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Hiring in Lebanon
Lebanon, officially known as the Lebanese Republic, is a country in Western Asia. Beirut is the capital and the largest city of Lebanon. Arabic is the official language; whereas French is a formally recognized language. The service sector, that includes tourism and banking, dominates the economy. This is followed by industry and agriculture. Lebanon’s main trading partners are South Africa, Switzerland, China, Italy, United Arab Emirates, Saudi Arabia and the United States. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Lebanon’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. Labor Code stipulates that employees are entitled to 15 days of annual leave. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Lebanon’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- The maximum probationary period is of 3 months.
Annual Leave
- Full time employees are entitled to 15 days paid vacation at the end of their first year of employment.
- The employee can accumulate two annual leave periods.
Public Holidays
- New Year's Day (1st January)
- Orthodox Christmas Day (6th January)
- Saint Maroun's Day (9th February)
- Rafik Hariri Memorial Day (14th February)
- Annunciation Day (25th March)
- Good Friday (10th April)
- Easter Sunday (12th April)
- Good Friday (Eastern) (17th April)
- Orthodox Easter (19th April)
- Labor Day (1st May)
- Martyrs' Day (6th May)
- Liberation Day (14th May)
- Eid al-Fitr
- Eid al-Adha
- Assumption of Mary (15th August)
- Islamic New Year
- Ashura
- Prophet's Birthday
- Lebanese Independence Day (22nd November)
- Christmas Day (25th December)
Maternity Leave
- Lebanese law currently allows women to take up to 10 weeks paid maternity leave
Paternity Leave
- Male employees are entitled to 3 days of paternity leave
Sick Leave
- Employees who have been working for the same entity for a period exceeding the probation period (three months), are entitled to a paid sick leave as follows:
- From three months to two years’ employment: 100% of the salary payable for half a month and 50% of the salary payable for another half month
- From two to four years’ employment: 100% of the salary payable for one month and 50% of the salary payable for another month.
- From four to six years’ employment: 100% of the salary payable for one and a half month and 50% of the salary payable for another one and a half month.
- From six to ten years’ employment: 100% of the salary payable for two months and 50% of the salary payable for another two months.
- Above ten years’ employment: 100% of the salary payable for two and a half months and 50% of the salary payable for another two and a half months.
Work Hours
- A normal working day should be eight hours, and in some cases up to 12 hours, knowing that employees should be given 9 consecutive hours of rest between each working day.
Overtime
- Overtime is paid for excess hours above 48 working hours per week on the basis of 50% extra payment.
Notice Period
- The length of notice is specified by law and cannot be reduced. It varies with the length of the employee’s employment:
- Under three years: One-month prior notice.
- Three years to six years: Two months’ prior notice.
- Six years to twelve years: Three months’ prior notice.
- Over twelve years: Four months’ prior notice.
Severance
- In case of abusive or unfair dismissal, the employee is entitled to severance pay from the employer in an amount equivalent to between two and 12 months' wages.
- The assessment of severance pay should take into consideration:
- the nature of the work;
- the employee's age;
- the duration of employment;
- the employee's health and family status;
- the materiality of the damage; and
- any misuse of the termination right.
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or the 14th month salary.
- There is no evidence that bonuses are customary.
income tax
- According to the principle of territoriality, taxes on salaries are due in Lebanon if one of the following conditions is met:
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- The beneficiary of the salary is resident in Lebanon, regardless of the source of funding.
- The services that triggered the income are executed on Lebanese territory or have contributed to the welfare of a company located in Lebanon, even though the source of funding is outside Lebanon.
- The source of funding is in Lebanon, regardless of where the beneficiary resides or where the effort was made.
- Personal income tax (PIT) is levied on wages and salaries at progressive rates.
- The brackets for the progressive payroll tax rates became between 2% and 25%, instead of between 2% and 20%, as per Article 23 of Budget Law 2019, which amended Article 58 of the Income Tax Law.
- The new payroll tax rates are effective starting 1 August 2019.
- These rates are reduced to half for retirement pensions and similar benefits.
- PIT is also levied on business income (e.g. sole proprietorships, general partnerships) at progressive rates.
- The annual progressive brackets for income tax profits became between 4% and 25%, instead of between 4% and 21%, as per Article 24 of Budget Law 2019, which amended Article 32 of the Income Tax Law.
- The new rates for income tax profits are applicable starting the year 2019.
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Income Tax Rate |
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|
Employment Income |
2% to 25% |
|
Business Income |
4% to 25% |
deductible expenses
Employment Expenses
- Reimbursements for expenses and representation allowances below 10% of the basic salaries of managerial staff may be deducted from taxable income.
- The following expenses may also be deducted from taxable income:
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- Payments to pension schemes.
- Scholarships or payments granted by an employer on the birth of a child, on marriage, or death, provided they are granted to all employees and have been approved by the Ministry of Labor.
- End-of-service indemnities paid in accordance with the relevant laws and regulations.
- Transportation allowances of LBP 8,000 per day.
- Annual schooling allowance of a maximum total amount of LBP 1.5 million and for a maximum of three children.
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- University tuitions that teachers are exempt from on behalf of their children are not subject to tax within certain limits, with no need to obtain approval from the Ministry of Labor.
Personal Allowances
- Individuals are entitled to family deductions ranging from LBP 7.5 million to LBP 12.5 million according to the taxpayer's family status.
Business Deductions
- For sole proprietorships and general partnerships, tax is levied on real profits or profits on a fixed lump-sum basis (a specified percentage, depending on the type of profession, applied to annual revenues to determine taxable profits).
- Accordingly, no deductions are taken into consideration.
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Deductible Expenses |
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Employment Expenses |
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Personal Allowances |
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Business Deductions |
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immigration
- All expatriates working in Lebanon must have a work permit and a residence permit.
- Such permits may be issued only at the request of an employer.
- To obtain a work permit, the following items must be submitted:
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- A special work permit application completed and signed by the applicant and the employer.
- A list of the names of the foreign employees (if any) at the office of the employer that must be signed and sealed by the employer.
- The address of the employer.
- The passport or the identity card of the expatriate. The Minister of Labor retains a photocopy of this document.
- A medical report evidencing that the expatriate is free from epidemic diseases.
- A photocopy of the employer’s registration in Lebanon.
- A list of authorized signatures of the employer.
- A certified copy of the employment contract entered into between the employer and the expatriate.
- A quittance (discharge or clearance certificate) issued by the Social Security National Fund.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
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Work Permit |
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2 years (can be renewed) |
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Residence Permit |
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1 year (temporary); 3 years (permanent) |
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value added tax
- The standard VAT rate in Lebanon is 11%.
- Unless specifically exempt, VAT is levied on all commercial transactions undertaken by business entities.
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VAT |
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Standard Rate |
10% |
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Exempt |
0% |
withholding tax
Dividends
- Dividends paid to a resident or nonresident are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty
Interest
- Interest paid by a Lebanese resident to a nonresident company is subject to a 10% withholding tax, with a lower 7.5% rate applying to interest on bank deposits, debt or bonds
Royalties
- Royalties paid to a nonresident are subject to a 7.5% withholding tax, unless the rate is reduced under a tax treaty
Technical Service Fees
- Technical or management fees paid to a nonresident are subject to a 7.5% withholding tax, unless the rate is reduced under a tax treaty
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WHT |
|
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Dividends |
10% |
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Interest |
10%/7.5% |
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Royalties |
7.5% |
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Technical Service Fees |
7.5% |
termination
- Subject to the conditions set out in the Labor Law, the employer may terminate some or all employment agreements where required to do so due to force majeure or economic or technical circumstances.
- Moreover, the employer may unilaterally terminate an employment contract without prior notice or severance pay in certain cases, including following:
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- The employee fakes his or her nationality;
- The employer is dissatisfied with the employee's performance during the three-month probation period;
- The employee is found to have committed a willfully negligent act or omission aimed at harming the material interests of the employer, provided that the employer has notified the Ministry of Labor in writing of such violation within three days of its verification;
- The employee, despite written warnings, commits a serious violation of the employer's internal regulations three times in a given year;
- The employee is absent without valid excuse for more than 15 days or more than seven consecutive days in a given year;
- The employee is sentenced to imprisonment for at least a year for committing a felony or has committed a misdemeanor in the workplace during the course of his or her work; or
- The employee assaults the employer or the manager in the workplace.
- Otherwise, prior written notice of termination must be served.
- The employee may require clarification as to the reasons for termination.
- The termination of an employment contract should not be unfair or abusive.
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
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Statutory Benefits |
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Probationary Period |
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Annual Leave |
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Public Holidays |
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Maternity Leave |
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Paternity Leave |
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Sick Leave |
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Overtime Pay |
|
Notice Period |
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Severance Pay |
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Social Security Benefits |
payments and invoicing
- The fiscal year is the calendar year.
- Income derived from personal business
- The deadline for filing tax returns for those taxed on real profits is before 1 April of the following year.
- For those taxed on a fixed lump-sum basis, the deadline is before 1 February of the following year.
- It is the employer's responsibility to declare the payroll tax to the authorities on a quarterly basis during the first 15 days of the month following the end of the quarter.
- An annual declaration is also due by 28 February of the following year.
- Tax on moveable capital income is withheld at source by the relevant company or organization and is to be declared within one month of the declaration of any dividends, interest, or share revenue, or after the maturity of interest on bonds.
- If taxpayers fail to submit a tax return, realization penalties will be due.
- The same deadlines for tax returns apply for tax payments.
- If taxpayers fail to make payment, late payment penalties will be due.
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Lebanon ranked 143rd in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% |
0% |
| Christmas Bonus Over Vacations % |
0% |
| Severance per Year % |
Employees are entitled to severance pay equal to one month's pay after completion of one year of employment (8.33% of annual salary) |
| Vacations % | Full time employees are entitled to 15 days paid vacation at the end of their first year of employment (4.12% of annual salary) |
| Notice % |
Employees are entitled to 30 days of notice period for one year of service or more (8.24%) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | 0% |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 20.78% |
employer accruals
Additional information (Country Accruals)
| Social security | 14.00% |
| Maternity | 40days |
| Vacations | 10.14% |
| Description | Social security contributions are the following: Borne by the employer: 8% for the maternity and sickness benefit schemes, on a maximum base of LBP 2.5 million (amounting to LBP 200,000 as a maximum per month), and 6% for the family benefit schemes, on a maximum base of LBP 1.5 million (amounting to LBP 90,000 as a maximum per month), in addition to 8.5% of total annual earnings for the end-of-service indemnity, with no ceiling. Borne by the employee: 3% for the medical scheme, on a maximum base of LBP 2.5 million (amounting to LBP 75,000 as a maximum per month). Salaries of foreign staff are normally subject to all contributions, except those for the end-of-service indemnity fund. However, foreign employees do not receive the family allowance benefits nor do they benefit from the medical reimbursements. The Ministry of Labour legislated a Decision no. 224, dated 12 July 2017, giving the right for the insured whose mandatory membership in the National Social Security Fund is terminated due to retirement (age 60 to 64) or due to permanent disability to benefit from the sickness and maternity scheme in accordance with the terms and conditions of the insured workers. |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | Full time employees are entitled to 15 days paid vacation at the end of their first year of employment. | This equals 4.1% (15/365 days) of annual income |
| Maternity Leave | Lebanese law currently allows women to take up to 10 weeks paid maternity leave | This equals 19.23% (10/52 weeks) of annual income |
| Paternity Leave | Male employees are entitled to 3 days of paternity leave | This equals 0.82% (3/365 days) of annual income |
| Sick Leave | Employees who have been working for the same entity for a period exceeding the probation period (three months), are entitled to a paid sick leave as follows: • From three months to two years’ employment: 100% of the salary payable for half a month and 50% of the salary payable for another half month • From two to four years’ employment: 100% of the salary payable for one month and 50% of the salary payable for another month. |
This equals 4.16% (0.5/12 months). Plus 50% of 4.16% |
| Overtime | Overtime is paid for excess hours above 48 working hours per week on the basis of 50% extra payment. | Depends on the number of overtime hours worked |
| Severance | In case of abusive or unfair dismissal, the employee is entitled to severance pay from the employer in an amount equivalent to between two and 12 months' wages. | Subjective |
| Social Security | Employers must make the following contributions: - Maternity and Sickness Benefit Scheme 8%; Family Benefit Scheme 6%; End of service indemnity 8.5% | This equals 22.5% of annual income |
