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New Tax Law in Libya by soclibya

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A NEW TAX LAW NO 7 & 8 FOR THE YEAR 2010. THIS IS A SUMMARY AND IF YOU WOULD LIKE MORE DETAILS, PLEASE LET US KNOW TO PUT YOU IN TOUCH WITH OUR TAX CONSULTANT IN LIBYA.

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                                                New
                                    Tax Laws ( No. 7 & 8 of 2010 )



                 I - Income TAX:

                 On the 28th of January 2010 the General People Congress issued a new income
                 tax law no. (7) Of the year 2010 which replaced the income tax law no. (11) of
                 the year 2004 and has come into force as from 28/04/2010 , the date of its
                 publishing in MUDAWANAT AL TASHRI-AT ( The Official Gazette ) no. 4 of the
                 year 2010.

                 Hereunder is a summary of some important points of this law which have to be
                 observed by all local and foreign tax-payers whether they are individuals or
                 companies.

                 1. Tax on Salaries and Wages:

                 A. New Tax Rates :

                 The following new salary tax rates have to be deducted from the gross salary less
                 employee social insurance contribution, employee social solidarity fund
                 contribution and income tax exemptions mentioned below:


                   No.             Gross Salary Brackets                             Tax Rate
                                 Per Year             Per Month
                     1            12,000                  1,000                         5%

                     2         Over 12,000             Over 1,000                       10%


                 B. Old Rates:

                 Old rates were as follows:


                   No.      Gross Salary Brackets                                      Tax Rate
                                    Per Year                 Per Month
                    1                 4,800                       400                      8%

                    2                 4,200                       400                     10%

                    4              Over 9,600                 Over 800                    15%




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                 Tax exemptions deductible from gross salaries are as follows:

                 A. New Tax Exemptions:


                  Social Status                     Per Year             Per Month
                  Single                            1,800                150

                  Married man with no
                                                    2,400                200
                  children

                  Married or widower or             2,400 +300 per
                                                                         200 + 25 per each child
                  divorced with children            each child


                 B. Old Tax Exemptions


                                                                  Per
                  Social Status                                                Per Month
                                                                  Year
                  Single                                          1200         100

                  Married man with no children                    1800         150

                  Married or widower or divorced with
                                                                  2400         200
                  children


                 Notes:

                 For calculating the exemptions the year is considered to be 360 days divided to
                 12 equal months.




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                 II. Tax on Companies – Corporate Tax :

                 A. New Tax Rates


                  Bracket              Income Tax Rate             Jihad Tax Rate

                  All net profit       Flat rate of 20%            4%


                 B. Old Tax Rates were as follows :


                                                     Income Tax
                     No.           Brackets                                      Jihad Tax Rate
                                                        Rate
                     First         200,000               15%                            4%

                  Following        300,000               20%                            4%

                  Following        500,000               25%                            4%

                  Following        500,000               30%                            4%

                  Following        500,000               35%                            4%

                                      Over
                  Following                              40%                            4%
                                   2,000,000


                 Note : Responsibility of the Company's Manager for its Taxes:

                 According to the new tax law , all companies are required to submit to the TAX
                 DEPARTMENT an annual tax declaration on their income on the relevant form
                 certified by an external auditor ( certified accountant ) within no later than four
                 months from the end of their fiscal year.


                 II - Jihad Tax Rates:


                 A: Jihad tax rates on Salaries and Wages:

                 This tax remained the same (unchanged).

                 The Jihad Tax Rate of 3% is deductible from gross salaries less Employee Social
                 Insurance Contribution and Employee's Social Solidarity Fund.

                 B: Jihad tax rates on Companies:

                 This tax also remained the same (unchanged), The Jihad tax rate on companies
                 is 4 % of the net profit.




111 Harp Island Close, London, NW10 0DQ, UK – Tel +44208 208 3120 - Reg. No. 6554019. Email: info@soclibya.com www.soclibya.com
                         Your Platform to Libya




                 III - Stamp Duty Law No. (8) Of the year 2010:

                 On the 28th of April 2010 the General People Congress issued also a new stamp
                 duty law no. (8) of the year 2010 concerning amendment of tax rates of some
                 items subject to stamp duty according to the tax table attached with the income
                 tax law no. (12) of the year 2004 . Law no(8) referred to has come into force
                 from 28/04/2010 , the date of its publishing in MUDAWANAT AL TASHRI-AT ( The
                 Official Gazette ) no. 4 of the year 2010 referred to above.

                 The following important items and their tax rates extracted from the law may be
                 of general interest:


                                                               Item      Old
                  No.                 Details                                         New tax rate
                                                                no.      rate
                        Invoices ( purchase of cars and
                   1                                            24 A     3%                  2%
                        alike to be paid by the buyer )

                        Invoices ( purchase of materials
                   2    ) over 100 Libyan Dinar to be          24 B      2%                  1%
                        paid by the buyer

                        Rental Contracts to be paid by
                   3                                             27      1%                  1%
                        the tenant

                        Contracts for supplies , services
                   4    ,Contracting , Public works ...         28 A     2%                  1%
                        etc. to be paid by the contractor

                        Sub- contracts to be paid by the
                   5                                           28 B     0.10%              0.10%
                        sub-contractor

                   6    Opening of Letters of credit            33A     0.20%              0.20%

                        Guarantee , Insurance … etc. of
                   7                                             35     0.50%              0.50%
                        Value

                   8    Receipts                                 36     0.50%              0.50%

                        Amounts paid by public
                        organizations financed from the
                   9    general budget of the STATE to           43     0.50%              0.50%
                        others to be paid by the
                        receivers




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                 IV. Social Security Contributions (INAS) - Laws No. 13 of 1981


                               Details                                        Rate
                  Employee contribution                             3.75 % of gross salary

                  Employer contribution                            11.25 % of gross salary

                  Total Contribution                                 15 % of gross salary


                 The total social security contribution of employees and employer should be paid
                 by the employer directly to the Pension Department.

                 V. Employee Social Solidarity Fund Contribution:
                 A rate of 1 % of the gross salary should be deducted from the gross salary of
                 each employee and should be paid to the Social Solidarity Fund Department.


                 I hope that the above summary is useful to foreign as well as local companies
                 and individuals operating in Libya.

                 For those who need more details they are advised to contact the author on his
                 following address:




                 (Note: All amounts are in Libyan Dinar)




111 Harp Island Close, London, NW10 0DQ, UK – Tel +44208 208 3120 - Reg. No. 6554019. Email: info@soclibya.com www.soclibya.com

								
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