Lebanon Payroll & HR Insight from a Global Payroll Outsourcing Leader
This guide is a must read before you either outsource your Lebanon payroll or build a local HR and Payroll function. As a Global Payroll Provider, Mercans can guarantee your full compliance with all the applicable regulations.
1.1 Registrations and Establishing an Entity
Registrations will depend on the legal form of the establishment. If it is a foreign company they can open a branch or a representation office in Lebanon. They should send the decision by official minutes and it should be legalized. In Lebanon you should appoint a lawyer in order to register the minutes of the ministry of the economy to obtain an authorization and then to be registered at the commercial register and they have to appoint a Lebanese manager for the entity.
After preparing all the necessary documents, it normally takes between one week and 10 days to complete the registration process.
The procedure of registering a company is as follows:
- Designate a Lebanese Lawyer
Each newly formed company must retain and pay an attorney on an annual basis.
Each newly formed company must retain and pay an attorney on an annual basis. On April 26 2012, the Beirut Bar Association increased the minimum annual retainer to LBP 9,000,000 effective as of January 2013. This retainer can be paid by the company during the year.
Start-up fees are set by the Beirut Bar Association at LBP 3,000,000. This usually takes (1 day)
- Deposit the Capital in a Lebanese Bank Account
This procedure can be carried out on the basis of a signed (or notarized) copy of the articles of association. This can sometimes take more than 2 days and accrues no charge.
For a personal entity or a branch, it is not necessary
- Register at the Company Registry
The applicant submits the following documents to the company registrar at the Ministry of Justice, along with the total amount of required fees:
- Articles of association
- Commercial circulars
- Minutes of the first general meeting of the partners
- Registration application and a draft of the registration certificate to be issued
- Document attesting the capital deposit
- Partners’ identity cards or passports (copy)
- Documents evidencing that the company is entitled to occupy the premises where it exercises its activities
Fee Schedule for Company Registration:
- Tax for the magistrates’ mutual fund: LBP 375,000 lump tax + 0.15% of the capital+ LBP 1,000 flat registration fee + LBP 500 application fee + LBP 1,000 certified copy + LBP 500 commercial publication fee
- Stamp duty: equal to 0.3% of capital + LBP 750,000 lump sum stamp duty + LBP 2,000 flat registration fee + LBP 1,000 application fee + LBP 2,000 certified copy + enrollment fee
(Qaydeyia) LBP 250+ LBP 1,000 Commercial publication fee
MINIMUM OFFICIAL EXPENSES FOR THE INCORPORATION
LEGAL FEES FOR THE INCORPORATION
|Lebanese Limited Liability Company (“LLC” or “SARL”)|
1400 USD (one thousand four hundred American dollars)
2000 USD (Two thousand American dollars)
|Lebanese Joint Stock Company (“SAL”), Holding Company and Offshore Company||1800 USD (one thousand eight hundred American dollars )||3500 USD (Three thousand five hundred|
|Branch of a foreign|
|1400 USD (one thousand four hundred American dollars)||2000 USD (Two thousand American dollars)|
Remark: The above‐mentioned official expenses are subject to changes depending on the number of shareholders and the amount of the capital.
TRADEMARK REGISTRATION AT THE LEBANESE MINISTRY OF ECONOMY AND TRADE
LEGAL FEES: 500 USD (five hundred American dollars) for one trademark
Remark: The official taxes related to Trademarks registration are excluded from this offer and are subject to changes depending on the number of classes. We shall provide the client with the precise amount in light of the file and before the initiation of the registration procedure.
- Notify the Ministry of Finance of Commencement of Business Operations
Agency: Ministry of Finance
Within 2 months of registration, the company must submit a notification of commencement of business activities to the Ministry of Finance in order to register for income tax and VAT. (2 Days – No Charges)
- Register at the National Social Security Fund (NSSF)
Agency: National Social Security Fund
This procedure has two functions: “Registration” of a new employee and The “Confirmation” by the system “Registration” function entails submitting a file for each new employee at the NSSF regional office closest to the company premises and obtaining a file reference number (or a receipt acknowledging the registration) immediately upon the submission.
Once this “Registration” function is completed, the business is considered to have fulfilled its legal obligations with the NSSF. The benefits to the newly registered employees, under NSSF rules, will also become immediately effective. The time to complete this procedure is 1 day and at no cost to the employer or the employee.
The “Confirmation” function consists of issuing a hard copy document (printed on a special size sheet) in the name of the registered employee along with his/her unique NSSF ID. Due to the lack of printing equipment at NSSF, the confirmation documents are printed in batches every few days or so. Therefore, it could take up to 30 days for a confirmation sheet to be received by the newly registered employee (1 day = no charges).
- File Internal Labor Regulations (règlement intérieur) with the Ministry of Labor
Agency: Ministry of Labor
When the number of employees at a company reaches 15 then the company will have to file internal labor regulations (règlement intérieur) with the Ministry of Labor according to Art. 66 of the Labor Code (1 day = no charges).
- Register for VAT
Agency: VAT Department
Registration for VAT is done at the VAT Department. To obtain a VAT certificate of registration, it takes 15 days. There are specific forms to fill out for each kind of registration. The VAT department is independent from the taxes’ department. The registration in both departments is free of charge.
- Obtain a Company Seal
Agency: Seal maker
Although not mandated by law, the majority of companies prefer to have company stamps. They can be order at any seal-making company.
It is mandatory to have an in-country bank account to process payroll in Lebanon.
Banks are open Monday to Friday (8:00am till 4:30pm) and Saturday (8:00am till 1:00pm), however working hours might vary between banks. All banks are closed on a Sunday and during official holidays.
1.3 Working Week
The typical working week in Lebanon is Monday to Friday from 8 am until 5.30 pm. Most offices are closed at the weekend.
Full Name: Lebanon Republic
Population: 6.082 million (World Bank, 2017)
Major Language: Arabic
Major Religion: Islam and Christianity
Currency: Lebanese Pound
Internet Domain: .lb
International Dialling Code: +961
How to say: –
Hello As-Salām ‘Alaykum
Good Morning Ṣabāḥul KẖAyr
Good Evening Masā’ Al-Khayr
Do You Speak English? Hal Tatakallam El-Ingliziyya
Good Bye Bāy Bāy
Thank You Shukran
See You Soon Ashoufak ‘Ourayyeb
2.1 Income Tax
- 1st quarter Jan-Feb-Mar: submission and payment before 15 April
- 2nd quarter Apr- May- Jun: submission and payment before 15 July
- 3rd quarter Jul- Aug- Sep: submission and payment before 15 October
- 4th quarter Oct- Nov- Dec: submission and payment before 15 January
Income tax law imposes a tax on all wages, salaries including overtime, gratuities and fringe benefits, after deduction of family allowances. Employers withhold the amounts due from salaries and remit them to tax authorities.
Taxpayers are required to submit their payroll tax, VAT, CIT (Corporate Income Tax) and BPT declarations electronically.
Taxpayers need to fill an electronic registration by visiting the MoF website www.finance.gov.lb
The MoF provides the taxpayer with an envelope including the e-Pin needed to access his account on the MoF website.
The E-filing service is currently available for VAT, CIT, payroll tax and BPT declarations only.
Brackets: (Monthly) LBP
Income Tax on Salaries (Monthly Brackets)
Taxable Amount LBP
Income Tax on Salaries (Yearly Brackets)
Taxable Amount LBP
2.2 Social Security
Lebanon commits to the principles of equality in rights and obligations and to the improvement of the socio-economic situation, which ensures the rights of its citizens through a comprehensive social approach, endorsed by all the Lebanese, to confirm social security on the basis of justice and equal opportunities.
It is important to understand that it is not an employee‘s responsibility to register with the social securities.
The employer must register all their employees and will deduct the part that should be paid by the employee at source and pay it on his behalf in addition to the rest of the taxes and social security contributions.
The Social Security contribution is as follow:
% paid by the Employee:
For sickness and Maternity (Medical): 3% (ceiling of lbp 2,500,000)
% paid by the Employer:
For sickness and Maternity (Medical): 8% (ceiling of lbp 2,500,000)
Family Allowances: 6% (ceiling of lbp 1,500,000)
End of service Allowance: 8.5% (on the whole salary)
Reporting Social Security for less than 10 employees should be done after each quarter of the year and its related payments should be done before the end of the following month. For 10 employees and more, the reporting should be made on monthly basis and its related payments made before the end of the following month. This needs to be paid before the end of next month.
Any delays in the tax or social security payment will be subject to the penalty.
2.4 New Employees
New starts need to be registered at the Social Security within 15 days from the starting date and 3 months from the starting date at the Ministry of Finance.
The following registration forms should be filled and submitted to the Ministry of Finance:
The forms can be found on Employment authority’s website or at the authorities’ offices.
The documents required for the registration are as follows:
- For Single: copy of the ID
- For Married: extract from the family civil register, issuance date does not exceed 3 months.
The other details required for the new starts are:
- Date of Birth
- Marital Status
- Number of Children
- Wife Working or Not
- Basic Salary
- Medical Insurance
The company must provide payroll authorities with the registrations numbers at the MOF and NSSF in case the employee was previously registered by another company if not, once registered he will get a fiscal number as well as a social security number.
Leavers are required to fill in and sign the leaver’s form which must be submitted to the social security. As for the ministry of finance, the employer should mention the leave information in the R7 declaration that is due at the end of the year, as well as from a legal perspective a clearance letter should be signed by the employee.
All payroll reports must be kept for 10 years in Lebanon.
Full time employees are entitled to 15 days paid vacation at the end of their first year of employment. Employees can accumulate two annual leaves. The employee should inform the employer when they want to take their leave, but it is up to the employer to approve the request
Each company is allowed to specify the holidays in its policy. Holidays are paid as normal and are calculated as regular pay, only transportation is deducted.
4.2 Maternity Leave
Female employees are entitled to 70 days paid maternity leave according to the employment law in Lebanon.
During the maternity leave, an employer cannot either issue a warning or terminate the employment contract unless the employee was already more than five months pregnant when she was hired.
There is no statutory paternity leave in Lebanon.
After an employee has been employed for more than three months, they are entitled to a half-month sick leave with full pay. The entitlement changes according to the number of years in service. An employer has the right to request a doctor to examine an employee requesting extended medical leave. If the sick leave exceeds the entitlement, the employer may deduct the extra days.
While the employee is on sick leave, the employer cannot issue any warnings or the dismissal notice for the employee. The employee can benefit from paid sick leave with a limit that depends on the number of working years at the company.
4.5 National Service
5.0 Employee Benefits
Expenses policy generally comprises of –
- General expenses: The expenses should be specified if they are for the interest of the Employees.
- Anything paid for the benefit of the Employees will be subject to Tax and Social Security.
- Car mileage is not subject to tax.
- Company cars used for business purposes are not subject to tax.
For Lebanese Employees
- Family extract should be submitted to prove the marital status and number of children. All the following Family benefits should be added.
Family allowances from social security for Married People:-
- For Wife not working: 60,000 lbp per month.
- For each child: 33,000 lbp per month per child up to 5.
The employee is entitled to 208,000 lbp per month for transportation, which is not taxable or 8,000 lbp per working day.
6.0 Visas & Work Permits
A permit from the Ministry of Labour is required for foreigners to work in Lebanon. The Lebanese law entitles the foreign workers who are in possession of a work permit to endure all the working and social rights while their stay in Lebanon. Social rights mean that they have to be registered at the social security but without the benefits, unless there is principle of reciprocity between Lebanon and the foreign country.
Free visas and Temporary Residence valid for a period of six months are granted on border departments and centres according to the following:
For Arab investors, Businessmen and their family members who are visiting Lebanon for the first time with the purpose of investment. This is followed by presenting an official document from the appropriate authorities proving their professional occupation in addition to a recommendation letter from the same authorities in favour of granting the visa. Businessmen and their family members will need to hold this letter from the Investment Development Authority of Lebanon (IDAL) in the favor of granting the visa in order to obtain a Visa.
For Arab investors, Businessmen, Traders and their family members their will require an invitation from a Lebanese businessman according to the following:
The invitee/employers must submit an application along with the supporting documents to the General Directorate of General Security that should include:
- A written commitment to bring over the employee on the applicant’s responsibility.
- A photocopy of his commercial record.
- A passport’s photocopy of the employee with an official document issued by the competent authorities certifying his professional occupation.
Investors and Businessmen mentioned in articles A, B, C above, possessing a temporary residence for a period of six months and who have already launched investment projects in Lebanon, can present a request to the General Directorate of General Security to obtain a yearly or a permanent residence, valid for three years which is renewable
For the citizens of the countries who have not granted immediate visas at the airport, their cases will be treated according to the following:
- Bankers, Directors/General Managers and employers after presenting a document that certifies their positions.
- People from Lebanese origin provided they present a proof.
- Touristic delegations of a minimum eight persons pursuant to an application presented by an authorized tourist company in Lebanon along with a departure commitment by that company.
- The patients coming for hospitalization and medical treatment according to a detailed report from a specialized physician justifying the reason of the medical treatment and hospitalization in Lebanon.
The rules for obtaining a Work Permit differ a bit depending on the type of work you intend to do.
The official rule is just like in many other countries it is important for the employer to prove that the work cannot be done by a Lebanese person. Once an individual has a work permit, they can apply for Residency Permit. More documents are required for the application and it takes about 10 working days to complete this phase. Like the work permit, residency is granted on an annual basis. If you obtain a work permit, you can apply for a temporary residency at the General Security within three months of your arrival to Lebanon.
A person eligible for residency may also apply for the same type of residency for their spouse, children and “servants and drivers” (as stated in the General Security’s official documents.) Employee’s spouse does not have the right to work in Lebanon on their work permit.
Work Permit and Residency
Power of Attorney to be legalized by a public notary should be issued in the name of the authorized person of the local company
Step 1: Preliminary acceptance from the Ministry of Labor
- Employee ID
- Colored copy of the passport valid for minimum 2 years and the original passport
- Two recent 3.5 x 4.5 photos
- Employee contract 1 hard original legalized at the public notary
- Legal documents of the local company (Commercial Circular, Commercial registration Certificate, Notice issued by the ministry of trade & economy, …)
Step 2: Once the preliminary is received from the Ministry of Labor the authorized person has to do the pledge at the public notary with the following documents:
- Preliminary acceptance signed by the Ministry of Labor + copy
- Colored copy of the passport valid for minimum 2 years
- Legal documents of the local company (Commercial Circular, Commercial registration Certificate, Notice issued by the ministry of trade & economy, …)
Step 3: Work Permit from the Ministry of Labor
- Medical insurance
- Principal lab exams, Tuberculosis tests, Chest x-ray (if required)
- The Notice issued by the Ministry of Trade and Economy.
- The Mother Company letter appointing the General Manager in Lebanon
- Copy of the passport valid for at least two years
Step 4: Residency
- Preliminary acceptance signed by the Ministry of Labor
- Passport valid for at least two years + 2 photocopies
- Three recent 3.5 x 4.5 photos
- Medical Insurance
- Employee contract 1 hard original copy legalized at the public notary
- Responsibility pledge legalized at a public notary
- Legal documents of the local company (Commercial Circular, Commercial registration Certificate)
- Rental deed legalized of the company location as well for the employee
Fees & Timeframe
First category employee:
|Lebanese Ministry of Labor|
|Preliminary acceptance||51.00||15 working days|
|Work Permit||1,271.00||20 working days|
|Notary for the pledge||41.00||1 working day|
|Employment contract 4/1000 to the Ministry of Finance|
on the total salary per year to issue 2 hard copies
(for MoL & General Security)
|Variable||1 working day|
|Notary for the Employment contract depends on the total salary per year||Variable||1 working day|
|Lebanese General Security|
|Residency||1,271.00||10 working days|
|Medical Insurance||Variable||1 working day|
|Others expenses will apply, such as fiscal stamps|
The above amounts might vary according to the lawyer who will be working on the constitution and also taken into consideration in case of an increase by the government on the charges related to the authorities.
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We are a borderless people engagement enabler, committed to make your teams happy. Driven by technology and innovation, we pride ourselves in being global people experts with striking local presence. We deliver bespoke human capital management services and innovative global payroll solutions to empower international businesses.
We are your reliable HR function outsourcing partner, delivering innovative HCM solutions, along with cutting-edge human capital management advice, to ensure consistent business growth, regardless of the size and industry of your company. We develop SaaS software and outsource HCM solutions tailored to 5,000+ clients across all continents.
Mercans operate globally, ensuring timely measurable results and bottom-line savings. We employ 500+ payroll and human resources specialists with in-depth local knowledge. Thanks to success-oriented teams striving for excellence and taking care of your organization’s tasks within budget, we have gained the trust of major multinational companies.
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