Lebanese Republic (Lebanon)

Lebanon operates a progressive income tax system that applies to residents and non-residents, with taxation based on annual income brackets. The personal income tax system is primarily governed by the Lebanese Income Tax Law enacted by Legislative Decree No. 144 dated 12 June 1959 and its subsequent amendments. Personal income tax is levied on various sources of income, including salaries, wages, bonuses, pensions and other employment benefits earned locally. Taxable income is calculated after applying personal deductions, family allowances for dependents (up to five children) and deductions for social security contributions. Tax rates range from 2% to 25%, although income brackets, allowances and thresholds have been significantly revised in recent years (notably under the 2022 and 2024 Budget Laws) to reflect inflation and currency depreciation. As a result, taxable thresholds are now set at much higher nominal LBP values and are subject to periodic updates. Social security contributions are mandatory with employers and employees required to contribute to the National Social Security Fund (NSSF) which covers health insurance, family benefits and end-of-service indemnities. Non-residents earning income from Lebanese sources are also subject to taxation taxation in accordance with territorial taxation principles. The tax structure is governed by the Lebanese Ministry of Finance.

Payroll taxes consist of a range of employer obligations related to employee compensation, primarily governed by the Lebanese Income Tax Law (Legislative Decree No. 144 of 1959) and the Social Security Law. Besides income tax with rates between 2% and 25%, employers and employees must contribute to the National Social Security Fund (NSSF). Employers contribute 22.5% (comprising 8% for sickness and maternity benefits, 6% for family allowances and 8.5% for end-of-service indemnities) while employees contribute 3% of the gross salary salary towards sickness and maternity coverage. While the contribution rates remain broadly unchanged, the salary ceilings used to calculate certain contributions (particularly sickness, maternity and family allowances) have increased. For example, the ceiling for sickness and maternity contributions has increased to LBP 120,000,000 per month as of 2025. Family allowance contributions are capped at LBP 18,000,000 per month. End-of-service indemnity contributions are calculated on the employee’s full salary without a ceiling. Foreign nationals working in Lebanon with valid work and residence permits can receive NSSF coverage (sickness, maternity, family allowances, etc.) only if their home country extends equivalent treatment to Lebanese workers. Payroll taxes are calculated based on gross salary for social security purposes and taxable income (after applicable deductions and allowances) for income tax purposes, and are subject to statutory rates and ceilings defined by law.

Employers are required to withhold personal income tax from employees’ salaries monthly and remit these amounts to the Ministry of Finance on a quarterly basis during the first 15 days of the month following the end of the quarter. NSSF contributions must be submitted by the 15th of the month following payment of salaries. Companies with fewer than ten employees must submit NSSF reports and pay contributions every three months. Additionally, employers are required to submit an annual payroll reconciliation by the end of February of the following year, summarising all wages paid and taxes withheld during the previous fiscal year.

Payroll providers and employers are required to maintain accurate and comprehensive payroll records, including salary details, tax withholdings, social security contributions and employee information. These records must be retained for a minimum of ten years to comply with tax, labour and NSSF regulations. Employers must also keep valid employment contracts, attendance logs, leave records and proof of salary payments such as bank transfer statements to prove payroll calculations. Employers must ensure timely and accurate submission of payroll declarations and payments to avoid penalties. Non-compliance, such as late filings, underreporting or incorrect payments can result in financial penalties, interest charges and potential legal action. The Ministry of Finance enforces strict compliance measures, and rounding rules apply to payroll taxes, requiring amounts to be rounded up to the nearest LBP 10,000 in favour of the treasury.