Tax on Salaries and Wages - Ministry of Finance

General Information

Amounts Subject to Tax

The tax covers salaries, wages, indemnities, allowances, pensions, and lifetime allocations paid from: a public fund to every person residing in Lebanon or abroad; and a private fund to every person residing in Lebanon, as well as to every person residing abroad for services performed in Lebanon.

Amounts Exempt from Tax

The following amounts are excluded from income tax on salaries and wages:

Allowances received by clergy for performing religious rites only. Other amounts remain subject to tax, such as salaries and wages received by clergy for teaching.
Salaries and related benefits received by ambassadors of foreign countries, diplomatic representatives, consuls, consular representatives, and their foreign national employees, subject to reciprocity. Salaries and wages of Lebanese employees in foreign embassies in Lebanon, and non-Lebanese employees residing in Lebanon before their employment by the embassy, are subject to income tax on salaries and wages.
Salaries and related benefits received by military personnel belonging to the armies of allied countries.
Pensions granted to employees of the State, public institutions, and private institutions, as determined under retirement laws and regulations.
Lifetime allocations and temporary indemnities paid to victims of work accidents.
Wages of agricultural labor.
Wages of domestic servants in private homes. The exemption does not include income of persons working in homes who do not have the status of servants, such as nannies, cooks, gardeners, and other workers.
Wages of male and female nurses and servants in hospitals, orphanages, shelters, and other nursing and emergency institutions.
End-of-service indemnity determined according to the laws in force in Lebanon. Additional end-of-service indemnity paid above the legal indemnity is exempt from tax if decided in the following cases:
- Abusive dismissal ruled by courts.
- Additional dismissal indemnity granted under a general and comprehensive system covering all employees and approved by the Ministry of Labor.
- Additional dismissal indemnity granted under an arbitration decision.
- Exceptional additional dismissal indemnity granted under a general and comprehensive text.
Family allowances paid according to the laws and regulations in force, such as a collective labor agreement.
Benefits of the National Social Security Fund.
Salaries, related benefits, allowances, and pensions received by certain employees of regional or international organizations or unions, Law No. 114 dated 07/12/1991 and its amendments.

Deductible Amounts

For the purpose of calculating the net amounts subject to tax, the following are deducted from gross amounts:

Amounts withheld and paid for retirement in accordance with the laws and regulations in force.
Indemnities received by the employee/wage earner to cover expenses incurred in carrying out work required by the service, such as job expenses, representation allowance, transportation allowance, travel allowance, cash responsibility allowance, meal allowance, and clothing allowance, according to Law No. 137 dated 26/10/1999.
- Meal allowance: for determining the net amounts subject to tax, the meal allowance granted to employees and wage earners affiliated with the National Social Security Fund is deducted from gross amounts when granted as a meal or meal voucher usable at restaurants or food stores approved by the issuer, provided that the value of one meal does not exceed LBP 5,000 per employee for each actual working day. If the meal voucher is replaced by a cash allowance, it is considered a salary benefit and is therefore subject to tax.
- Clothing allowance: for determining the net amounts subject to tax, the clothing allowance granted to employees and wage earners affiliated with the National Social Security Fund is deducted from gross amounts when the nature of the work requires special clothing, provided that its value does not exceed the official monthly minimum wage as an annual clothing allowance. If the clothing allowance is replaced by a cash allowance, it is considered a salary benefit and is therefore subject to tax.
50% of the amounts paid as actual flight-hours allowance to pilots and other aircraft crew members subject to tax in Lebanon.
Certain social benefits: education grants, birth grants, marriage assistance, and assistance upon the death of a family member of the employee/wage earner, within the conditions and limits of the amounts set by the State Employees Cooperative, provided that these benefits are granted under a permanent and comprehensive system covering all employees and approved by the Ministry of Labor.

Family Deduction

Tax is imposed on net taxable amounts after deducting the family deduction as follows:

For each person:

Each person benefits from an annual family deduction of:

LBP 7,500,000 for the person themselves.
LBP 2,500,000 for their spouse if the spouse is dependent on them and does not work.
LBP 500,000 for each dependent child, up to a maximum of five children, under the following conditions:
- For a holder of a personal disability card, throughout its validity period.
- For males who have not exceeded the age of eighteen, or up to a maximum of twenty-five for those pursuing university studies.
- For females before marriage, or if widowed or divorced.

If both spouses have dependent children, the father is granted the deduction for them. The wife does not benefit from the deduction for her children unless she is widowed or the husband has a proven disabling condition and does not perform any paid work.

For an employee/hourly worker receiving daily wages:

An employee or hourly worker who receives daily wages benefits from a deduction equal to LBP 25,000 for each working day, regardless of family status.

For lump-sum wages:

Lump-sum wages are taxed at a rate of 3%, regardless of their amount, without benefiting from any deduction. Lump-sum wages are wages paid to workers and employees hired occasionally to perform temporary work on a piecework or quantity basis.

Notes:

The taxable income brackets and the basic deduction are prorated according to the period of work for which the wage is due, with the month calculated as 30 days.
If the employee/wage earner simultaneously carries out an activity subject to tax on commercial, industrial, and non-commercial profits, Chapter One, they benefit only from the deduction provided under Chapter One.
An employee/wage earner working for more than one employer must choose a main workplace where they benefit from the family deduction. Each other employer withholds the tax due on amounts paid to the employee without any family deduction.

Tax Rates and Brackets

Article 58 of the Income Tax Law sets the tax rates and brackets as follows:

Rates	Annual Brackets
2%	From LBP 1 to LBP 6,000,000
4%	From LBP 6,000,000 to LBP 15,000,000
7%	From LBP 15,000,000 to LBP 30,000,000
11%	From LBP 30,000,000 to LBP 60,000,000
15%	From LBP 60,000,000 to LBP 120,000,000
20%	Above LBP 120,000,000

The taxable income brackets and the basic deduction are prorated according to the period of work for which the wage is due, with the month calculated as 30 days.
These progressive rates and brackets are used to calculate tax on salaries and wages of employees and daily workers, and to calculate tax on salaries and wages of teachers, including hourly-contract teachers. Lump-sum wages are subject to tax at 3% without any deduction. Lump-sum wages are wages paid to employees and workers hired occasionally to perform temporary work on a piecework or quantity basis.

Wage, Related Benefits, and Cash and In-Kind Benefits

Definition of wage:

A wage is everything that enters the employee’s estate in return for the service/task performed for the employer in execution of the employment contract, regardless of its name or payment method.

Determination of wage:

The wage may be determined based on time, monthly, daily, or hourly, and/or based on production. It may be fixed or in-kind, such as providing housing free of charge or for a nominal fee, providing water, electricity, and telephone for the employee’s personal needs free of charge or for a nominal fee, etc. It may also take the form of commission, shares of profits, tips, allowances, etc. The wage may be paid in cash or in kind.

Salary benefits and cash and in-kind benefits:

In addition to the wage, the employee/wage earner may receive salary benefits and various cash and in-kind benefits, including, for example and not limited to: overtime compensation, transportation allowance, travel allowance, representation allowance, meal allowance, gifts, education grants, birth grants, etc.

Employer Obligations

Registration

1- Registration of the Company / Establishment

Company / establishment subject to profits tax

Persons exempt from profits tax, such as associations, educational institutions, etc.

Every taxpayer starting a new activity must notify the competent financial departments within two months from the date of commencement of business.
Registration mechanism:

For bodies, institutions, and associations exempt from profits tax, the commencement of business forms prepared by the Ministry of Finance are used for this purpose, and the registration request must be attached with the following supporting documents:

Copy of the title deed, investment contract, or statement from the owner that occupancy is by tolerance.
Copy of the articles of incorporation.
Personal identification, Form M11, for the person authorized to sign on behalf of the institution, in addition to a copy of their identity card.
Copy of the license if the taxpayer is required to have one before the competent official administration, such as the notification and information document submitted by an association to the Ministry of Interior and Municipalities.

The registration request is submitted to the Salaries and Wages Tax Department in Beirut for taxpayers in Beirut Governorate, while requests of other taxpayers are submitted to the various financial units in the governorates according to the tax center.

2- Registration of Employees / Wage Earners

The employer must send a “New Employee/Wage Earner Registration Request”, Form R3, once for each employee/wage earner currently employed, including those not subject to tax, in order to register them with the Ministry of Finance and obtain a financial number for each of them. This request is also sent when a new employee/wage earner is hired.
Employee/wage earner registration mechanism:
- The employee/wage earner records their personal information on “Information Statement from the Employee/Wage Earner to the Employer”, Form R4. This form is kept by the employer, and the information included in it is used as the basis for completing the registration request, Form R3. Form R4 is amended whenever any change occurs to the employee’s personal information.
- The registration request, Form R3, is attached with a copy of the identity card for an unmarried employee/wage earner and a copy of a family civil extract for a married employee/wage earner. The registration requests sent, Forms R3, are also attached to the employee/wage earner registration request letter, Form R1-3, which includes information about the company/establishment and a field indicating the number of registration requests sent.
Registration requests, Form R1-3 + Forms R3 with copies of identity cards or family civil extracts, are sent by post to:
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

A registration request must be sent for each employee starting work in the establishment or company within a maximum period of two months from the date of employment.

Penalty

For each violation of the provisions relating to the obligation to register employees with the tax administration, a flat penalty of fifty thousand Lebanese pounds is imposed for each employee or wage earner not registered within the specified deadline, or for providing incorrect information about them.

3- Keeping the Employee Register

The employee register must be kept by taxpayers subject to assessment on the basis of actual profit and on a basis other than actual profit, as well as institutions exempt from income tax, public institutions, municipalities, and unions of municipalities.
The employee register includes all information relating to the employee/wage earner, especially:
- Names of employees, officers, workers, assistants, and other wage earners.
- Amount of their salaries, wages, indemnities, and related benefits.
- Type of work, such as department manager or sales representative, and type of wage, monthly, daily, or hourly.
- Date they started work and, where applicable, date of interruption of work or dismissal.
- Family status of the employee/wage earner, single, married, widowed, divorced, and number of children.
- Amount of sums deductible from gross income as provided by law.
- Amount of tax withheld from the salary if the employee/wage earner is subject to tax.
This register includes information on all employees/wage earners, including those exempt from tax.
There is no specific form for this register. The employer may keep the employee register on paper or electronically, provided that the above information is clearly shown, without ambiguity, and without leaving blank fields.
Penalty for failure to keep the register: anyone who does not keep this register, or refuses to show it to the competent tax administration employees, is fined LBP 25,000 for each name omitted from it.

If the above-mentioned employers do not keep the employee register, refuse to present it or the documents required to determine the true taxable income, or refuse to allow competent employees to review them, they are also directly assessed for tax and penalty on the basis of income estimated by the competent financial departments.

4- Calculation and Withholding of Tax

The employer must calculate the tax for each employee/wage earner, withhold it at source, declare it, and pay it to the Treasury.
Tax calculation: upon each salary or cash/in-kind benefit due date, the accumulated income received by the employee/wage earner from the beginning of the year or from the start date of work, if work started during the year for which the tax is calculated, until the salary or benefit due date is calculated. The total deductible amounts according to the law and the family deduction for the same period are deducted, and the tax due is determined by applying the tax rates and prorated brackets for that same period, as provided in Article 58 of the Income Tax Law. The tax to be withheld is the difference between the tax due and what was previously withheld. No tax must be withheld when this difference is negative; in such case, it is deducted from tax that will become due later. Practical examples
Tax withholding: tax is withheld by the employer at source from salaries and wages paid to employees and wage earners.

5- Payment and Declaration of Tax

A - Periodic Statement R10

Submission of Periodic Statement R10 and Payment of Tax

All employers, regardless of their income tax assessment method, as well as institutions exempt from profits tax, are required to prepare the periodic statement for payment of income tax on salaries and wages “R10” for each quarter, regardless of the value of salaries and wages and the amount of tax due, even where no tax is due for the relevant quarter.
If a tax or penalty is due, an advance income tax payment notice, Form S1, is prepared, and the employer must pay the amounts due at any branch of banks operating in Lebanon or at any LibanPost office.
This statement, together with the advance payment notice “S1”, if tax or penalty is due, and a copy of the bank receipt, is sent every 3 months no later than the fifteenth day of the month following the relevant three-month period, exclusively by LibanPost - Ministry of Finance service, or any other company contracted by the Ministry of Finance for this purpose.

Deadline

The periodic statement R10 must be submitted and the tax, if due, paid for each quarter of the calendar year no later than the fifteenth day of the month following the relevant three-month period.

Penalty

If tax is due and the periodic statement is submitted within the deadline without paying the related tax, the late payment penalty, collection penalty, is imposed at 1.5% for each month of delay, with any fraction of a month considered a full month.
If tax is due and paid within the deadline without submitting the periodic statement, the penalty under Article 125 of the Tax Procedures Law is imposed at 5% of the quarterly tax, with a minimum of LBP 100,000 and a maximum of LBP 1,000,000.
If tax is due and the periodic statement is not submitted and the tax is not paid within the specified deadline, the penalty under Article 116 of the Tax Procedures Law is imposed at 5% for each month of delay, with any fraction of a month considered a full month, subject to the following minimum penalty:
- LBP 750,000 for joint-stock companies.
- LBP 500,000 for partnerships, limited liability companies, and institutions exempt from tax.
- LBP 100,000 for individuals and other taxpayers.
If no tax is due and the periodic statement is not submitted within the deadline, the minimum penalty under Article 125 of the Tax Procedures Law, amounting to LBP 100,000, is imposed.

In all cases, a collection penalty of 1.5% for each month of delay is imposed on the total paid outside the legal deadline, tax + penalty.

Amendment of the Periodic Statement by the Taxpayer

Pursuant to Article 40 of the Tax Procedures Law, a taxpayer who discovers that the periodic statement submitted to the tax administration contains an error or omission that does not result in additional tax may submit an amended declaration showing the error or omission, and pay the deficient tax and related amounts if due.

If the taxpayer submits the amendment of the statement within the deadline of the original statement, the amended statement is considered an attachment, and no assessment penalty is due on the additional tax, if any.

If the taxpayer submits the amended declaration within 30 days from the expiry of the original declaration deadline, no assessment penalty is due, provided that the amendment does not result in additional tax exceeding 10% of the tax due.

If the additional tax exceeds 10% of the tax due, or if the amendment is made after the 30-day period from the expiry of the original declaration deadline, the penalty under Article 110 of the Tax Procedures Law is imposed at 20% of the tax difference, with a minimum of:

LBP 750,000 for joint-stock companies.
LBP 500,000 for partnerships, limited liability companies, and institutions exempt from tax.
LBP 100,000 for individuals and other taxpayers.

B - Annual Declaration R5 and Individual Annual Statements R6

Submission of the Annual Declaration

All taxpayers, regardless of their tax assessment method, as well as institutions exempt from profits tax, must submit before the first of March of each year the annual declaration, Form R5, for the total salaries and wages of all their workers, whether taxable or exempt, regardless of their annual salaries or wages, together with an individual annual statement of the total income of each employee/wage earner, Form R6, and the tax withheld from it.
The annual declaration “R5” and the individual annual statement “R6” are considered one integrated unit.
The declaration submitted by the employer to the competent financial department must match the declaration submitted to the National Social Security Fund in terms of the names of employees/wage earners and the total salaries, wages, and indemnities paid to them.
If it is proven that the employer decided to pay or paid additional amounts to employees, such as a balance-sheet bonus, after January 15 of each year for the previous business year, these amounts are excluded from the late payment penalty provided that the tax due on them is paid within the legal deadline set for submission of the annual declaration.
The annual declaration “R5”, the individual annual statements “R6”, and the advance payment notice “S1”, if tax or penalty is due, are sent within the legal deadline, before the first of March, exclusively by LibanPost - Ministry of Finance service, or any other company contracted by the Ministry of Finance for this purpose.

Deadline

The annual declaration “R5” and the individual annual statements “R6” must be submitted before the first of March of each year.

Penalty

Every taxpayer who fails to submit the annual declaration, R5 + R6, is subject to a penalty of 5% of the tax due according to the declaration for each month of delay or fraction of a month, provided that the penalty does not exceed 100% of the tax due for the declaration and is not less than:
- LBP 750,000 for joint-stock companies.
- LBP 500,000 for partnerships, limited liability companies, and institutions exempt from tax.
- LBP 100,000 for individuals and other taxpayers.
If the declaration submitted by the employer to the competent financial department does not match the declaration submitted to the National Social Security Fund in terms of employee/wage earner names and total salaries, wages, and indemnities paid to them, the taxpayer is subject to a penalty of LBP 200,000 pursuant to Article 126 of the Tax Procedures Law.

Upon Cessation of Business / Upon Dismissal of Employees

Upon cessation of business: every employer who ceases business or transfers their establishment or shop before the end of the year must submit the annual declaration “R5” and the individual annual statements “R6” within two months from the date of cessation of business or transfer of the establishment or shop.
Upon dismissal of employees: an employee who leaves work is considered to have ceased work in relation to the employer, and the employer must submit to the competent tax unit, together with the annual declaration, a list of the names of employees who have left work.

Amendment of the Annual Declaration by the Taxpayer

Pursuant to Article 40 of the Tax Procedures Law, a taxpayer who discovers that the declaration submitted to the administration contains an error or omission resulting in additional tax may submit an amended declaration showing the error or omission, and pay the deficient tax and related amounts if due. If the taxpayer submits the amended declaration within the original declaration deadline, the amended declaration is considered an attachment, and no assessment penalty is due on the additional tax, if any.

If the taxpayer submits the amended declaration within three months from the expiry of the annual declaration deadline, no assessment penalty is due provided that the amendment does not result in additional tax exceeding 10% of the tax due.

If the additional tax exceeds 10% of the tax due, or if the amendment is made after the three-month period from the expiry of the original declaration deadline, the penalty under Article 110 of the Tax Procedures Law is imposed at 20% of the tax difference, with a minimum of:

LBP 750,000 for joint-stock companies.
LBP 500,000 for partnerships, limited liability companies, and institutions exempt from tax.
LBP 100,000 for individuals and other taxpayers.

Employee / Wage Earner Obligations

Employee / Wage Earner Working for a Resident Employer

One employer

More than one employer

Submission of Personal Declaration R8

Every employee, wage earner, or worker must submit the personal declaration for salaries and wages tax, Form R8, in each of the following cases:
- They simultaneously hold a job or work in several institutions or shops.
- They receive a pension or lifetime allocations.
- They simultaneously practice a profession subject to the tax introduced under Chapter One of the Income Tax Law. This declaration states the names and addresses of the various employers for whom they worked during the previous year, and the amounts received from each or due to them for that year. The computerized “R8” program may be used to complete 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 5% for each month of delay of 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 penalty or tax is due, an advance income tax payment notice, Form S1, is prepared, and the tax/penalty is paid at any branch of banks operating in Lebanon or at any LibanPost office.
Declaration mechanism: the “R8” declaration is sent with the advance income tax payment notice “S1”, if tax or penalty is due, exclusively by LibanPost - Ministry of Finance service, or any other company contracted by the Ministry of Finance for this purpose.

Employee / Wage Earner Working for a Non-Resident Employer

Registration

A resident employee/wage earner working for a non-resident employer must submit a personal identification, Form M11, in addition to a copy of their identity card, to the competent financial department in order to obtain a personal number from the Ministry of Finance used for submitting the tax declarations and statements due from them.
For employees of foreign embassies in Lebanon, a “resident” means the Lebanese employee/wage earner and the foreign employee/wage earner who was resident in Lebanon before the date of employment by the embassy.

Tax Calculation

All rights and obligations of the non-resident employer transfer to the resident employee/wage earner, such as the Lebanese employee/wage earner at a foreign embassy in Lebanon and the foreign employee/wage earner resident in Lebanon before employment by the embassy, especially regarding submission of declarations and payment of tax.
Upon each salary or cash/in-kind benefit due date, the accumulated income received by the employee/wage earner from the beginning of the year or from the date of starting work, if work started during the year for which tax is calculated, until the salary or benefit due date is calculated. The total deductible amounts according to the law and the family deduction for the same period are deducted, and the tax due is determined by applying the tax rates and prorated brackets for the same period, provided in Article 58 of the Income Tax Law. The tax to be withheld is the difference between the tax due and what was previously withheld. No tax must be withheld when this difference is negative; in such case, it is deducted from tax that will become due later. Practical examples.

Payment and Declaration of Tax

Periodic Statement R10

All rights and obligations of the non-resident employer transfer to the resident employee/wage earner, especially regarding submission of declarations and payment of tax.
Submission of periodic statement R10 and payment of tax:
- Every employee/wage earner working for a non-resident employer must submit the periodic statement for payment of salaries and wages tax “R10” for each quarter, regardless of the value of salaries and wages and the tax due on them, even if no tax is due for the relevant quarter, every 3 months no later than the fifteenth day of the month following the relevant three-month period.
- If a tax or penalty is due, an advance income tax payment notice, Form S1, is prepared, and the concerned employee/wage earner must pay the amounts due at any branch of banks operating in Lebanon or at any LibanPost office.
- This statement is sent with the advance payment notice “S1”, if tax or penalty is due, exclusively by LibanPost - Ministry of Finance service, or any other company contracted by the Ministry of Finance for this purpose.

Deadline:

The periodic statement “R10” must be submitted and the tax, if due, paid for each quarter of the calendar year no later than the fifteenth day of the month following the relevant three-month period.

Penalty:

If tax is due and the periodic statement is submitted within the deadline without paying the related tax, the late payment penalty, collection penalty, is imposed at 1.5% for each month of delay, with any fraction of a month considered a full month.
If tax is due and paid within the deadline without submitting the periodic statement, the penalty under Article 125 of the Tax Procedures Law is imposed at 5% of the quarterly tax, with a minimum of LBP 100,000 and a maximum of LBP 1,000,000.
If tax is due and the periodic statement is not submitted and the tax is not paid within the specified deadline, the penalty under Article 116 of the Tax Procedures Law is imposed at 5% for each month of delay, with any fraction of a month considered a full month, subject to the following minimum penalty:
- LBP 750,000 for joint-stock companies.
- LBP 500,000 for partnerships, limited liability companies, and institutions exempt from tax.
- LBP 100,000 for individuals and other taxpayers.
If no tax is due and the periodic statement is not submitted within the deadline, the minimum penalty under Article 125 of the Tax Procedures Law, amounting to LBP 100,000, is imposed.

In all cases, a collection penalty of 1.5% for each month of delay is imposed on the total paid outside the legal deadline, tax + penalty.

Annual Declaration R5 and Individual Statements R6

All rights and obligations of the non-resident employer transfer to the resident employee/wage earner, especially regarding submission of declarations and payment of tax.
Every employee/wage earner working for a non-resident employer must submit, before the first of March of each year, the annual declaration, Form R5, for the total of their salaries and wages, together with an individual annual statement of their total income, Form R6, and the tax withheld from it, with the advance income tax payment notice if any tax or penalty is due.

Deadline:

The annual declaration “R5”, the individual annual statements “R6”, and the advance income tax payment notice “S1”, if any tax or penalty is due, must be submitted before the first of March of each year.

Penalty:

Every taxpayer who fails to submit the annual declaration, R5 + R6, is subject to a penalty of 5% of the tax due according to the declaration for each month of delay or fraction of a month, provided that the penalty does not exceed 100% of the tax due for the declaration and is not less than:

LBP 750,000 for joint-stock companies.
LBP 500,000 for partnerships, limited liability companies, and institutions exempt from tax.
LBP 100,000 for individuals and other taxpayers.

If the declaration submitted by the employer to the competent financial department does not match the declaration submitted to the National Social Security Fund in terms of employee/wage earner names and total salaries, wages, and indemnities paid to them, the taxpayer is subject to a penalty of LBP 200,000 pursuant to Article 126 of the Tax Procedures Law.

References