Global Mobility Services: Taxation of International Asignees - Libya

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1 Global Mobility Services: Taxation of International Asignees - Libya Taxation issues & related matters for employers & employees 2018

2 Last Updated: June 2018 This document was not intended or written to be used, and it cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer.

3 Country: Libya Introduction: International assignees working in Libya 4 Step 1: Income tax summary - Libya 5 Appendix A: Rates of tax 7 Appendix B: Double-taxation agreements 8 Appendix C: Contacts and offices 9 Additional Country Folios can be located at the following website: Global Mobility Country Guides Global Mobility Country Guide (Folio) 3

4 Introduction: International assignees working in Libya PwC is the world's leading provider of professional services. The People and Organisation group works together with its clients to find solutions for the challenges they encounter when transferring people from one country to another. This summary is intended to inform foreign nationals and their employers about high level tax, social security and immigration issues. This guide is not exhaustive and cannot be regarded as a substitute for professional advice addressing individual circumstances. Nevertheless, answers will be found to most of the questions raised by an expatriate or his/her employer. More detailed advice should be sought before any specific decisions are made about these issues. More information can be obtained from our offices specializing in People and Organisation, Global Mobility. 4 People and Organisation

5 Step 1: Income tax summary- Libya Question Basic information Answer 1 The date of the tax year end 31 December 2 Types of income that are liable to tax Trading, Partnership, Employment, Bank Deposits, Self Employment 3 How are residents and non residents treated differently for tax purposes? 4 Do spouses file tax returns jointly or as individuals? Any one working in Libya will be liable to pay tax No tax return for employees 5 Method of determining domestic tax residence Not mentioned in tax law 6 Provide some details of the exchange controls in this jurisdiction Tax rates, allowances and credits Central Bank approval is required for remidence of local currency abroad 7 Income tax allowance amount LD 1,800 for single, LD 2,400 for married plus LD 300 per child 8 Jihad tax 3% 9 Capital gains tax allowance amount NA 10 Rate of capital gains tax Treated the same as any other income 11 Rate of tax on interest 5% 12 Rate of tax on dividends None 13 Rate of employer social security 11.25% 14 Rate of employee social security 3.75% 15 What types of income are exempt from tax/deductible from taxable income? Before arriving in the country 16 What must an individual do in order to be able to work in the country ie obtain a work permit, intra company transfer visa, critical skills visa Saving bank account, Life assurance payment, agriculture income, foreign income, pension, health insurance, End of service bonus, cash for the accumulated leave at end of the service Work Visa is required Global Mobility Country Guide (Folio) 5

6 Question 17 What conditions must be met to be eligible to have a work permit 18 What is the maximum period a work permit will be issued for 19 Can a work permit be renewed Yes 20 What would be the immigration requirements for a short term business visitor 21 At what point/type of activity would trigger a tax liability in the country During the assignment Answer Applied through the local employer for allowed jobs for expatriates One year renewable Obtain business visa Any income generated in the country 22 Does an individual need to register as a taxpayer Yes through the employer 23 Timeline and process for registering as a taxpayer Week 24 Are provisional taxes required? No 25 If yes, on which dates? 26 If yes, what are the penalties for non compliance? 27 Important dates to remember during the tax year End of each month taxes have to be paid by the employer. Self employed have to submit tax return within 90 days after the year end At the end of the tax year 28 Tax return filing deadline Not applicable as it should be done on the monthly payroll for expatriates. Self employed is 90 days after the year end 29 Penalty for late filing NA for expatriates as they need employment through a registered entity in Libya 30 Tax payment deadline 60 days after the month end for payroll 31 Penalty for late payment 1% per month for a maximum of 12% of the value At the end of an assignment 32 The process and actions required before leaving the country Obtain final exit visa 6 People and Organisation

7 Appendix A: Rates of tax Personal income tax rates for 2017 Taxable income over Not over Income Tax rate (%) 0 LD 12,000 5% LD 12,001 Above 10% Global Mobility Country Guide (Folio) 7

8 Appendix B: Double-taxation agreements Countries with which double-taxation agreements are in place Malta Singapore United Kingdom 8 People and Organisation

9 Appendix C: Contacts and offices Contacts Husam Elnaili Fadel Zraig Tel: Tel: Husam.elnaili@ly.pwc.com fadel.zraig@ly.pwc.com Global Mobility Country Guide (Folio) 9

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