Libya Personal Income Tax

Libyan nationals and foreigners are subject to income tax on income arising in Libya. Libyan nationals and foreigners are considered to be resident if they satisfy any of the following conditions:

  • They are Libyan.
  • They are in Libya with a work visa.
  • They undertake employment in Libya.

Residence results in liability for Libyan personal income tax for the year of residence.

Income subject to tax. The taxation of various types of income is described below.

Employment income. Income tax is levied on employment income paid in cash or in kind.

Self-employment income. Individuals carrying out business activi­ties independently, providing consulting services or engaging in technical, artistic or scientific projects are subject to tax on income derived from such activities.

Investment income. Interest on bank deposits of whatever term is subject to withholding tax at a rate of 5%.

Other income. Other income is subject to tax at various rates.

Taxation of employer-provided stock options. Income derived from employer-provided stock options is taxed in the same manner as employment income.

Capital gains. The law does not make any reference to tax on capi­tal gains. Company capital gains are treated as trading income.

Exempt income. The following items are exempt from income tax:

  • Income from deposits in savings accounts
  • Payments to beneficiaries of life insurance policies
  • Payments for disability arising from employment
  • Income from agricultural activities
  • Income of civil servants and state employees
  • Income from pensions
  • Income derived from writing and research in the fields of sci­ence and culture
  • Income of charitable organizations
  • Foreign income
  • Export income
  • Development activities as determined by the government

Deductions

Deductible expenses. Expenses that may be deducted include life insurance premiums, general insurance premiums, social security contributions and medical insurance contributions.

Personal deductions and credits. Individuals may claim the fol­lowing annual personal allowances:

  • LYD1,800 for a single taxpayer
  • LYD2,400 for a married taxpayer
  • LYD300 for each dependent child, up to the age of 18

Rates. The following are the tax rates applicable to annual tax­able income.

Annual taxable income

Exceeding         Not exceeding                                           Rate

LYD                        LYD                                                           %

0                               12,000                                                        5

12,000                       —                                                              10

Jihad tax. Jihad tax is withheld monthly from earned income. It is imposed on gross income less the Social Unity Fund contribu­tion (see below) and the employee’s social security contribution at the following rates:

  • 1% if monthly income does not exceed LYD50
  • 2% if monthly income does not exceed LYD100
  • 3% if monthly income exceeds LYD100

Social Unity Fund contribution. One percent of monthly gross salary is withheld as a contribution to the Social Unity Fund.

Relief for losses. Losses incurred in business or professional activities may be carried forward and offset against profits from the same type of activities in the following five years. Losses may not be carried back.

Other taxes

Property tax. Only Libyan nationals may own property. Tax at scale rates is assessed on 60% of rental income. The top rate of property tax is 15%.

The transfer of immovable property is not formally subject to any property transfer tax.

Inheritance and gift taxes. Libya does not impose inheritance tax or gift tax.

Social security

Social security contributions are payable monthly on salaries, wages, bonuses and other compensation income.

The contribution rates are 11.25% for employers and 3.75% for employees. The state pays a 0.75% portion of the contribution for Libyan companies. Employers withhold the employee contribu­tions monthly.

Tax filing and payment procedures

The tax year in Libya for individuals is the calendar year.

Employees who have only income from employment are not required to file annual income tax returns.

Individuals with non-employment income must file an annual tax return within 60 days after the end of the tax year (31 December). For such individuals, tax is payable in four quarterly installments, beginning on 10 March, with a 15-day grace period, or on the next day in a quarter after the issuance of an assessment.

Double tax relief and tax treaties

Under Libya’s double tax treaties, resident individuals who derive income abroad may claim a tax credit for foreign tax paid, up to the amount of the tax due on such income in Libya.

Libya has entered into double tax treaties with the following countries.

Arab Maghreb             India                             Sudan

Union countries           Malta                            Syria

Bulgaria                       Pakistan                        Turkey

Egypt                           Serbia                           Ukraine

France                          Singapore                     United Kingdom

Greece                          Slovak Republic

Libya has signed double tax treaties awaiting ratification with the following countries.

Austria                         China                            Qatar

Azerbaijan                    Croatia                          Russian Federation

Belarus                         Germany                      Slovenia

Belgium                       Italy                              Spain

Bosnia and                   Korea (South)               Switzerland

Herzegovina                 Netherlands

Temporary entry visas

A valid passport and entry visa are required to enter Libya.

Libya offers the following types of temporary visas to foreign nationals:

  • Transit visas, which are valid for a maximum of seven days
  • Student visas, which are valid for 12 months and are renewable
  • Tourist visas, which are single-entry visas valid for 30 days
  • Business visas, which may be single-entry visas valid for 30 days, or multiple entry visas valid for 3, 6 or 12 months
  • Residence/work visas, which are provided outside Libya if the individual will enter Libya with the intention of residing or working

A fee is payable for the issuance of each type of visa.

Work permits and self-employment

Foreign nationals must obtain a work permit to work in Libya. Foreign nationals who will work under an employment contract must obtain a work authorization, which is valid for up to one year.

Foreign nationals may not be self-employed.

After the period of validity for a work authorization or work permit expires, an individual may reapply for such items.

Residence permits

Residence permits are granted to foreigners on the basis of employment. They are granted on the application of the employ­ing company. A residence permit is regarded as temporary and is not issued until it has been determined that a similarly qualified national is not available. A national must be employed and trained to replace the foreigner, and some occupations are restricted to nationals (for example, secretarial and clerical).

Employed foreign nationals who reside in Libya for more than 15 years may obtain a 5-year residence permit, which is renew­able every 5 years.

The following documents must be submitted with the application for residence permit for workers:

  • Application form containing family details
  • Detailed curriculum vitae and copies of qualifications
  • Passport and a copy of the passport
  • Copy of the work visa
  • Work authorization issued by the Manpower Department
  • Twelve passport-size photos

Requirements and documentation are subject to frequent change.

Family and personal considerations

Family members. Dependent relative visas are usually granted automatically to family members of a foreign national who holds a valid work authorization or permit. However, an expatriate’s spouse must file an application for a residence permit through the expatriate’s employer and may not undertake employment.

Marital property regime. The default marital property regime in Libya is based on Islamic law. Under Islamic law, a legal share of the estate automatically devolves to the surviving spouse and children.

Driver’s permits. Expatriates may drive legally in Libya using their home-country driver’s licenses for up to three months. Holders of residence permits must apply for local driving licenses.