Libya Corporate Tax Guide 2026

Overview — Corporate Taxation in Libya

Corporate income tax in Libya is governed by Income Tax Law No. 7 of 2010 and its amendments, administered by the Libyan Tax Authority. Companies resident in Libya are taxed on their worldwide income; non-resident companies are taxed only on Libyan-source income. A company is considered resident if it is incorporated in Libya or has its place of effective management in Libya. The tax year is the calendar year, though companies may apply for approval of a different fiscal year.

Corporate Income Tax Rate

The standard CIT rate is 20% of taxable profits. In addition, a Jihad tax of 2% is levied on the same taxable base, bringing the combined effective rate to 22%. Key features:

• Standard CIT — 20% on net taxable profits
• Jihad tax — 2% additional levy (total 22%)
• Oil & gas companies — taxed under special production-sharing agreement regimes, typically at much higher effective rates
• Branches of foreign companies — taxed at standard rates (20% + 2%) on Libyan-source profits
• Small businesses — may qualify for presumptive tax regimes below certain turnover thresholds

Taxable Income & Deductions

Taxable income is calculated as gross revenue less allowable business deductions. Deductible expenses include:

• Cost of goods sold and raw materials
• Employee salaries, benefits, and social security contributions
• Rent and utilities
• Depreciation of fixed assets at prescribed rates
• Interest on business loans (subject to thin capitalization rules)
• Repair and maintenance costs
• Marketing and advertising expenses
• Taxes (excluding CIT and Jihad tax)

Non-deductible expenses include fines, penalties, donations (unless to approved entities), and certain entertainment expenses. Tax losses can generally be carried forward for up to 5 years.

Withholding Taxes

Libya imposes withholding taxes on certain payments to non-residents. Common rates include:

• Dividends — 5-10% WHT (rate depends on treaty or domestic law)
• Interest — 5% WHT on payments to non-residents
• Royalties — 5-10% WHT on payments to non-residents
• Technical service fees — 5% WHT on payments to non-residents

Libya has a limited double tax treaty network, primarily with Arab League countries. Payments to non-treaty countries may be subject to higher rates.

Filing & Payment

Companies must file annual corporate tax returns within four months of the end of the tax year (30 April for calendar-year companies). Estimated tax is payable in advance through quarterly instalments. The final tax liability is calculated at year-end, with any balance due upon filing or refunded. Late filing penalties and interest apply for non-compliance. The Tax Authority conducts audits and may issue assessments for up to 5 years after the filing date.

FAQs

Is the Jihad tax deductible for CIT purposes?

No, the Jihad tax is calculated on the same taxable base as CIT and is not deductible in computing taxable profits. Both taxes are paid on the same taxable income.

Are oil and gas companies subject to the standard CIT rate?

No, oil and gas companies operate under production-sharing agreements (PSAs) with the Libyan government, which typically impose higher effective tax rates and special fiscal terms.

Can foreign tax credits be claimed?

Libyan-resident companies can generally claim foreign tax credits for taxes paid on foreign-source income, subject to the terms of applicable double tax treaties and domestic law.

Disclaimer

This guide provides general information about Libyan corporate tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Libyan tax advisor or the Libyan Tax Authority for advice specific to your situation. InvestmentKit does not provide tax advice.