How to Register an Offshore Company in Lebanon [Legal Advice]
This series on registration and incoporation in Lebanon comes to Wamda courtesy of Michel Ghanem of Khalaf Law Firm and Lebanon Offshore, both of which offer preferred rates to Wamda Card members, offering offshore registration in only 4 hours at a fraction of typical costs, which can exceed $13,000.
Lebanese offshore companies can work everywhere but Lebanon, says Ghanem. While they can rent a local office and hire employees all of their products should be exportedm and cannot be sold to other Lebanese companies. The biggest benefit of registering offshore is that they only pay a yearly flat tax of US $650.
Below is a description of the criteria for registering an offshore company in Lebanon. For more on different types of registration, see our complete list on How to Register a Company in Lebanon.
Offshore Companies are governed by Decree-Law No.46 dated 24 June 1983 and the new Law No 19 dated 9 September 2008.
Purpose of Offshore Companies
Offshore companies are limited to the following specific activities:
Negotiating and signing of contracts regarding operations and dealings to be executed abroad and relating to products and goods existing abroad or in the Lebanese duty free zone.
Management of companies out of Lebanon whose activities take place exclusively abroad: export of professional, administrative and organizational services and the export of all types of software services to non-resident companies upon their request.
Triangular or multilateral trade operations that take place outside Lebanon. For this purpose it is possible for offshore companies to negotiate, sign contracts, ship goods, re-issue invoices for activities and operations outside Lebanon or from and into the customs free zones in Lebanon. This includes the use of customs free zone facilities in order to store merchandise imported for re-export purposes.
Performing maritime transport activities.
Acquisition of bonds, parts, shares and participations in non-resident foreign companies; and providing loans to non-resident companies in which the offshore owns more than 20% of the capital
Acquiring rights and/or exploiting rights for licenses of materials and merchandise; acting as agents or representatives of foreign companies in foreign markets.
Creation of branches and representative offices abroad.
Building, investing, managing and owning all types of economic projects
Opening letters of credit and obtaining loans to finance the operations and activities mentioned above, from banks and financial institutions in Lebanon and abroad.
Rental of offices and acquiring of real estate as necessary for the activity of the offshore company; complying with the law governing the acquisition of real estate by foreigners in Lebanon.
The Articles of Incorporation of Offshore companies must provide that it may not practice any activity other than the ones mentioned above.
Legal Obligations of Offshore Companies
Offshore Companies are subject to the following obligations:
Offshore companies are prohibited from carrying out insurance, banking and financial institutions' operations or any other operation carried out by other institutions subject to the control of the Central Bank;
Offshore companies may not as well receive any profits or revenues or income from financial capital or immovable property located in Lebanon or for rendering services to firms domiciled in Lebanon, except from interest revenue and revenues from trading in Lebanese treasury bills;
Except as otherwise specifically provided by the law, Offshore companies will be subject to all the provisions governing joint stock companies in all aspects;
The company may keep its accounts and books in the foreign currencies used in its operations;
Offshore companies must appoint at least one Lebanese auditor.
Offshore Companies will be registered at the Central Commercial Register in accordance with the Code of Commerce;
Offshore companies may only publish its annual balance sheet, the names of the members of the Board of Directors and the auditors in the above-mentioned Commercial Register;
Offshore companies are required to keep account records and prepare annual financial statements and submit declarations with payment of due tax to the competent Income Tax authorities, according to the laws governing joint stock companies;
It is possible for offshore board members to be foreigners; the Chairman is not required to obtain a work permit in case he is a non-Lebanese residing outside Lebanon;
An offshore company's chairman and board members are exempt from the legal ceiling provided for in Article 154 of the Lebanese Code of Commerce.
- Foreign employees working in Lebanon are exempt from the obligation of obtaining a work permit on condition that the annual budget (total assets) of the company is not below LBP 1 billion;
- Offshore companies are not required to abide by the provisions of Article 62 of the Law regulating the lawyers' profession in Lebanon except when: its capital exceeds LBP 50 million; or its overall assets value exceeds USD 500,000
As mentioned earlier, Offshore Companies are exempted from Income Tax and, instead, it shall pay a flat rate tax of LBP 1.000.000 (One Million Lebanese Pounds, or the equivalent of US $ 660). This tax will apply as of the first year of registration.
Also, Dividends distributed by Offshore Companies are exempted from Capital Gains Tax (invested capital).
Contracts and all other documents signed by the offshore company in Lebanon, related to its activities abroad, are exempt from the stamp duty tax.
Dividends distributed by offshore companies are exempt on income from movable capital.
Payments made to non-residents entities for work performed abroad are exempt from withholding tax.
Employees of offshore companies working abroad are exempt from payroll tax.
The offshore company shares and shareholders are exempt from transfer and inheritance taxes and all related fees.
1. The Articles of Incorporation must include the:
- Corporate Name (in Arabic and English).
- Corporate purpose ( The corporate purpose shall be limited to acts provided for in Decree Law no. 46/83 and the new Law No 19 dated 9 September 2008).
- Address of the Head Office (with the Lease contract or the Title deed)
- Capital amount of no less than thirty million Lebanese Pounds (LBP 30.000.000).
- Term of the Company.
- Required Quorum and Majority for the decisions of the Ordinary and Extraordinary Assemblies.
- Appointment of the Chairman.
- Signatory Powers.
- Type of shares (Nominative or to bearer shares).
2. Conditions related to the Capital:
- No less than the one-quarter of the value of the Company's shares must be paid-up upon subscription, and the General Assembly shall be empowered to request the full payment of the remaining amount.
- The Capital may be deposited in a foreign currency.
3. Incorporation documents attached to the Articles of Incorporation:
- Minutes of Meeting of the Organizational general Assembly confirming the subscription process and electing the first Board of Directors, unless the members of the first Board of Directors are appointed in the Articles of Incorporation.
- Minutes of meeting of the first Board of Directors appointing the Chairman and dividing the charges among the members.
- Request for incorporation comprising the names of the shareholders, the corporate purpose and the name of the authorized signatory.
- Commercial circular.
- Incorporation certificate.
- Appointment of one or more auditors.
- A list of the shareholders, the number and the value of the shares owned by each of them.
1. Copy of the bank deposit of the Capital.
2. Copies of the identity cards of the shareholders.
3. The Lease Agreement or the title deed.
4. If the shareholder is a moral person (a company), the following documents shall be provided:
- Articles of Incorporation of such company.
- Certificate of Registration of such company.
- Certificate of Signatory Power of such company (i.e. a document empowering a person to sign on its behalf).
- Minutes of Meeting of the General Assembly of such company empowering it to participate and own equity in Offshore Company, and appointing one person to sign on behalf it and to represent it in the Board of Directors of the Offshore Company.
If such company is foreign, all the abovementioned documents should be certified at the Commercial Registry of its country, by its Ministry of Foreign Affairs, and most importantly by the Lebanese Consulate.
- Incorporation Fees: US$ 2,200 - Legal fees for processing incorporation: US$ 2,000.
REQUIRED PERIOD OF REGISTRATION
24 hours as of the signature of the required documents in front of a Notary Public and the deposit of the Capital in the bank account.
SIGNATURE OF THE COMPANY’S DOCUMENTS
24 hours as of the date of obtaining all aforementioned documents.