the chairman is not
a Lebanese citizen and lives outside Lebanon, s/he does not need a work
permit. The corporate head office must lie in Lebanon but board meetings and
general meetings may be held abroad if company by-laws permit. The ordinary
annual general meeting (AGM), however, must take place in Lebanon within
five months of the end of the fiscal year. AGMs may be held twice a year if
so provisioned in the by-laws. The company also must appoint for a
three-year tenure at least one Lebanese senior auditor who lives in the
country. Unlike other joint stock companies, no second auditor is required.
2.3.5.
Offshore Companies
2.3.5.1.
characteristics
An offshore
company may have its headquarters in or out of Lebanon but by definition
operates outside the country. Bank accounts may be held in Lebanese liras or
any other currency. Offshore companies are structured as joint stock
companies. However, added to the documentation is a bank guarantee for LI.30
million (L'SD20,000), automatically renewable, as a security against payment
of annual taxes. Offshore companies, like holding companies, receive special
tax treatment due to their limited status.
2.3.5.2.
object
Contracts may be
negotiated and signed relating to operations outside Lebanon and to
merchandise located abroad or in Lebanese Customs-free areas. These
contracts are exempt from fiscal stamp duties. Offshore companies may use
Customs-free zones to store imported goods for re-export, rent office space,
and acquire real estate. They may also prepare studies and engage in
financial services for ventures beyond Lebanese borders.
2.3.5.3.
registration
Entry into the
Commercial Register according to the provisions of the Code of Commerce is
compulsory. If the main office is offshore, a record of the companies is
kept in a special registry at the Commercial Registry, along with all
information that joint stock companies are required to publish by law.
2.3.5.4.
MANAGEMENT
The chairman of
an offshore company does not need a work permit if he is not Lebanese.
However, the board must have at least two Lebanese directors and the company
must appoint for a three-year term at least one Lebanese auditor who resides
in the country.
2.4.
Taxation
2.4.1.
Personal Income Tax
The law differentiates between daily employment
and earnings from practicing a profession or trade. Salaries are taxed on a
sliding scale. The tax rate is as low as 2% and as high as 20%. gross income
is the sum total of salaries, allowances, annuities, bonuses, pension and
other benefits. Income tax is applied to net income, http://www.finance.gov.
lb/main/taxation/income_tax.htm
2.4.2.
Registered Companies/Corporations
2.4.2.1.
joint stock
AND
limited liability companies:
15% tax on business profit
7.5% tax on
profits received from the development or sale of real estate.
A withholding tax at a rate of 10% is levied on all income derived
from movable capital assets generated in
Lebanon.
This tax essentially concerns:
Distributed dividends, interest, and income on shares
Directors'
fees as well as amount payable to them from profits
Distribution
of reserve or profits in form of additional shares or under any form.
2.4.2.2.
holding
companies:
Holding
companies are exempt from paying:
Income tax on profits
Income tax on profit distribution.
They must
pay:
10% on the
interest on loans issued to companies operating in Lebanon, if the loan
maturity is less than three years
10% tax on capital gains received from
the sale of holding company shares or its participation in Lebanese
companies it has owned for less than two years
10% on amounts collected from renting
patents and on the reserved rights it possesses on a Lebanese company
Graduated tax on capital and reserves
2.4.2.3.
offshore
companies:
Offshore
companies are exempt from:
Tax on profits
Tax on profit distribution
Stamp duties on overseas business contracts signed in
Lebanon
30% of foreign employees' basic salary is exempt.
The
company is subject to:
LL1 million (around USD660) fixed annual tax
10% tax on profit received from the sale of fixed assets in
Lebanon
Two to 20% tax on the salaries of company employees working in
Lebanon.
2.4.3.
Value Added Tax:
The Value
Added Tax (VAT) is equal to a 10% flat rate.
3.
FOREIGN
COMPANIES
3.1.
Characteristics
Foreign companies may operate in
Lebanon either as a branch or as a representative office. A branch may
directly engage in industry, commerce, banking, etc., while a representative
office is a non-commercial and non-taxable entity that is allowed only to
market the product or service of its company. Both types must obtain a
license to operate from the Ministry of Economy and Trade.
3.2.
Required Documents
The concerned party
needs to submit to the Trade Department or Public Relations office at the
Ministry of Economy and Trade the following documents:
application
Subject: Setting
up a branch or representative office of a foreign company in Lebanon
Signed by
Branch manager or
Representative Office Manager or
Agent/Attorney
articles
OF association OF THE FOREIGN
COMPANY
Certified by: Commercial Register in
country of origin and
Lebanese Embassy in country of origin and
Lebanese
Ministry of Foreign Affairs
Translated into Arabic by: Sworn
Interpreter
Certified by:
Ministry of Justice
resolution
OF A board OF
directors OR
general assembly OR ANY
RELEVANT AUTHORITY
Subject: Setting
up a Branch or representative office of a foreign company in Lebanon
Certified
by: Lebanese Embassy in country of origin and
Lebanese
Ministry of Foreign Affairs
Translated into Arabic by: Sworn
Interpreter
Certified by:
Ministry of Justice
power of attorney
Certified
by: Notary public if it is effected in
Lebanon
or
Mother company if it is
effected abroad
3.3.
Completion Time
Studying the application by the Trade Department needs a maximum
period of seven days.
If the application fulfills the
required conditions and documents, the concerned party will have to pay the
registration fees in the Ministry of Finance, and return the blue copy of
the receipt to the Ministry of Economy and Trade.
The Trade Department will issue a
copy of the 'notice' within at maximum a ten-day period, which will be
published in the Official Gazette by the concerned party.
After paying fees for publication in
the Official Gazette, the concerned party will have to return the receipt to
the Trade Department, which will issue the original "notice" instantly.
3.4.
Costs
The flat fee for registration is: LL1,800,000 (App. USD1,200)
The cost of the publication in the Official
Gazette depends on the space needed for the 'notice' (around LI.5,000 per
line).
3.5.
Trade Register
After the
'notice' is granted by the Ministry of Economy and Trade, it should be
incorporated at the Trade Register in Beirut. The concerned party should
submit to the Trade Register the 'notice' and a certified translated copy of
the same documents submitted to the Ministry of Economy and Trade.
The time needed to accomplish the incorporation is three days.
The fee to be
paid in the Trade Register for the Mutual Magistrates' Fund is LL900,000
(App. USD600).
3.6.
Income Tax
15% on the net profit (for branch office only) if
the mother company is a corporation. A representative office is exempt from
income tax.
4.
INVESTMENT
GUARANTEES AND PROTECTIONS
4.1.
Investment
Promotion Agreements
Lebanon
has signed investment promotion agreements with the following countries:
1996: Romania,
Egypt, Ukraine, China
1997: Spain,
Syria, Armenia
1998: Germany,
Cuba
1999: Canada,
Greece, Tunisia, Italy, Iran, France, UAE, Morocco
2000: Chile,
Yemen
2001:
Switzerland, United Kingdom, Bulgaria, Russia, Kuwait, Sweden, Belarus,
Pakistan
2002: Cyprus,
Austria, Hungary, Gabon
4.2.
Constitution
With the private property guaranteed and
protected by the Lebanese Constitution, the risk of government
nationalization is practically non-existent.
Protection of industrial, commercial, intellectual, scientific,
and artistic property.
By law,
foreigners benefit from the same protection granted to nationals. They
benefit also from the protection of patents, industrial patterns, and
designs, trademarks, trade names, place of origin, labels of origin and
protection against unfair competition.
Registration
of patents: In order to obtain a patent certificate, an applicant must
submit the required documents to the Office of Protection of Industrial and
Commercial Property, affiliated to the Ministry of Economy and Trade.
The business
concern, falling under commercial property, including various tangible and
non-tangible assets, is subject to legal protection. The business concern is
protected by the possibility of filing a civil suit in compensation for
damages caused by unfair competition, and by a criminal suit for
infringement of patents or trademarks.
4.3.
Investment
Guarantees
4.3.1.
National Investments Guarantee Corporation (NIGC)
The National
Investment Guarantee Corporation was created to encourage new investments
made in
Lebanon by Lebanese or foreign commercial companies. The corporation,
which benefits from a government guarantee, covers war risks, civil strife,
riots, confiscation and expropriation, provided that an annual premium of
0.2% of the insured amount is paid.
4.3.2.
International Organizations for Guarantee of Investment
Most organizations
such as IAIGC (Arab Consortium), COLACL (Lrance), HLR MLS (Germany), RCDG (L'K), OPIC Export/Import (US) have resumed their
activities in
Lebanon. The Lebanese Government has also joined MIGA, the Multinational
Investment Guarantee Agency of the World Bank, which covers transfer,
expropriation, and war risks for any project established in
Lebanon.
4.3.3.
Guarantee of Bank Deposits
The National Institute for the Guarantee of Bank Deposits (NIGD) is
a semi-public company in whose capital the Government and banks operating in
Lebanon participate. Its
objective is to guarantee all deposits of registered banks in Lebanon
4.3.4.
Free Transfer of Capital
Transfer
of capital, interest, and dividends to/from Lebanon, is free of any
restrictions or controls.
5.
THE
LEBANESE JUDICIAL SYSTEM
The Lebanese judicial system is governed by the following:
The principle
of equality that grants the right to all Lebanese and foreign persons or
legal entities to go to court.
The principle
of two levels of jurisdiction (Court of First Instance and the Court of
Appeals). A supplementary recourse level before the Supreme Court is
possible in some cases.
The principle
of the separation of the legislative and executive authority enables judges
to freely carry out their duties.
6.
THE
LEBANESE
ARBITRATION CENTER
The
Lebanese
Arbitration Center was established in
May 8, 1995 in close affiliation with the Chamber f Trade, Industry and
Agriculture, whose by-laws and regulations are similar to those of the
international Chamber of Commerce in
Paris.
The Lebanese Arbitration Center relies on the Lebanese Procedural Code for
the regulation of internal and international arbitration. Lebanon has
ratified the New York Convention of 1958 relating to international
arbitration.
7.
SOCIAL
SECURITY CONTRIBUTION
Social Security Contributions are calculated as a percentage
of monthly salaries, including overtime, gifts, or fringe benefits. All
companies are required to register their salaries in the National Social
Security Fund within one month from the start of operations.
In general, all Lebanese employees and workers, regardless of
the nature of their employment, are subject to the social security
provisions, provided their activities are conducted on Lebanese soil.
As far as
foreigners working in Lebanon are concerned (holders of work permits), they
are entitled to social security benefits, provided their countries of origin
offer equal treatment to Lebanese workers (i.e. France, Italy, UK, Syria,
and Belgium).
Non-resident foreigners and Lebanese are exempted from social
security contributions if they are working in
Lebanon pursuant to an
employment contract concluded abroad with foreign companies, and if their
employer produces evidence that they are entitled to social security
benefits in their country of residence at least equivalent to those offered
in Lebanon.
contribution type employee's
contribution employer's contribution
Sickness and maternity
2% 7%
Family
allowances
6%
End of service
allowance 8.5%
8.
CUSTOMS
DUTIES
Import of machinery, equipment/spare parts, and building material
used for setting up a
nev
industry in Lebanon are subject to a Customs duties rate ranging between
zero and 5%, depending on the level and characteristics of the investment
project. Import of machinery, equipment, spare parts, and building material
used for setting up a tourism project in Lebanon is subject to the minimum
Customs duties rate. For more and specific information regarding the rates,
please check the website of the Lebanese Customs Directorate on
www.customs.gov.lb
9.
FOREIGN
ACQUISITION PROPERTY
On
March 20,
2001, Parliament endorsed amendments on the legislation regarding the
Foreign Acquisition of Property, which was proposed by the Cabinet on
December 13, 2000. Law No. 296 is meant to provide incentives for foreign
investment in industry and tourism through reactivating the real estate
sector by (a) easing the legal limits on foreign ownership of property, and
(b) lowering the estate registration fees to 5% for both Lebanese and
foreign investors. The law stipulates the following:
Whereas the existing law limited the acquisition
of land by foreigners to 5% in each Mohafaza, the new law allows foreigners
to acquire 3% of the total area of
Lebanon
regardless of the geographic location subject to one condition: foreigners
can acquire no more than 3% of the total area of a caza. One exception to
this law is Beirut, where foreigners are allowed to acquire up to 10% of the
total area of the capital.
Foreigners can
now acquire 3,000m' of land without the passage of a decree by the Council
of Ministers. The authorization to acquire a piece of land for a specific
project has to be executed within a period of five years (extended only once
for an additional five years if requested). It is legally allowed for
foreigners to buy more than 3,000m subject to a Council of Ministers'
decree.
The government
has also proposed lowering real estate registration fees to 5.8% for both
Lebanese and foreign investors. This 5.8% registration fee includes the
municipality fee of 0.25%, stamp duty of 0.3%, the lawyers' syndicate fee of
0.1%, and an additional 0.1% if the registration took place through a
notary's office rather than the land registry (these fees add up to 0.75% of
the 5.8% fee and have remained unchanged). Thus, registration fees, net of
the additional duties, have been reduced by 1% for Lebanese investors and
11% for foreign investors.
10.
WATER, POWER, FUEL AND GASOLINE COST
10.1.
Water
Water is charged yearly according to
consumption in cubic meter. One cubic meter costs LL.224,000. Whenever the
bill is one month overdue, a penalty of 2% is imposed for late payment.
10.2.
Power
Power for industries and hotels is calculated under the Medium
Voltage Power Scheme:
-Daytime: LL112/kWh
-Peak time: LL320/kWh
-
Night: LL8O/kWh
10.3.
Gas Oil and Gasoline
The prices of fuel oil and gasoline vary according to world prices.
- Fuel Oil: Between USD230 and USD250/Ton
-
Gasoline (unleaded): Between USD630 and USD700/Ton
11.
INCENTIVES OFFERED
The New Investment
Development law No. 360 dated
16/8/2001
classified
Lebanon into three investment zones (A,B,C)
11.1
ZONE A
Areas that will benefit from the
following exemptions, reductions, and facilities:
1- Work permit
of various categories, exclusively needed for the project, provided that at
least two Lebanese nationals are employed against one foreigner, and are
registered in the National Fund for Social Security.
2- Exemption
from income tax for two years (from the date of listing the shares thereof
on the Beirut Stock Exchange), provided that the effective negotiable shares
are no less than 40% of the capital of the company.
11.2
ZONE B
Areas that will benefit from the
following exemptions, reductions and facilities:
1- Work permits of various categories, exclusively
needed for the project, provided that at least two Lebanese nationals are
employed against one foreigner, and are registered in the National Social
Security Fund.
2- Exemption
from income tax for two years (from the date of listing the shares thereof
on the Beirut Stock Exchange), provided that the effective negotiable shares
are not less than 40% of the capital of the company.
This exemption
period shall be added to any other exemption period enjoyed by the company
3- A 50%
reduction in income taxes and taxes on project dividends, for a period of
five years. Reduction shall apply from the date of commencement of
exploitation of the project governed by the provisions of this law. In the
event that the investor benefits from the aforementioned exemptions related
to the listing of shares at the Beirut Stock Exchange, reduction shall apply
after the lapse of that exemption period.
11.3
ZONE C
Areas that
will benefit from the following exemptions, reductions and facilities:
1- Work permits
of various categories, exclusively needed for the project, provided that at
least two Lebanese nationals are employed against one foreigner, and are
registered in the National Social Security Fund.
2- Exemption
from income tax for two years (from the date of listing the shares thereof
on the Beirut Stock Exchange), provided that the effective negotiable shares
are no less than 40% of the capital of the company.
This exemption period shall be added to any other exemption period
enjoyed by the company
3- A full
exemption for 10 years from income taxes and taxes on project dividends.
Reduction shall apply from the date of commencement of exploitation of the
project governed by the provisions of this law. If the investor already
benefits from the aforementioned exemptions related to the listing of shares
at the Beirut Stock Exchange, the reduction shall apply after the lapse of
that exemption period.
12.
PACKAGE DEAL CONTRACT
12.1.
Definition
A package deal contract is a contract whereby the Lebanese
government, represented by IDAL, shall grant the investor willing to
establish a project, the incentives, exemptions, and reductions decided on
by IDAL's Board of Directors for this project, within the ceiling listed
hereof (incentives), provided that the investor is committed under this
contract to execute his project in accordance with the terms and duration
contained therein.
The rights and obligations of both IDAL and the investor shall be
specified in detail in the contract, including commitment by the investor to
implement the project within a certain period of time. The contract is
subject to the approval of the Council of Ministers based on a proposal of
the Prime Minister, after being signed by IDAL and the investor.
12.2.
Incentives Offered
Projects benefiting from the package deal system shall be offered
at maximum, the following incentives:
1- Full exemption from income taxes and taxes on project dividends
for up to 10 years starting from the commencement date of the project
exploitation.
2- Obtaining work permits of various categories, provided that
the project benefiting of the package deal maintains local labor interests
through employing at least two Lebanese nationals against one foreigner, and
registration of same in the National Social Security Fund.
3- Reduction of
work and residence permit fees up to a maximum of 50%, regardless of the
category thereof and depending on the number of permits acquired. Also, the
value of the certificate of deposit with the Housing Bank shall be reduced
by half.
4- Exempting
various Lebanese joint-stock companies aiming to acquire and/or manage an
investment project benefiting from the provisions of the package deal
contract, from the obligation of having Lebanese nationals or legal entities
on the Board of Directors thereof.
5- Reduction up
to a maximum of 50% of permit fees for constructions needed for the
execution of the project.
6- Full
exemption from fees related to land registration at the Land Registry, and
from fees for annexation, sub-division, mortgage, and registration of lease
contracts at the Registry for estates where projects which are the subject
of a package deal contract are to be built on, provided that the execution
of same shall be within five years from the date of registration of the land
at the Land Registry. An investor in default of implementation of the
project thereof shall be liable to pay a penalty equivalent to three times
the fees that were originally due.
