Tax on Non-Residents
Definition
Amounts received in Lebanon by persons, companies or institutions that do not have a place of business in Lebanon, for activities subject to income tax, as well as profits, revenues and proceeds earned in Lebanon, are divided into two types:
- Compensation for services: this refers to work that requires expertise, such as technical consultations, occasional brokerage activities, and other professional or technical services.
- Other amounts paid to non-residents: these are amounts resulting from activities involving the provision of materials, supplies or other items, and are not considered services.
Tax Calculation
Compensation for services: the taxable amount is calculated by applying a profit rate of 50% to the original revenues, and a tax rate of 15% is then applied.
Other amounts paid to non-residents: the taxable amount is calculated by applying a profit rate of 15% to total revenues, and a tax rate of 15% is then applied.
Withholding, Declaration and Payment of Tax
Any person who pays amounts to non-residents must declare these amounts within the deadline set for declaring their own profits, after withholding the tax due from such amounts. This withheld tax must be paid to the Treasury together with the declaration.
Penalty
Failure to include the amounts paid to non-residents in the annual declaration:
5% of the tax due according to the amounts determined by the administration for each month of delay, with any fraction of a month considered a full month, up to a maximum equal to the amount of the tax due, provided that the penalty is not less than:
- LBP 750,000 for joint-stock companies, including joint-stock companies benefiting from exemptions.
- LBP 500,000 for partnerships and limited liability companies, including companies benefiting from exemptions, and institutions exempt from tax.
- LBP 100,000 for individuals.
In addition, a collection penalty, late payment penalty, of 1.5% is applied for each month of delay, with any fraction of a month considered a full month.
Forms
- 26: Statement of amounts paid to non-residents, personal income tax declaration, or income tax declaration for individual establishments.
- 26A: Statement of amounts paid to non-residents, income tax declaration for partnerships.
- 26C: Statement of amounts paid to non-residents, income tax declaration for capital companies.
- The tax is paid through the advance payment notice P1, Chapter One field.