Taxes on Salaries in Lebanon and the Expatriates

In Brief

The Labor relationship between the employee and employer takes one of the two type of contracts, either limited duration contract or unlimited duration contract, in both contracts salaries are subject to taxes and subscriptions , taking into consideration that foreign employer must be registered before the official authorities and the National Social Security Fund (NSSF),

Both local and expatriates employees are subject to salaries or income taxes, however, expatriates are subject to the legal regulations of work and residency permits,

The Salaries are subject to taxes before the Ministry of Finance and the National Social Security Fund As Follows:

A- Taxes to Ministry of Finance:

Each employer must submit to the said Ministry a yearly declaration before the first of march of each year, aforementioned declaration must state the number of employees and the total salaries paid to them, such declaration must be identical to the declaration submitted to the National Social Security Fund, all declarations submitted according to the specimens issued by the Ministry of Finance, the employer will be subject to penalties in case he commits any violation to declaration rules,

In addition to the yearly declaration, the employer must submit another yearly declaration for each employee states the total salaries paid to the employee after deduction of taxes and subscriptions, Such declaration submitted according to the specimen issued by the Ministry of finance,

In case the employer failed to submit the above declarations on time, he will be subject to penalties, the salaries taxes must be paid quarterly,

The Monthly Salaries Taxes are as follows:

- 1 000 L.L. to 500.000 L.L. 2%.
- 501.000 L.L. to 750.000 L.L. 4%.
- 751.000 L.L. to 1.250.000 L.L. 7%.
- 1.251.000 L.L. to 2.500.000 L.L. 11%.
- 2.501.000 L.L. to 5.000.000 L.L. 15%.
- Portion over 5.000.000 L.L. 20%.

There is a monthly deduction before calculating the taxes; the deduction is 625.000 L.L. if the employee is single, however, if the employee is married and his wife does not work, an additional amount 208.000 L.L. For wife and 41.000 L.L. for each child will be deducted,

B- Subscriptions to NSSF (National Social Security Fund).

Salaries are subject to NSSF subscriptions whether the employees are local or expatriates, with some differences,
Each employer must submit to the National Social Security Fund a yearly declaration before the 31st of march of each year, such declaration must state the number of employees and the total salaries paid to them, the said declaration submitted according to the specimens issued by NSSF, the employer will be subject to penalties, in case he commits any violation to declaration rules,

All Local employees are subject to the subscriptions and they benefit from submissions granted by NSSF Such as medical care, family compensations and end of services compensations,

Regarding Expatriates,

All expatriates are subject to subscriptions and they cannot benefit from submissions granted by NSSF unless there is a mutual convention between Lebanon and country where the expatriates belong, Lebanon has entered to such convention with four countries, said countries are France, Italy, Belgium and Britain , but signed execution protocol only with France, moreover, members of expatriates family do not benefit from said benefits if they are not reside in Lebanon permanently, in all cases they do not benfit from end of services compensation,

However, employer is not subject to the division of end of services subscriptions unless the employee itself can benefit from the end of services submissions granted by the NSSF.

The employer is not subject to the law of National Social Security Fund (NSSF) In case the expatriates who is working in Lebanon according to contracts singed abroad with foreigner organization if he proves that the expatriates benefit from social security submission in the country where the contract signed or in the country where the expatriates belong, such submissions must at least be equal to these provided in the Law of social security, in this matter the NSSF investigate case by case,

The NSSF Subscriptions for the three Divisions are as follows:

- End of services: 8.5%.
- Medical care: 12% payable to the limit of 2.500.000 L.L. the employee pays 3%, employer 8% and the state 1% of this subscription.
- Family compensation: 6% payable to the limit of 1.500.000 L.L.,

The employer must pay the NSSF subscriptions if the number of employees are ten and above for a specific month not later than the end of next month, in case the number of employees are less than ten, the employer must pay the NSSF subscriptions quarterly and not later than the end of next quarter regarding the previous quarter.
The employer will be subject to penalties in the amount equivalent to 1.5 per thousand for each delayed day if he failed to pay the subscriptions on time.

C- TAKING INTO CONSIDERSTION THAT RULES AND REGULATIONS MAY CHANGE.

Chehab Law Offices
Mar Elias – Beirut
Lebanon