UAE. Tax and Audit experts from Deloitte Middle East were prominent speakers in ‘Libya Focus Day’, a seminar held by MEED in Dubai on May 16, 2012.
Deloitte leaders provided valuable insights on the overview of Libya’s taxation and accounting framework and helped provide attendees with updates and guidance on doing business in Libya’s resurging infrastructure and energy sectors.
“The Libya market is not new to us. Our Middle East firm served Libya clients and international firms for many decades before the last regime took control. As part of our commitment to the Middle East and North Africa region, we are pleased to yet again support our Libyan and international clients in establishing and growing their businesses, as well as engaging the Libyan public sector in its ambitious plans for infrastructure and social reform,” said Omar Fahoum, chairman and chief executive of Deloitte in the Middle East.
Attendees at the seminar were advised on how to do business in Libya to support the country in its plans to expand economic capacity and enhance infrastructure. Shedding light on opportunities and challenges, Deloitte experts outlined the tax and accounting environment, and shared practical tips on operating in Libya.
In addition, they discussed regulatory changes set to take place in Libya throughout 2012 and well into 2013.
The most notable laws in the current Libyan Tax System were outlined by Deloitte experts as follows:
· Corporate Tax: The Income Tax Law which became effective on 1 April, 2010 provides for a 20% flat tax rate. Additionally, a 4% defense contribution and 0.5% stamp duty (on the total tax due) apply.
· Tax incentives include double taxation treaties with multiple countries such as Malta, UK, France, and Singapore. The New Investment Promotion Law does not apply to oil and gas projects.
· Payroll tax laws stipulate that social security contributions must be made by both the employer and the employee (employer contributes 11.25% of gross wages and salaries while the employee contributes 3.75%).
· Libya has no VAT or sales tax.
“Libya has been identified as a priority market for Deloitte, thus it is essential to enhance and strengthen our presence in Libya to support our clients and address the complexities of the market,” said Robert O’Hanlon, partner in charge for Audit Services, Deloitte Middle East. “We work to leverage global best practices, and integrate local knowledge and experience, to ensure that any strategies set forth to support clients and the Libyan economy will work,” he added.
As to registration and foreign investment laws in Libya, Deloitte experts outlined these during the event:
• Foreign ownership is currently limited to 65% of the share capital.
• Only companies undertaking an ‘allowed activity’ under the decision No. 13 of 2005 may register a branch in Libya. Allowed activities include: the Constructions and Civil Works field, Consultancy & Technical studies, Oil services, Communications, and Electricity and Environmental protection.
“There is an evident growing global interest in Libya, and many businesses will soon be opening in the country, creating a well-varied business environment. Due to the country’s ample natural resources, Libya can become a leading economy in the Mediterranean,” said Brandon George, Senior Manager, International Tax and M&A services, Deloitte Middle East.
Many industries are forecasted to change and develop in Libya, such as the Oil and Gas, construction and tourism sectors. Yet, Deloitte experts have identified short term challenges in setting up businesses in Libya, be it from sourcing skilled talent to understanding and managing regulatory and tax complexities.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.
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About Deloitte & Touche (M.E.):
Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence for over 85 years.
Deloitte is among the region’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with over 2,500 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region (International Tax Review World Tax 2010, 2011 and 2012 Rankings) and was recognized as the 2010 Best Consulting Firm of the Year in the Complinet GCC Compliance Awards.
In 2011, the firm received the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).