What are the most serious tax pitfalls to be aware of when considering an inbound investment into Lebanon?

The major tax pitfall we have in Lebanon is not directly linked to the tax itself, but to the entity’s performance. Most of our cases have been to do with compliance, involving lots of companies which never really paid attention to the laws around residency. There are regulations that define who is tax resident or not, and that clarify the application of withholding tax vis-à-vis income tax and other taxes.

Many businesses don’t have the best tax advice and therefore their activities are not in compliance with the rules relevant to their specific entities nor transactions.

For instance, foreign investors cannot own any companies engaged in financial monetary transactions, such as banks. These have to be owned by Lebanese. Another thing is that they often have the wrong tax adviser, without an international outlook, who is not aware of the proper application procedures for a double tax treaty.