INDIVIDUAL TAXATION

Residents pay tax only on Lebanese-sourced income and foreign-sourced income from movable capital. Married couples are taxed separately and there is no option to elect for joint taxation.

INCOME TAX

There are three categories of income in Lebanon and each category is taxed separately. Business income and employment income are taxed at progressive rates; a different set of tax bands and tax rates apply to business income and employment income.

Business income are those income derived from industrial, commercial and professional activities; includes royalties, rent, and income from the exercise of liberal professions.

Employment income; includes salaries, wages, and pension payments

Income from movable capital; interest, dividends, and directors’ fees paid out of profits. Income from this category is taxed at a flat rate of 10%.

Residents are entitled to the following allowances:

• LBP7,500,000 million for single individuals (US$5,000)
• LBP10 million for married individuals (US$6,667)
• LBP500,000 (US$333) for each dependent child 18 years of age (25 years if pursuing advance studies) and below

RENTAL INCOME
Rental income is considered as business income and taxed at progressive rates. Income-generating expenses are all deductible when computing for the taxable income. Deductible expenses include depreciation costs (depreciation of the building is set at 2.5% per annum), expenses incurred by the landlord on behalf of the tenants (not exceeding 20% of the rental proceeds), and other management costs and charges for administering lease properties on behalf of the tenants (not exceeding 10% of the proceeds).

CAPITAL GAINS
Unless individual taxpayers are trading in real estate, capital gains on real estate are not subject to capital gains or profit tax.

PROPERTY TAX

Real Estate Tax

Real estate tax is levied on the annual net rental income of the property.