Overview: Corporate Tax for Libyan Branches of International Construction Companies and Engineering Design / Technical Consulting Bureaus

Corporate Income Tax for Branches of Foreign Construction Companies and Technical Consulting / Engineering Design Companies

Overview

• In Libya, branches of foreign construction companies are required to follow the accrual basis of accounting. This is mandatory, even though Income Tax Law No. 7-2010 allows general taxpayers to choose between the accrual and cash basis methods for determining their annual net income.

• Annual corporate income tax rates in Libya: The annual corporate income tax rate for branches of foreign construction companies in Libya is 20% (see Articles 63 and 70 of the Income Tax Law No. 7-2010*).

• In Libya, the maximum corporate income tax rate for foreign design and engineering consulting firms can reach 40%. These entities are generally taxed on a "presumed profit" basis rather than actual net income. Because a significant portion of their expenses occurs outside Libya, the Libyan Tax Authority applies a presumed profit margin ranging from 25% to 40% of total revenue earned within the country.

• Deadline for Filing the Return: The return must be filed by the end of the official business day on the last day of the fourth month following the month in which the corporate income tax reporting period ends (April 30).

• Penalty for Failure to File a Tax Return on Time: If a taxpayer fails to file a tax return without a valid excuse, the taxpayer will be subject to a fine equal to the amount of tax due according to the final calculation (doubled at a rate of 100 percent).

• In the event of a late payment: For each delay lasting one month or part thereof, a penalty equal to 1% of the tax amount due will be imposed (up to a maximum of 12%).
• The taxpayer must either pay the assessed tax or file a formal objection within 45 days of receiving the tax assessment notice.

• Under Libyan tax law, corporate income tax (CIT) exceeding 100 LYD is paid in four equal quarterly installments. These payments are remitted directly to the Libyan Tax Authority, which operates under the Ministry of Finance. Installment Deadlines:
  • First Installment: March 10
  • Second Installment: June 10
  • Third Installment: September 10
  • Fourth Installment: December 10
  For instance, if a tax assessment notice is issued on July 17 and the taxpayer accepts it without objection, the first installment becomes due on the next scheduled payment date, which is September 10.
• The State's right to collect taxes is NOT subject to a statute of limitations  (https://libyabulteni.blogspot.com/2025/07/gnu-hukumetine-bagli-maliye-bakanligi.html).

(*) Below is the link to download Income Tax Law No. 7-2010 (Google Drive): 

https://drive.google.com/drive/folders/1_VsRnlCqN5cOcPZVbOKZY-lnlVueBBcC?usp=drive_link

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