The creation of the TSEZ will attempt to overcome the barriers that have historically stymied foreign direct investment and prevented many local private sector businesses from expanding their operations in Lebanon.
Highlights
TSEZ is a method of stimulating economic activity, encouraging investment and attracting workers.
It is designed to provide local and international businesses with incentives to invest in development and infrastructure through reductions in taxes and regulation. TSEZ is planned to include a world-class infrastructure facility and is a true free Economic Zone in the region and the only such economic zone in Lebanon. Situated in Tripoli, the second largest city in Lebanon, and on the shortest path out to Syrian-Turkish trade routes, connecting east and west. It provides easy access to the growing economies of the Gulf, Levant and North Africa. Tax benefits are the most common form of incentive and can take the form of tax breaks or a tax holiday.
In addition to Tax benefits TSEZ offers a set of incentives for its designated users:
Fiscal Incentives:
- 100% customs exemption on imported raw material
- Duty-free export of finished goods
- Duty-free import of construction material, equipment, office machinery, and spare parts
- 100% exemption on VAT and excise tax for goods and services destined for exports
- 100% exemption on corporate profit tax (provided that not less than 50% of the workforce is Lebanese and the value of fixed assets pr capital is greater than the US $ 300,000)
- 100% exemption on withheld tax on salaries for employees of tenants and on social security contributions
- 100% exemption on building permit fees and built property tax
- 100% exemption on shares and bonds issued by companies with TSEZ
Financial Incentives:
- Total capital and profit repatriation
- Unrestricted currency conversion
- 100% foreign ownership of companies permissible
- Flexible Labor-law regulations with up to 50% Foreign Labor allowed
- No limitation on Local-market sales as a percentage of production
- No nationality conditions for board0of-directors representation
- Equal treatments between foreign and local investments
- No restrictions (export licenses) for local suppliers selling products of firms in the zone
- One-stop-shop: all business procedures streamlined through a one-stop-shop on the zone.
Sectors based incentives
The TSEZ model encourages value-added and knowledge-intensive industries and considers them the key target of the IDR (Incentive Distribution Rights). Six service based sectors are targeted for exemptions:
- Creative industries
- Educational services
- Financial advisory and consulting services
- Healthcare services
- Logistic services
- Tourism
Related activities Incentives provided:
- Exemption from Foreign Investment Committee rules
- Freedoms relating to foreign employment
- Exemption from corporate income tax for a period of 10 years from the commencement of activities
- Exemptions from withholding tax on royalty and technical fee payment to nonresidents for a period of 10 years from the commencement of activities
- Skilled foreign workers are exempt from tax on car purchases
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