Lebanon, with its official non-interventionist stance toward private investments, offers one of the most liberal investment climates in the Middle East. The economic openness of the country is harnessed through the absence of legal restrictions on the entry or exit of many firms, encouraging free market competition and furthering the development of the private sector. Liberal trade and investment policies have allowed foreign direct investments to account for a considerable share of Lebanese GDP.

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Lebanon's investment legislation is simple and transparent seeking to facilitate the establishment of new businesses in Lebanon, and to ensure their viable growth and expansion. The multiple trade agreements and investment treaties signed over the last few years have further improved the investment climate in Lebanon, accelerating its integration into regional and global economies.

The Lebanese legal framework complies with international standards, offering equal treatment for local and foreign investors and presenting a suitable platform for businesses.

The investment Law No. 360 for the year 2001 is the legal framework governing investments in Lebanon.

The Law includes incentives based on the zone where the investment is established and identifies three zones (A, B, and C) with different incentives such as income tax reductions and facilitation in work permits depending on the zone.

Foreign and Lebanese investors can establish companies on an equal footing and without restrictions throughout the country.[1]

The documents:

• The articles of association of the company (Download a template)
• The deed of subscription to the capital of the company (Download a model)
• A letter addressed to the bank requesting the opening of a bank account (a company in the process of incorporation) in which the capital will be deposited (Download a template)
• A confirmation letter issued by the bank to confirm the shareholders' full subscription to the share capital
• The minutes of the constitutive general meeting (Download a template)
• Minutes of the first Board meeting (Download a template)
• The registration form (Download a template)
• The trade circular (Download a template)
• The title deed, the deed of lease or occupation of the head office (Download a template)

There is no reporting obligation. Lebanon ensures and guarantees total freedom of local and foreign capital.

Restrictions on foreign investment in Lebanon:

• The media, inaccessible to foreign companies; 
• Commercial representation: the capital of a SAL must consist of registered shares held majority by Lebanese and two-thirds of the capital of a SARL must be held by Lebanese; 
• The operation of a public service. In the case of a SAL, one third of the capital must be held by Lebanese;
• The real estate sector: a branch cannot operate in this sector (in the case of a subsidiary, the capital must be majority owned by Lebanese and an authorization from the Council of Ministers is required); 
• The sectors of banking, insurance, capitalization, savings, capital investment, organized air transport: it is impossible, in these sectors, to create a SARL.

Lebanon has concluded 54 bilateral agreements with 50 countries for development and investment protection to provide foreign investors with a legal framework that ensures the establishment of an enabling environment between Lebanon and the contractual partners. Foreign investment in both countries enjoys under these treaties fair and equitable treatment without discrimination and full protection and security.

To facilitate cross-border trade and encourage international trade, Lebanon has signed 34 tax treaties with 32 countries. The latter encourage the exchange of goods and services, the inflow of capital and technology to avoid double taxation on the one hand, as well as tax evasion on the other hand through administrative assistance between contractual partners.

List of bilateral investment agreements signed by Lebanon

Corporate taxes

Lebanon has one of the most competitive corporate income tax rates regionally and internationally, the equivalent of 17% (according to the latest regulations), making Lebanon one of the most attractive and competitive business environments for foreign and domestic companies.

Joint Stock Companies and limited liability Companies are subject to the following:

• 17% tax on corporate profit
• 15% tax on profits received from the sale of fixed assets including financial assets (shares)
• A withholding tax at a rate of 10% on all proceeds derived from movable capital assets (fixed assets) generated in Lebanon. This Tax essentially concerns:
• Distributed dividends, interest and income on shares
• Distribution of reserve or profits in the form of additional shares or under any form

Further information on other forms of companies can be found through (this link)

Personal Income Tax Rate:

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.

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Value Added Tax (VAT):

In Lebanon, the two rates of VAT are the standard rate of 11% and the zero rate (0%). The standard rate of VAT applies to all supplies of goods and services, unless a specific measure provides for the zero rate or an exemption.

Read: 2019 Worldwide VAT, GST and Sales Tax Guide - Lebanon

• Probation Period : 2 months.
• Working Hours: 48 hours per week. (underspecific circumstances, employers are allowed to add 12 hours of overtime per week to the employee's regular work schedule, subject to a permit issued by the Ministry of Labour, and overtime is paid one and a half times).
• Rest: minimum one hour in the middle of the day
• Annual Leave: fifteen days with full salary.
• Maternity Leave: 7 weeks
• Sick leave: Every employee is entitled to sick leave on medical report, the duration of which is calculated in proportion to the duration of his employment.
• Public Holidays:  2 mandatory public holidays: Labour Day (1 May) and Independence Day (22 November). In addition, there are 13 other government-recognized public holidays during which all public institutions and the majority of businesses are closed.
• Foreign employees: prior approval required from the Ministry of Labour
• Termination of the employment contract: The employer and the employee may mutually agree to terminate the written employment contract at any time. In this case, no compensation or fees will be paid.

However, in the event of termination of the contract by one of the parties, the injured party is entitled to claim damages. If the employee has been dismissed without notice, he must be compensated for the period of notice due to him.

Leabanese Code of Labor

• Socio-economic and political situation

Lebanon faces today an economic and financial crisis ranked among the most severe in the world:

- GDP fell from 55 billion (2018) to below 20 billion (2021)

- Public debt/ GDP: over 150%

- Poverty and unemployment: over 50% & 30%

- Currency depreciation: 95% LBP value vs USD

- Significant budget and trade deficits

- Recession: -14% in 2019

Covid-19 pandemic reduced economic activity and lay-offs

Beirut port blast: August 4^th 2020 caused over 200 deaths, 7000 injuries, and 15 billion dollars in property damage

For nearly three years, Lebanon has been assailed by the most devastating, multi-pronged crisis in its modern history. The unfolding economic and financial crisis that started in October 2019 has been further exacerbated by the dual economic impact of the COVID-19 outbreak and the massive Port of Beirut explosion in August 2020.

Of the three crises, the economic crisis has had by far the largest (and most persistent) negative impact. The Spring 2021 Lebanon Economic Monitor found that Lebanon’s economic and financial crisis ranks among the worst economic crises globally since the mid-nineteenth century. Nominal GDP plummeted from close to US$52 billion in 2019 to an estimated US$23.1 billion in 2021. The protracted economic contraction has led to a marked decline in disposable income. GDP per capita dropped by 36.5% between 2019 and 2021, and Lebanon was reclassified by the World Bank as a lower-middle income country, down from upper-middle income status in July 2022. Such a brutal contraction is usually associated with conflicts or wars.

Beyond the human tragedy, the impact of the Port of Beirut explosion has had implications at the national level, despite its geographical concentration. These add to Lebanon’s long-term structural vulnerabilities, which include low-grade infrastructure—a dysfunctional electricity sector, water supply shortages, and inadequate solid waste and wastewater management—as well as weak public financial management, large macroeconomic imbalances, and deteriorating social indicators.

• Waste Management situation

Solid Waste management has become of increasing concern; although the privatization of this sector in terms of collection and treatment, a significant number of communities and municipalities are still facing major problems with the treatment and disposal of waste, hence directly affecting the environment and creating serious economic and social problems. Corruption, lack of human resources and suitable facilities and inadequate technical skills are responsible for inefficient municipal solid waste management (Abbas et al., 2019).

Since 1994, Lebanon's waste management policy has consisted of implementing a series of emergency plans, each partially and poorly executed, and extended until a new crisis emerged. Devoid of any measures to move to long-term, sustainable planning, these local emergency fixes to the lingering waste crisis have incurred high financial costs for citizens as well as negative environmental, health, and safety impacts.

Lebanese citizens are paying a high price for solid waste management (SWM). Lebanon spends $154.5 to manage every ton of solid waste, compared to Algeria, Jordan, and Syria which spend $7.22, $22.8, and $21.55, respectively (Human Rights Watch, 2020). The solid waste sector ranked first in terms of environment-related government spending in Lebanon, with a total of $647 million spent between 1998 and 2008 (Arif & Doumani, 2014). Expenditures on SWM reached $2.2 billion between 1996 and 2015 (Akiki, 2019).

Despite these high expenditures, the cost of environmental degradation (COED) from the solid waste sector was around $66.5 million (0.2% of national GDP) in 2012 (Arif & Doumani, 2014), increasing to $200 million (0.4% of GDP) in 2018 (MoE, UNDP, 2019). To date, around 20% of the waste is recovered, out of which only 6% reaches recycling facilities, 36% is landfilled, and 44% is dumped in around 940 open dumps scattered throughout the country (MoE, UNDP, UNHCR, UNICEF, 2020).

At the same time, the private company contracted since 1994 to collect and treat much of Lebanon’s waste – Sukleen (part of the Averda Group) – has generated over $170 million in revenues per year, one of the highest waste management revenues in the world (Chaaban, 2016). Sukleen has held a monopoly in waste management in Beirut and Mount Lebanon since the 1990s, when it won a contract for building, testing, and operating a waste incinerator located in the city of Amrousiyeh. Operation at that site was short-lived as angry residents burned the plant down in 1996, but through other contracts, Sukleen came to handle around 50% of the waste generated nationally, serving around 400 municipalities (Chaaban, 2016). The company’s contract was renewed three times by the Council for Development and Reconstruction (CDR) without an open tender. With each contract renewal, collection and processing fees increased, all paid using transfers from the Independent Municipal Fund, an intergovernmental grant system that disburses taxes and fees to municipalities.

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• Main Actors

• Infrastructure

- 48 % of the waste are disposed in sanitary landfills.

- Outside the capital Beirut and Mount Lebanon, dumping of waste and open burning is predominant.

• Regulatory Framework

- Law No. 444 (August 1988) regulating hazardous waste management;

- Decree No 8471 dated 2012 related to environmental compliance for industries;

- Decree 8006 (June 2002) amended through Decree 13389 (September 2004), classifying the different healthcare waste categories.

- Decree 8735/1974 on pollution from solid waste and wastewater, which designates SWM a municipal responsibility.

- Decree 9093/2002, which provides municipalities with a financial incentive to host a waste management facility by offering a five-fold increase in the budgeted Independent Municipal Fund (IMFU) allocation if the municipality establishes a sanitary landfill or a solid waste processing plant (incinerator/recycling/compost, etc.) within the municipal boundaries, and a 10-fold increase if at least 10 municipalities are allowed to dispose of their waste in the sanitary landfill or use the processing plant.

- Law 216/1993, which entrusts the MoE with assessing all sources of solid waste generation.

- Law 444/2002, which sets landfill standards and promotes recycling.

- A draft Law on Integrated Solid Waste Management, which was approved by the Council of Ministers (CoM) in 2012 and sent to the parliament for final approval under Decree 8003, dated 23/04/2012. It is currently still under discussion at the Parliament.

• WM initiatives and programs

- Switchers

- DAWWEER

- GIMED

- Energy Innovation Hub

- Sprout by Injaz

- GMI: Green Mediterranean Initiative . Youth (Scool and university) education on the importance of recycling practices and waste management issues. 52 reversible waste vending machines placed in public and private schools in Beirut & Mount Lebanon