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Posted By: Antoine Tabbakh | 24 Apr 2016

8 BARE MINIMUM CONSIDERATIONS FOR STARTING YOUR BUSINESS IN LEBANON

It seems a good time to invest in Lebanon, as interest remains high in spite of the current local and regional geopolitical situation due in general to the discovery of oil and gas, estimated as much as 30 trillion cubic feet of gas and 700 million oil barrels off the Lebanese offshore. Today, there are nearly 40 international oil firms’ queueing up to invest in Lebanon competing for the drill of its coastal water. The gas and oil primarily alongside foreign trade, banking, real estate investments in small units’ apartments due to high demand and the high-tech sector are leading the current economy that ought to have profound near-future effects on the economy and the get-up-and-go for a long-run economic growth drive.

  1. HALFWAY POINT LOCATION: ‘EAST MEET WEST’

Lebanon is located on the Eastern part of the Mediterranean sea and falls mid-point between 3 continents Asia, Europe and Africa which makes it a strategic hub and passage (by Sea, Air and Land) between East and West. Beirut today, with its largest and busiest ports, airport and major regional highways stand as an important international trading station with the surrounding Arab countries. Beirut offers a cosmopolitan life style, events and activities with nightlife full of entertainment and superior quality of health services and education.

  1. LAISSEZ- FAIRE ECONOMY AND BUSINESS ENVIRONMENT

Lebanon, rated one of the best in the MENA region, holds a free market economy, a strong laissez-faire commercial tradition and a liberal financial system with no constraints on capital flows or foreign workers’ work permits. Its skilled and competitive multi-lingual workforce (English, French & Arabic) is among the highest educated in the world holding university diplomas. Lebanon is a service-oriented country, the real GDP in 2014 registered a 2% growth rate and its composition by sector is:

  • agriculture: 5%
  • industry:  30%
  • services:    65%
  1. ADEPT CENTRAL BANK WITH STRONG BANKING SYSTEM AND SECRECY LAWS

The Central Bank’s retains foreign hard currency reserves in the area of 40 billion US$. Total private sector commercial banks’ deposits grew by 5% from prior year to US$151.6 billion by end of 2015 Interests earned on banks’ deposits care in the area of 4% for US Dollars and 6.5% for Lebanese Pounds. Lebanese banks are creative and forward-looking and are major providers of credit to individuals and businesses. Annual interest rates for US$ commercial loans ranges from 4% to 12% depending on certain financial and economic risks’ criteria. Inflation rates have been maintained below 5% and the currency exchange rate has been fixed and pegged at the rate of 1,500 LBP to 1 US$ since 1998. Gold reserves of roughly 287 tons, ranked 20th worldwide, provides coverage for the Lebanese Pound and foreign capital. To boost internal demand, sustain economic growth and job creation, the central bank has initiated stimulus packages of US$ 1.46 billion in 2013, US$.1.8 billion in 2014 and 2015 and is planning to launch another one in 2016 to keep the economy going.

  1. ATTRACTIVE INCENTIVES, CAPITAL FINANCING, TAX EXEMPTIONS AND BUSINESS SUPPORT

Domestic established programs and policies created by the public and private sectors aim to promote Lebanon financial development, direct investment in profitable projects, employment and economic growth. It include:

  • Kafalat And Central Bank Financing Schemes – guarantee loans to banks at very competitive lending rates to boost productivity in sectors such as manufacturing, tourism, crafting, IT, housing, educational, agriculture and environment.
  • Local Banks – provide competitive commercial terms’ loans.
  • Venture Capital Funds – help build new startups with high-growth/risk new technology or idea for exchange of ownership shares.
  • Business Incubators – support start-ups, SMEs and the launch of entrepreneurial projects by providing financial, training and technical assistance and creating networking opportunities.
  • Industry Associations – help companies expand their market reach and develop their business.
  • Governmental – provides companies with free trade, industrial and rural areas, fiscal, tax, capex, labor, export and other related incentives and exemptions.
  • Other Supporting Funds and Business Stimulus
  1. FAST AND INEXPENSIVE INCORPORATION OF COMPANIES, OFFICE SETUP AND BUSINESS LAUNCHING

Starting a new business in Lebanon can be relatively simple and open. It takes entrepreneurs only nine days, as per the World Bank’s, to start a business in Lebanon, compared to the average of 19 days in the MENA region’. The Lebanese legal system naturally safeguards private ownership of all form of assets. Several business structures with limited personal liability’s companies exist and foreign ownership is generally allowed. This includes the setting up of confidential, versatile and cost-effective offshore companies that carry its activities outside the Lebanese territory or in the free trade zone. For more information on regional offshore companies – Comparison Review: http://www.bsf-lb.com/offshore-formation.html

  1. COMPETITIVE CORPORATE FISCAL CHARGES, TAXES AND ANNUAL MAINTENANCE

Legal entities in Lebanon are subject to modest income tax rates on their net profits derived in Lebanon. Lebanon has also double-taxation treaties with many countries around the world.

For more information on taxation/per legal entity in Lebanon – Table Matrix:

http://www.bsf-lb.com/blog/category/Taxation

  1. EMERGING HOTTEST SECTOR THE “INFORMATION TECHNOLOGY”

It is moving forward robustly at a 8% growth and a market size of about US$400 million due for incentives provided by the central bank to high-tech start-ups of affordable in terms of financing and limited-loans guarantees executed thru the banks.

  1. REGIONAL CENTER TO THE MOST REMARKABLE MEDIA INDUSTRIES

Lebanon is considered the center in the Arab world with offices serving most of the region and a highly developed and creative sector that includes publishing, motion pictures, broadcasting, advertising and creative arts.

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