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How to start a new business in Lebanon

February 2013 | Servcorp

With a population of 4.6 million, an upper middle income, and a liberal economic system, Lebanon is at the heart of the Middle East and the crossroads of three continents. This makes it a real regional and international hub for trade, finance, services, culture, and tourism.

Starting a business in Lebanon raises two major questions: Why? and How?

Many investors and entrepreneurs consider Lebanon as an attractive business destination. The free market economy, the sophisticated banking system, and the availability of skilled workforce are all valuable incentives, reinforced by the existence of real opportunities in the Lebanese market.

The various investment opportunities come from both the Lebanese Government and the private sector. The privatization of many state-owned enterprises and the upgrade of others open a wide range of appreciated commercial opportunities.   Significant investment opportunities also exist in Lebanon's offshore oil and gas exploration.

Furthermore, the GDP growth (reaching 4% in 2012), the moderate tax rates, the electronic payment availability, the expanding infrastructure, the facilities offered to investors and with no restrictions on the movement of capital across the borders, starting a new business becomes an attractive approach!

Significant improvements have been implemented in Lebanon's mechanisms for paying taxes and business start-up procedures to facilitate this process for investors interested in entering the Lebanon market.  According to the World Bank's ‘Doing Business' 2012 report, opening a business in Lebanon consists of an average of five steps which can be done over nine days, compared to an average of 8.2 steps spread over 20.9 days in the MENA region.

There are seven types of companies to choose from, the most common legal form is the Société à Responsabilité Limitée “SARL”, a private limited liability corporate entity, and whose liability is limited to the contributions of its members. There are many providers of legal and documentation services in Lebanon, as well as business registration services.  Entrepreneurs can be assisted in the business setup process by not only legal providers, but a recently established “One-Stop-Shop” Service which facilitates the certification and licensing process.

To allow the business owners to concentrate their time and resources on their business, the Servcorp serviced offices provide access to fully furnished offices and well-equipped meeting room facilities in the Beirut Souks business district while reducing the financial risk and allowing more flexibility.

The corporate tax rate depends on the type of company. It ranges from a flat rate of 1,000,000 LBP for offshore companies to a maximum of 15% of profits. Distribution of dividends is subject to a 10% tax rate. Salaries and wages of employees are progressively taxed from a minimum of 2% to a maximum of 20%.

According to a report from Fakhry Law Firm, as part of the World Bank's Doing Business, to open and establish your own company in Lebanon, you must:

-          Designate a Lebanese Lawyer

-          Deposit capital in a bank and obtain the certificate of deposit

-          Register the company with the company registry

-          Notify the Ministry of Finance of the commencement of operations

-          Register at the National Social Security Fund