Lebanon investment opportunities and incentives

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Why should foreign companies consider investing in Lebanon? Lebanon has a lot to offer for foreign investors on numerous diverse fields.

Strategic Location – Business Hub

Lebanon – officially known as the Lebanese Republic - is a small sovereign state in Western Asia. It is strategically located at the crossroads of Europe, Asia and Africa. Due to its preferential geographical location, it provides companies with easy access to regional and global markets and as a gateway to the Middle East countries.

Free market economy

Lebanon has a free market economy and a laissez-faire commercial tradition. With its non-interventionist stance toward private investments, it offers the most liberal investment climate between the Middle East countries, since the government does not restrict foreign investments.

Competitive business environment

Lebanon has a low corporate tax rate of 15% and a solid and safe banking system. It has one of the freest economy internationally due to the lack of restriction on capital flows. Lebanon has simple and transparent investment legislation which complies with all the international standards.

Highly educated labor force

Lebanon offers the most educated labor force in the region with the highest number of graduates.

Apart from the above advantages the government of Lebanon offers further series of financial- and non-financial incentives to national and foreign investors depending on the sector of operation. Many exemptions and tax benefits are offered by various ministries and government agencies as well in diverse (from agriculture to Information Technology) fields to support business people and companies in the set-up and operation phase of their businesses.

The Investment Development Authority of Lebanon (IDAL) introduced two incentive schemes, one for larger investment projects and one for SME-s operating in 8 economic sectors, with a set of investment incentives.

1. Package Deal Contracts (PDC)

This scheme is mainly provided for large scale projects which have high impact on the employment.

The applications for this scheme are reviewed and evaluated based on the following criteria:

• The size of the investment (The size of capital invested into the project);
• Number of new jobs created;
• Sector type (to which sector the project belongs);
• Socio-economic impact;
• Environmental impact;
• Extent of technology transfer, provision of technical training;
• Impact on similar industries and on consumers;
• Compatibility with national government priorities and development policies.

Eligibility criteria based on sector, minimum investment size and minimum number of jobs created and incentives received in case of Large scale projects:

• Tourism – minimum investment size is USD 15,000,000 – minimum no. of jobs created is 200;
• Industry - minimum investment size is USD 10,000,000 – minimum no. of jobs created is 100;
• Agroindustry - minimum investment size is USD 3,000,000 – minimum no. of jobs created is 60;
• Agriculture - minimum investment size is USD 2,000,000­ – minimum no. of jobs created is 50;
• IT - minimum investment size is USD 400,000­ – minimum no. of jobs created is 25;
• Media - minimum investment size is USD 400,000 – minimum no. of jobs created is 25;
• Technology - minimum investment size is USD 400,000 – minimum no. of jobs created is 25;
• Telecommunication minimum investment size is USD 400,000 – minimum no. of jobs created is 25.

The following incentives can be obtained from the PDC scheme:

• Full (100%) exemption from income tax for the period up to 10 years;
• Full (100%) exemption from project dividend taxes for the period up to 10 years;
• Full (100%) exemption from land registration fees;
• Up to 50% rebate on work and residence permits;
• Up to 50% rebate on construction permit fees;
• Immediate issuance of work permits of all categories, provided that at least two Lebanese nationals are employed against one foreigner.
• Exemption from the obligation of including Lebanese nationals in the Board of Directors;

2. Investment project by zone (IPZ)

This scheme is mainly catered for small and medium sized projects. It is designed to provide the highest support to those projects which are in regions that face the highest socioeconomic challenges.

The applications for this scheme are reviewed and evaluated based on the following criteria:

• Geographical location of the project (Zone A, Zone B, Zone C);
• Size of investment (The size of capital invested into the project);
• Sector type (to which sector the project belongs);
• Socio-economic impact;
• Environmental impact;
• Impact on the local labor force (potential for new job creation);
• Market for local consumption, export potential;
• Extent of technology transfer, provision of technical training;
• Impact on similar industries and on consumers;
• Establishment of R&D centres;
• Value of hardware and software for ICT projects;
• Compatibility with national government priorities and development policies.

Eligibility criteria based on location, sector and minimum investment size and incentives received in case of SME projects:

ZONE A

Areas falling under Zone A:

• Coastal areas delimited by a line parallel to the coast
• 10km from the jetty of Tripoli
• 24km from Beirut’s lighthouse
• 8 km from Saida’s sea fortress

Sector and minimum size of investment:

• Tourism – minimum investment size is USD 10,000,000
• Industry - minimum investment size is USD 5,000,000
• Agroindustry - minimum investment size is USD 2,000,000
• Agriculture - minimum investment size is USD 1,500,000
• IT - minimum investment size is USD 200,000
• Media - minimum investment size is USD 200,000
• Technology - minimum investment size is USD 200,000
• Telecommunication minimum investment size is USD 200,000
• The following incentives can be obtained:
• Immediate issuance of work permits for all the above categories;
• Full exemption from income tax for a 2-year period, provided that at least 40% of the company’s shares are listed on the Beirut Stock Exchange.

ZONE B

Areas falling under Zone B:

• Industrial areas in the North: Rimal, Baddawi, Mina, Bahsas, Enfeh, Chekka, Hiri;
• Industrial areas in the South – Saida, Ghazieh, Tyre

Sector and minimum size of investment:

• Tourism – minimum investment size is USD 4,000,000
• Industry - minimum investment size is USD 3,000,000
• Agroindustry - minimum investment size is USD 1,500,000
• Agriculture - minimum investment size is USD 1,000,000
• IT - minimum investment size is USD 200,000
• Media - minimum investment size is USD 200,000
• Technology - minimum investment size is USD 200,000
• Telecommunication minimum investment size is USD 200,000

The following incentives can be obtained:

• Immediate issuance of work permits for all the above categories;
• 50% reduction on income tax and taxes on project dividends for 5 years;
• Full exemption from income tax for two additional years, provided that at least 40% of the company’s shares are listed on the Beirut Stock Exchange.

ZONE C

Areas falling under Zone C:

• Cazas of Akkar, Minieh-Dinnieh, Bsharri, Hermel, Baalbeck, Marjeyoun, Hasbayya, Sour, Jezzine, Rachaya, Bint Jbeil, West Bekaa;
• Villages in the mountainous areas of Jbeil (Byblos) caza;
• Villages in the mountainous areas Batroun caza;
• Villages in Iklim el Kharroub;
• Villages in Nabatiyeh Caza adjacent to liberated areas;
• Villages in Sour caza adjacent to the liberated areas;
• Villages in Bint Jbeil caza adjacent to the liberated areas;
• Villages in Marjeyoun adjacent to the liberated areas.

Sector and minimum size of investment:

• Tourism – minimum investment size is USD 1,000,000
• Industry - minimum investment size is USD 1,000,000
• Agroindustry - minimum investment size is USD 1,000,000
• Agriculture - minimum investment size is USD 500,000
• IT - minimum investment size is USD 200,000
• Media - minimum investment size is USD 200,000
• Technology - minimum investment size is USD 200,000
• Telecommunication minimum investment size is USD 200,000

The following incentives can be obtained:

• Immediate issuance of work permits for all the above categories;
• Full exemption (100%) from income tax and taxes on project dividends for a 10-year period;
• Full exemption from income tax for two additional years, provided that at least 40% of the company’s shares are listed on the Beirut Stock Exchange.

Shanda Consult is specialised in consultancy regarding project-based investments and as a partner in bringing together investors and investment projects.

Shanda Consult is advising on numerous investments, ranging from Energy/Telecom/IT to industry, technology, tourism and agriculture investments.

Please do not hesitate to contact us if you wish to be guided with your Lebanon-related projects and business.

Source: The Investment Development Authority of Lebanon (IDAL)