General Information
Taxable Amounts
Salaries and wages tax applies to salaries, wages, indemnities, allowances, retirement pensions and lifetime allowances paid by a public fund to any person residing in Lebanon or abroad, by a private fund to any person residing in Lebanon, and to every person residing in Lebanon.
Amounts Exempt from Tax
The following amounts are exempt from salaries and wages tax:
- Allowances received by clergymen for performing religious rites only. Amounts received by clergymen for taxable activities such as teaching remain subject to tax.
- Salaries and related benefits received by ambassadors of foreign states, diplomatic representatives, consuls, consular representatives, and foreign nationals employed by them, subject to reciprocity.
- Lebanese employees working in foreign embassies in Lebanon, and non-Lebanese employees residing in Lebanon before their employment by the embassy, are subject to salaries and wages tax.
- Salaries and related benefits received by military personnel belonging to the armies of allied countries.
- Retirement pensions granted to employees of the state and public or private institutions, as determined by applicable retirement laws and regulations.
- Lifetime allowances and temporary allowances paid to victims of work accidents.
- Wages of agricultural labor.
- Wages of domestic workers in private homes, except where the exemption does not cover the income of persons working in homes without having the status of domestic servants.
- Wages of nurses, caregivers and service workers in hospitals, orphanages, shelters and other nursing and relief institutions.
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End-of-service compensation determined according to the laws in force in Lebanon,
and additional compensation exceeding the statutory compensation when decided in the following cases:
- Arbitrary dismissal compensation ordered by courts.
- Additional compensation granted under a general system covering all employees and approved by the Ministry of Labor.
- Additional compensation granted by an arbitration decision.
- Exceptional additional compensation granted under a general and comprehensive provision.
- Family allowances paid according to the applicable laws and regulations.
- Benefits of the National Social Security Fund.
- Salaries, allowances and retirement pensions received by certain employees of regional or international organizations or unions.
Amounts Allowed as Deductions
For the purpose of calculating the net taxable amounts, the following are deducted from the gross amounts:
- Amounts withheld and paid for retirement in accordance with the applicable laws and regulations.
- Indemnities received by the employee to cover expenses incurred in performing work required by the service, such as job expenses, representation allowance, transportation allowance, travel allowance, cashier responsibility allowance, meal allowance and clothing allowance.
Meal allowance: To determine the net taxable amounts, the meal allowance granted to employees registered with the National Social Security Fund may be deducted when it is provided as a meal or meal voucher, provided that the value of one meal does not exceed LBP 5,000 for each employee for each actual working day.
If the meal value is replaced by a cash allowance, this allowance is considered a salary benefit and is subject to tax.
Clothing allowance: To determine the net taxable amounts, the clothing allowance granted to employees registered with the National Social Security Fund may be deducted when the nature of the work requires special clothing, provided that it does not exceed the official minimum monthly wage for each annual clothing allowance.
Employer Obligations
Registration
1- Registration of the Company / Institution
Companies subject to profits tax:
Persons exempt from profits tax, associations, educational institutions...
- Every taxpayer starting a new business must notify the competent financial departments within two months from the date of starting business.
- The Ministry of Finance start-of-business form is used and must be accompanied by the required supporting documents.
- A copy of the title deed, lease contract, or owner’s statement that occupation is by tolerance.
- A copy of the articles of association.
- Personal identification form 11 for the person signing on behalf of the institution, together with a copy of their ID.
- A copy of the license where the taxpayer is required to obtain a license from a competent official authority.
- Registration with the Salaries and Wages Tax Department is submitted in Beirut for taxpayers in Beirut Governorate, while applications for other taxpayers are submitted to the financial units in the governorates according to the tax center.
2- Registration of Employees / Workers
- The employer must submit an employee / worker registration request, form 3, for all existing employees or workers in order to register them with the Ministry of Finance and obtain a financial number for each of them. The request must also be submitted when hiring a new employee or worker.
- The employee or worker records their personal information on form 4, which is kept by the employer.
- The registration request, form 3, must be accompanied by a copy of the Lebanese employee’s identity card and, for a married employee, a family civil extract.
- Registration requests sent using form 3 must also be accompanied by the employee registration list, form 3-1, which includes information about the company or institution and the list of registration applications submitted.
- The registration forms, form 3-1 and form 3, with copies of identity cards or family civil extracts, are sent by mail.
Address:
Ministry of Finance - Public Finance
Revenue Directorate - Salaries and Wages Tax Department
Justice Palace Area - Corniche El Nahr
Beirut - Lebanon
Postal Code: 20664291 Lebanon.
Deadline
The employee registration request must be sent within a maximum period of two months from the date the employee starts work in the institution or company.
Penalty
Any violation of the obligation to register employees with the tax administration is subject to a fixed penalty of LBP 50,000 for each employee or worker not registered within the specified deadline, or for providing incorrect information.
3- Keeping the Employee Register
The employee register must be kept by:
- Taxpayers subject to taxation on the basis of real profit, in addition to institutions exempt from income tax, public institutions, municipalities and unions of municipalities.
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The employee register includes all information relating to the employee or worker, including:
- Names of employees, officials, workers, assistants and other wage earners.
Employee Obligations
Employee / Worker with a Resident Employer
One employer / more than one employer
Submission of Personal Declaration R8
Every employee or worker must submit the personal salaries and wages tax declaration, form 8, in the following cases:
- They work at the same time in a job or activity in several institutions or shops.
- They receive a retirement pension or lifetime allowances.
This declaration shows the names and addresses of the different employers for whom the employee worked during the previous year, and the amounts received from each of them or due for that year. The R8 program may be used to fill this declaration.
Deadline
This declaration must be submitted before the first of May of each year.
Penalty
In case of delay in submitting the declaration, the penalty under Article 109 of the Tax Procedures Law is imposed at a rate of 5% for each month of delay on the tax due according to the declaration, with a minimum of LBP 100,000, in addition to a late payment penalty of 1.5% for each month of delay, with any fraction of a month considered a full month.
Payment of Tax / Penalty
If any tax or penalty is due, the advance payment notice for income tax, form P1, is prepared, and the tax or penalty is paid at any branch of banks operating in Lebanon or at any Libanpost office.
Declaration Mechanism
Declaration form 8, together with the advance payment notice for income tax P1, must be sent exclusively through Libanpost, or any other company contracted by the Ministry of Finance for this purpose.
Employee / Worker with a Non-Resident Employer
Registration
- The resident employee or worker employed by a non-resident employer must submit personal identification form 11, together with a copy of their identity card, to the competent financial department in order to obtain a personal number with the Ministry of Finance, to be used in all tax forms, declarations and statements due.
- For employees of foreign embassies in Lebanon, the Lebanese employee and the foreign employee residing in Lebanon before employment by the embassy are considered taxable.
Tax Calculation
All rights and obligations of the non-resident employer are transferred to the resident employee or worker. The cumulative income received by the employee or worker from the beginning of the year, or from the date of starting work, is calculated. If work started during the year, the related tax is calculated through the periodic declaration and statements.
The resident employee or worker is subject to the tax due in accordance with the Income Tax Law, and the rules related to declaration and payment of tax apply.
Payment and Declaration of Tax
Periodic statement D10.