Doing Business in Lebanon
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Lebanon a Brief Survey
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Investment Climate
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Investment Climate


Foreign investment is welcomed and encouraged by the Lebanese government into the economy.

The major attractions of Lebanon to foreign investors are as follows:

  • A strategic geographical location as a transshipment point between a variety of Arab countries and overseas.
  • Free market economy with liberal investment policies.
  • Free foreign exchange market with no restrictions on the transfer of capital and earnings. The traditional banking secrecy law in Lebanon has, in 2002, been amended to empower the Special Investigation Committee (SIC) to lift bank secrecy and investigate suspicious transactions to ensure compliance with anti money laundering law.
  • Protection of private property and right and equality between the Lebanese and Non-Lebanese.
  • Variety of investment opportunities in all sectors of the economy.
  • Fairly low tax rates with room for tax structuring and planning.
  • Highly skilled, educated and multilingual (Arabic, English and French) workforce.


There is a ten years tax exemption on profits generated by industrial entities that are established after 1980 in areas that the government wants to develop and in which produce new products not produced in Lebanon before January 1, 1980 and own more than $300,000 in production assets.


The Investment Development Authority in Lebanon (IDAL) acts as a facilitator. It makes investment easier, faster, and more productive on both a short and long-term basis. The new Investment Development Law enables IDAL to assist in the setting up and operating business enterprises on Lebanese soil backed by new investment privileges, tax benefits, and incentives in the areas of tourism, agriculture, agro-processing, industry, technology, communications, and information technology among others. The key to IDAL efficiency lies in its "One-Stop-Shop" service: issuing licenses and permits, providing studies, offering the ideal match between the right entrepreneurs and the right investors.

A package deal contract is a contract whereby the Lebanese government, represented by IDAL, shall grant the investor willing to establish a project the incentives, exemptions, and reductions decided on by IDAL Board of Directors for this project, within the ceiling listed hereof (incentives), provided that the investor is committed under this contract to execute his project in accordance with the terms and duration contained therein.

The rights and obligations of both IDAL and the investor shall be specified in detail in the contract, including commitment by the investor to implement the project within a certain period of time. The contract is subject to the approval of the Council of Ministers based on a proposal of the Prime Minister, after being signed by IDAL and the investor.

Projects benefit from the package deal system shall be offered at maximum, the following incentives:

  • Full exemption from income taxes and taxes on project dividends for 10 years starting from the commencement date of the project exploitation.
  • Obtaining work permits of various categories, provided that the project benefiting of the package deal maintains local labor interests through employing at least two Lebanese nationals against one foreigner, and registration of same in the National Social Security Fund.
  • Reduction of work and residence permit fees up to a maximum of 50%, regardless of the category thereof and depending on the number of permits acquired. Also, the value of the certificate of deposit with the Housing Bank shall be reduced by half.
  • Exempting various Lebanese joint-stock companies aiming to acquire and/or manage an investment project benefiting from the provisions of the package deal contract, from the obligation of having Lebanese nationals or legal entities on the Board of Directors.
  • Reduction up to a maximum of 50% of permit fees for constructions needed for the execution of the project.
  • Full exemption from fees related to land registration at the Land Registry, and from fees for annexation, sub-division, mortgage, and registration of lease contracts at the Registry for estates where projects which are the subject of a package deal contract are to be built on, provided that the execution of same shall be within five years from the date of registration of the land at the Land Registry. An investor in default of implementation of the project thereof shall be liable to pay a penalty equivalent to three times the fees that were originally due.


The cumulative amount of subsidized interest loans to productive sectors in Lebanon reached $3.22 billion at the end of June 2010.

The industrial sector accounted for $1.9 billion, or (59%) of the total, followed by tourism with $946.6 million, agriculture with $302 million, specialized technology with $74.5 million and handicrafts with $1.2 million.

Subsidized interest loans extended in 2009 totaled $542.6 million relative to $465.5 million in 2008 and $245.4 million in 2007. The figures are compiled by the Central Bank of Lebanon.

Subsidized medium and long-term loans reached $2.18 billion, equivalent to 67.6 percent of the total at end-June 2010. Industry accounted for 59.5% of the total, followed by tourism with 34.6%, agriculture with 4.3% and specialized technologies with 1.7%.

The program was established in the first quarter of 1997 and consists of a 5-7% subsidy on the interest for loans extended in foreign currencies to productive sectors. Also, subsidized interest loans guaranteed by Kafalat Corporation totaled $730.7 million, or 22.7% of the total. Industry accounted for 53.1% of Kafalat-backed subsidies, followed by agriculture with 27.5 percent, tourism with 16.3%, special technologies with 3 percent and handicrafts with 0.2%. back to top


Kafalat is a Lebanese financial company with a public concern that assists small and medium sized enterprises (SMEs) to access commercial bank funding. Kafalat helps SMEs by providing loan guarantees based on business plans / feasibility studies that show the viability of the proposed business activity source. It processes guarantee applications for loans that are to be provided by Lebanese banks to SMEs operating throughout Lebanon.

Kafalat targets SMEs and innovative start ups that belong to one of the following economic sectors:

  • Industry
  • Agriculture
  • Tourism
  • Traditional Crafts
  • High Technology

Kafalat guaranteed loans benefit from interest rate subsidies. These subsidies have been set up to mitigate the crowding out effect of the high interest rates in Lebanon that are induced by public sector borrowing. The interest rate subsidies are financed by the Lebanese treasury and administered by the Central Bank of Lebanon. back to top


The Kafalat loan guarantee is issued based on the viability of the business project to be financed. The guarantee that is made in favor of the lending bank, allows the borrower to provide the bank with collateral, which makes the loan  safer for the bank. With the Kafalat loan guarantee, the bank may require less other collateral for the loan. In fact, Kafalat offers two types of guarantees that explicitly require the lending bank not to impose any additional collateral request on the borrower. The final decision (and the conditions) for granting the loan rests however in the hands of the lender. Kafalat constantly urges banks not to ask for other guarantees and to be content with the credit decision made based on the business plan and the feasibility of the project. back to top

In addition to the guarantee, the borrower benefits from a subsidy on the interest that is being charged by the bank. This allows SMEs to access bank funding at a reasonable cost.


Kafalat loan guarantee reduces the risk of the loan for the bank. Also Kafalat guaranteed loans in Lebanese Pounds benefit from exemption from the statutory reserve requirement by the Central Bank of Lebanon. This significantly reduces the cost of capital of the lending bank, allowing it to lend customers with lower interest rates. back to top


The Lebanese private sector is dominated by small and medium sized enterprises that face difficulties in accessing funds from commercial banks. Kafalat's loan guarantees help SMEs in Lebanon to access commercial bank debt financing. This allows SMEs to increase the financing of their business activities, which leads to increased domestic investment, output, and employment. back to top


In 2006, Kafalat has signed a partnership with the European Union and the Ministry of Economy and Trade of Lebanon (MOET) to increase the amount and the size of the loan guarantees beyond the level offered by Kafalat until 2005. This partnership comes as part of the Lebanese government's efforts in the formulation of an SME financial strategy and the promotion of economic development. The new guarantee types will consolidate Kafalat's initiative to encourage the financing of investment proposals based on business plans and credit appraisal, placing emphasis on the project's feasibility and viability instead of the borrower's net worth. Banks that will lend to SMEs based on the Kafalat loan guarantees developed under this partnership will be required not to impose any collateral requirements on top of the guarantee from Kafalat.

For SMEs and start ups, this partnership specifically aims to:

  • Ensure access to credit to finance sound investment projects, without having to provide any collateral requirement.
  • Increase and strengthen the equity of SMEs and start ups.
  • Promote the integration of SMEs and start ups into the formal sector by requesting from these companis to register as a condition for a loan application.
For commercial banks, this partnership specifically aims to:

  • Increase the maximum amount of loan that can be guaranteed under the scheme (beyond the level offered by Kafalat until 2005).
  • Provide incentives to commercial banks to be less risk averse basing their lending decisions on the project investment merits, cash flow and market opportunities.
  • Increase the amount of commercial bank lending available.
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Last Update: 03 April 2012

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