Libya taxes residents on worldwide income and non-residents on Libya-source income only. Libya's tax administration capacity has been significantly affected by ongoing political fragmentation since 2011, with parallel administrative structures in different parts of the country in some periods.
The Libyan tax year is the calendar year.
Libya's headline corporate income tax (CIT) rate is 20%.
The headline personal income tax (PIT) rate is 10%.
0% - Libya has no VAT.
Libyan tax law does not specifically address corporate residence; tax authorities instead assess any income derived from services provided in Libya. For Libyan-registered entities, income arising both in Libya and abroad (worldwide income) is assessable for corporate income tax, applied on the same basis to Libyan-controlled entities, foreign-controlled entities, and branches of foreign companies. Any foreign entity seeking to provide services in Libya must obtain a business license and register as a legal entity. Where a foreign entity is not properly registered or does not maintain statutory books per local regulations, a "deemed profit" basis of taxation applies to turnover, at rates varying by business activity type.
A non-Libyan entity has a Libya permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Libya on the entity's behalf, assessed under Libyan domestic law and any applicable tax treaty.
Libya has no Controlled Foreign Company regime. No provisions exist under Libyan tax law for attributing or currently taxing the undistributed profits of a foreign entity controlled by a Libyan resident, individual or corporate. This is consistent with the broader state of Libyan tax administration - the law also lacks defined rules for interest deduction limitations, corporate residence, and foreign tax credits, and Libya is not a participant in the OECD/G20 Inclusive Framework on BEPS.
No specific rules apply to the deduction of interest expenses in Libya - there is no debt-to-equity ratio or EBITDA-based limitation currently in force.
Libya does not use an elective check-the-box classification system. Libya does not have a comprehensive ATAD2-style anti-hybrid regime.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Per PwC's Libya tax summary, dividend income has not historically been subject to any additional taxation layer, and Libyan tax law contains no special provisions regarding inter-company dividends - effectively avoiding double taxation on distributed profits, though not through a formal exemption regime comparable to a European-style participation exemption.
Per PwC's Libya tax summary, no provision exists under general Libyan tax law for a foreign tax credit; relief from double taxation depends entirely on whether a specific double tax treaty has been concluded with the counterparty jurisdiction.
Libya has signed double tax treaties with roughly 10-13 countries per the US State Department, including Algeria, Belarus, Egypt, India, Italy, Kuwait, Malta, Pakistan, Singapore, Sudan, Saudi Arabia, Tunisia, and the UK; a UK treaty (signed 2008) has faced ratification delays. A UAE treaty has been negotiated at an initial-agreement stage but is not yet fully in force. Libya has no double tax treaty, bilateral investment treaty, or free trade agreement with the United States, though a Trade and Investment Framework Agreement (TIFA) was signed in December 2013 and ratified by Libya in February 2019.