EXECUTIVE SUMMARY

A June 2021  World Bank report estimated that Lebanon’s depression was likely to rank among the world’s top three most severe economic crises since the 1850s, noting that the “brutal and rapid” contraction in Lebanon’s GDP was of a magnitude usually affiliated with conflicts or wars.

The World Bank estimated Lebanon’s real GDP fell 5.4 percent in 2022, after 7 percent and 21.4 percent contractions in 2021 and 2020, respectively.  Lebanon’s currency, the Lebanese pound (LBP), has lost more than 98 percent of its value since 2019.  Inflation reached an estimated 186 percent in 2022.  According to the United Nations, the country’s income poverty rate increased from 25 percent in 2019 to 74 percent in 2021. Lebanon’s financial sector accumulated more than $72 billion in USD losses. As a result, Lebanese depositors face monthly withdrawal restrictions on their accounts, and some turned to armed robbery of their own banks to access their life savings. Public sector workers, demanding salary increases to keep pace with rising inflation, have stopped showing up to work or only work one or two days per week. Some essential public sector services – such as registering new home ownership – are either unavailable or significantly delayed. A growing number of Lebanese have felt compelled to emigrate in search of a better life.

The IMF and the government reached a staff-level agreement on proposed economic reforms in April 2022.  The government committed to executing eight reform-related prior actions that the IMF requires before its Executive Board will consider financing the $3 billion, four-year loan.  However, as of April 2023, the government has made only limited progress on these prior actions. An IMF delegation visited Lebanon in March 2023 and concluded that the country is at a “dangerous crossroads” and, absent critical reforms, faces “a never-ending crisis.”

The primary obstacle to undertaking these and other much-needed reforms remains persistent political paralysis.  Since the end of President Michel Aoun’s term in October 2022, Lebanon’s presidency has remained vacant.  Meanwhile, the country’s Cabinet is in caretaker status with reduced authorities per the country’s constitution, creating a “double vacancy” for the first time in Lebanon’s history. Even before this double vacancy, Lebanon’s politicians did not pursue reforms at a speed commensurate to the severity of the country’s economic crisis. The United States has called on Lebanon’s political leaders to set aside their partisan brinkmanship and work for the common good of the Lebanese people.

While the overall economic picture is bleak, there are still some sources of optimism. Lebanon and Israel finalized a historic agreement to demarcate their maritime boundary on October 27, 2022, with the United States playing a lead negotiator role.  The deal clears the way for Lebanon to develop underwater hydrocarbon resources, although industry experts expect it will be years before Lebanon could begin large-scale extraction, and the amount of any commercially extractable resources is still unproven. Additionally, Lebanon still has the underpinnings of a free-market economy with unrealized potential. The country benefits from a highly educated labor force, diverse culture, rich history, strong tourism appeal, and mild climate. The Lebanese diaspora community has provided a backstop to Lebanon’s economic woes through a steady flow of remittances and could be the country’s vanguard of renewed investment if conditions improve.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2022 150 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2022 N/A https://www.globalinnovationindex.org/analysis-indicator
US direct investment position in Lebanon (outward) US$M 2021 $346 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita, Atlas method 2021 $5,110 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

Policies Towards Foreign Direct Investment

Lebanon is open to Foreign Direct Investment (FDI).  The Investment Development Authority of Lebanon (IDAL) is the national authority responsible for promoting local and foreign investment in Lebanon covering the priority sectors: industry, media, technology, telecommunications, tourism, agriculture, and agroindustry.  IDAL seeks to facilitate international and local partnerships through joint ventures, equity participation, acquisition, and other mechanisms.  However, IDAL’s current operations are severely limited due to funding constraints.

IDAL has the authority to award licenses and permits for new investment in specific sectors.  It also grants special incentives and tax exemptions for projects implemented by local and foreign investors based on an investment’s geographic location, sector, and number of jobs created (Investment Law No. 360).  IDAL used to publish its investment incentives online by sector at http://investinlebanon.gov.lb/en/sectors_in_focus ; however, as of April 2023, the website is not operational.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign private entities may establish, acquire, and dispose of interests in business enterprises and may engage in all types of remunerative activities.  Lebanese law allows the establishment of joint-stock corporations, limited liability, and offshore and holding companies.

According to the United Nations Conference on Trade and Development (UNCTAD)’s latest investment policy review of Lebanon, the country allows only Lebanese nationals to obtain licenses to manufacture and trade products related to defense and weapons (Legislative Decree 137 of 12 June 1959, Weapons and Ammunition Law).  Only Lebanese nationals can own political newspapers and all broadcast media (Press Law of 14 September 1962, Broadcast Law 382 of 4 November 1994). A series of regulatory requirements also effectively restrict FDI in two other instances: fixed line telephony and energy transmission. Both are closed to domestic and foreign investors as they are currently operated by state-owned enterprises, which have a de facto monopoly.  Only Lebanese nationals are permitted to practice law.

Legislative Decree No. 35 (August 5, 1967), under the Lebanese Commercial Code, permits foreigners to own and manage 100 percent of limited liability companies (LLC or Société à Responsabilité Limitée – SARL), except if the company engages in certain commercial activities such as exclusive commercial representation.  In these cases, Lebanese citizens must hold a majority of capital, and the manager must be Lebanese (Legislative Decree No. 34 dated August 5, 1967).  An amendment introduced in 2019 allowed the formation of LLCs by only one person.

Legislative Decree No. 304 of the Commercial Code (December 24, 1942) governs joint-stock corporations (Société Anonyme Libanaise – SAL) and was amended by Law No. 126 on March 29, 2019.  Limitations related to foreign participation stipulate that: 1) one-third of the board of directors should be Lebanese (Article 144 amended); 2) board members can be either shareholders or non-shareholders (Article 147 amended); 3) one-third of capital shares should be held by Lebanese for companies that provide public utility services (Article 78); and 4) capital shares and management in cases of exclusive commercial representation are limited (Legislative Decree No. 34 dated August 5, 1967).  Banking, insurance, and cargo, which can only operate as joint-stock corporations (JSCs), are required to have a Lebanese majority on the board.

Holding and offshore companies are structured as JCSs and governed by Legislative Decree No. 45 (on holdings) and Legislative Decree No. 46 (on offshore companies), both dated June 24, 1983.  The law on offshore companies was amended by Law No. 85, dated October 18, 2018, whereby all board members may be non-Lebanese (Article 2, para 4) and the company may be formed by one person (Article 1 in the amendment of the Commercial Code).  A foreign non-resident chairman/general manager of a holding or an offshore company is exempt from the obligation of holding work and residency permits.  Law No. 772, dated November 2006, exempts holding companies from the obligation to have two Lebanese persons or legal entities on their board of directors. All offshore companies must register with the Beirut Commercial Registry.  The law does not permit offshore banking, trust, and insurance companies to operate in Lebanon.

There are size and quota limits that effectively curb foreign ownership of real estate as well. Law No. 296, dated April 3, 2001, amended the 1969 Law No. 11614 that governs acquisition of property by foreigners.  The 2001 law eased legal limits on foreign ownership of property to encourage investment in Lebanon, especially in industry and tourism, abolished discrimination for property ownership between Arab and non-Arab nationals and set real estate registration fees at approximately six percent for both Lebanese and foreign investors.  The law permits foreigners to acquire up to 3,000 square meters (around 32,000 square feet) of real estate without a permit but requires Cabinet approval for acquisitions exceeding this threshold.  The cumulative real estate acquisition by foreigners may not exceed five percent of total land in any district.  Cumulative real estate acquisition by foreigners in the Beirut region may not exceed ten percent of the total land area.  The law prohibits individuals not holding an internationally recognized nationality from acquiring property in Lebanon.  In practice, this restriction attempts to prevent Palestinian refugees who are long-term residents in Lebanon from owning property.

The Lebanese Government does not review FDI transactions for national security considerations.

Other Investment Policy Reviews

Lebanon is not a member of either the Organization for Economic Cooperation and Development (OECD) or the World Trade Organization (WTO).  UNCTAD, in collaboration with IDAL, published a comprehensive Investment Policy Review for Lebanon in 2018.  The report provides a thorough assessment of Lebanon’s business environment, with concrete short-, medium-, and long-term recommendations to revitalize Lebanon’s investment climate (but of course the report does not address challenges arising from the current economic crisis, as the crisis post-dates the report).  UNCTAD recommendations included creating an FDI promotion strategy and passing or amending legislation, rules, and regulations in the taxation, labor, competition, and governance regimes towards a more conducive business environment.  The full report is available at https://unctad.org/en/PublicationsLibrary/diaepcb2017d11_en.pdf

In March 2022, Konrad Adenauer Stiftung and Arabnet published   Braving the Storm: Safeguarding the Lebanese Innovation Economy  and followed-up with the articles Lebanese Innovation Ecosystem Post-Crisis Assessment – Part 1: Talent  and Part 2: Access to Capital  in January 2023. The report notes that the country’s economic crisis has severely impacted the Lebanese innovation ecosystem, much like the wider economy. Between 2017 and 2021, yearly total investments in local startups shrank by more than 70 percent, from $54 million to $16 million. The number of startup investment deals dropped from 56 to 12, which puts Lebanon in 14th place when it comes to the number of investments among 18 MENA countries, from second place in 2017. The resulting toxic environment has also led several startups to relocate outside of Lebanon, with an estimated 55 percent of companies having moved either their entire or part of their business abroad.

Business Facilitation

Lebanon does not have a business registration website; rather, IDAL has provided an information portal about doing businesses in Lebanon and outlines requirements at  http://investinlebanon.gov.lb/en/doing_business ; however, as of April 2023, the website is not operational.

According to the 2018 UNCTAD report, company establishment is cumbersome and costly in Lebanon. At the time of the report, it took an average of more than 15 days to establish an LLC with 15 employees or more in Beirut. Companies must typically register with one of five trade registers (Beirut, Bekaa, Mount Lebanon, North, and South) that operate in the country and is closest to the company’s location. LLCs and JSCs must also retain the services of a lawyer and auditor on a yearly basis, pay registration fees at the Ministries of Finance and Justice, and register employees at the National Social Security Fund.  Foreign companies seeking to establish branches in Lebanon must additionally register at the Ministry of Economy.  Online establishment is not available for companies wishing to incorporate in Lebanon, and information on establishment is scattered.  Foreign branches and representative offices can be partly registered online, but heavy administrative requirements remain. All foreign documents must be certified by the trade register in the company’s country of incorporation and legalized by the Lebanese embassy or consulate there and translated into Arabic.

Lebanon’s civil servants have been intermittently on strike in 2022 and 2023, not showing up to work or only working one or two days per week. These strikes have generally slowed the provision of public services, and at any given time, the availability of a specific public service is unpredictable. Investors should expect delays in their correspondence with government offices.

Outward Investment

Lebanon neither promotes nor incentivizes outward investment, nor does it restrict domestic investors from investing abroad.  However, informal capital controls imposed by Lebanon’s Central Bank prevent nearly all external transfers from accounts opened on or before October 17, 2019. Banks do allow outward transfers of money from so-called “fresh dollar” accounts, which include post-October 17, 2019, foreign currency deposits.

Lebanon has signed bilateral investment treaties with the following partners (in alphabetical order):  Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium/Luxemburg, Benin, Bulgaria, Canada, Chad, Chile, China, Cuba, Cyprus, Czech Republic, Egypt, Finland, France, Gabon, Germany, Greece, Guinea, Hungary, Iceland, Iran, Italy, Jordan, Korea (Republic of), Kuwait, Malaysia, Mauritania, Morocco, Netherlands, OPEC Fund, Pakistan, Qatar, Romania, Russia, Slovak Republic, Spain, Sudan, Sultanate of Oman, Sweden, Switzerland, Syria, Tunisia, Turkey, United Arab Emirates, Ukraine, United Kingdom, and Yemen.  For more information, please visit the Ministry of Finance’s website on:  http://www.finance.gov.lb/en-us/Finance/IA/IPA/ .

Lebanon is a member of the Pan-Arab Free Trade Area (PAFTA), which includes:  Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestinian territories, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates, and Yemen.  Lebanon has a free trade agreement with the European Union as well as the European Free Trade Association (EFTA), which includes Iceland, Liechtenstein, Norway, and Switzerland. Lebanon launched free trade agreement negotiations with MERCOSUR countries in 2016, which are unlikely to continue in the short term. The accession of Lebanon to the Agadir Free Trade Agreement (Egypt, Morocco, Jordan, and Tunisia) has been approved by member countries and awaits Lebanese Parliament’s ratification to enter into effect.

Lebanon does not have a bilateral taxation treaty with the United States. It has bilateral taxation treaties with Algeria, Armenia, Bahrain, Belarus, Bulgaria, Cuba, Cyprus, Czech Republic, Egypt, France, Gabon, Iran, Italy, Jordan, Kuwait, Malaysia, Malta, Morocco, Pakistan, Poland, Qatar, Romania, Russia, Senegal, Sudan, Sultanate of Oman, Syria, Tunisia, Turkey, UAE, Ukraine, and Yemen. For more information, please visit: http://www.finance.gov.lb/en-us/Finance/IA/TC/Pages/default.aspx .

Lebanon is not a member of the OECD Inclusive Framework on Base Erosion and Profit Sharing.

Transparency of the Regulatory System

Private firms should exercise caution when bidding on public projects.  Lebanese Government agencies have often sole-sourced contracts, undertaking direct contracting processes that operate according to differing standards and without a formal competitive solicitation.  Public institutions may evade regulations that promote full and open competition by splitting contract requirements into smaller solicitations whose values do not exceed government agency procurement limits.  Parliament passed a modern public procurement law (PPL) consistent with international standards in June 2021, updating Lebanon’s public procurement system for the first time since the 1960s.  The law took effect in July 2022, aiming to standardize procedures that all public institutions must follow when purchasing goods and services. A Ministry of Energy and Water tender to purchase fuel for electricity generation was conducted in November 2022 under the PPL, and the tender was published on the public procurement authority website: www.ppa.gov.lb. However, local media have highlighted instances questioning the government’s strict adherence to PPL requirements, including a preliminary, non-binding arrangement to build a second terminal at Beirut International Airport. The Public Procurement Management Administration (PPMA), known as the “Tender Board,” technically has the authority to review terms of reference and evaluate bids for government contracts. The Tender Board is generally transparent, but corruption can arise within the scope of the tenders and the ministries that issue them. The Central Inspection Board (CIB), an oversight body within the Office of the Prime Minister, oversees government administrative processes, and the Court of Audit has oversight over public expenditures.  The Social Security Fund and the Council for Development and Reconstruction, public entities that manage large funding flows, remain outside the CIB jurisdiction.

The 2018 UNCTAD report noted that commercial regulations impacting business operations are “outdated and the relevant procedures are cumbersome.”  Trademark registration, economic and trade indicators, and market surveillance reports are available online at: http://www.economy.gov.lb .  However, some procedures, including those related to branch offices or representative offices of foreign companies, or to protecting intellectual property rights, still require the right holder to visit the ministry in person to finalize and pay required dues.

All legislation, government decrees, decisions, and official announcements are published in the Official Gazette: http://pcm.gov.lb/arabic/landing.aspx?pageid=9 . The government does not publish proposed draft laws and regulations for public comment, but a parliamentary commission may invite private sector stakeholders to comment on legislation.  Telecom Law No. 431 requires the Telecommunication Regulatory Authority (TRA) to issue regulations in draft for public consultation to promote transparency and enable the general public to shape future regulations.  The TRA has not introduced new regulations since the term of its executive board expired in 2012.  Publicly listed companies adhere to international accounting standards.  In general, legal, regulatory, and accounting systems for Lebanese businesses in the formal sector accord with international norms.

Lebanon passed the Access to Information Law in 2017 to promote transparency in the public sector.  The law permits anyone, including foreigners, to request information from government agencies.  A Whistleblower Protection law also passed in 2018.  While the Whistleblower law is in force, the establishment of a National Anti-Corruption Commission (NACC) to oversee the law’s implementation was only approved by Parliament in April 2020, and its members were appointed in January 2022. The NACC’s operations are currently limited the due to a lack of resources. Lebanon announced in 2017 its intent to join the Extractive Industries Transparency Initiatives (EITI), a global standard to promote transparency of the extractive sector, though Lebanon has not yet joined. Parliament adopted the Transparency in Oil and Gas Law in 2018 to facilitate the EITI accession process.  To complete Lebanon’s candidacy, the Minister of Energy and Water announced that Lebanon would form a Multi-Stakeholder Group (MSG), with representatives from government, private firms operating in Lebanon, and civil society.  In March 2019, the Minister of Energy and Water invited civil society to choose independently its representative to the MSG, as per the EITI’s requirements. EITI membership will require annual data disclosures on licenses, contracts, beneficial ownership, payments, revenues, and production.

Draft budgets and an end-of-year reports are generally not published.  Information included in budgets was often not considered reliable or reasonably accurate, nor did it correspond to actual revenues and expenditures.  Details regarding allocations to and earnings from state-owned enterprises were limited.  Lebanon’s supreme audit institution does not make its audit reports publicly available.  Lebanon’s debt obligations are transparent, but Lebanon defaulted on its external debt in March 2020, and the Ministry of Finance stopped publishing quarterly sovereign debt reports after the Q4 2021 report. An independent auditor conducted a review of Lebanon’s Central Bank financial accounts and gold reserves in 2022. The Central Bank announced in November 2022 that the independent audit of the bank’s gold reserves confirmed the accuracy of the bank’s reported numbers. The final audit report, which examines both the gold reserves and the Central Bank’s financial accounts, was not publicly available as of April 2023.

Lebanon does not promote or require companies to disclose environmental, social, and governance policies to facilitate transparency and/or help investors and consumers distinguish between high- and low-quality investments.

International Regulatory Considerations

Lebanon is not part of any regional economic block.  It adopts a variety of standards based on the type of product and product destination.  Lebanon is not a member of the WTO but has held observer status since 1999.  Lebanon does have a WTO/TBT (technical barriers to trade) Enquiry Point that handles enquiries from WTO Member States and other interested parties.

Legal System and Judicial Independence

Lebanon has a civil (roman and codified law) legal system inspired by the French civil procedure code (three degrees of jurisdictions: First Instance, Appeal, and Supreme Court).  Property ownership is enforced by registering the deed in the Property Registry.  Lebanon has a written commercial law and contractual law.  Lebanon has commercial, civil, and penal courts but no specialized courts to hear intellectual property (IP) claims.  Civil and/or penal courts adjudicate IP claims.  Lebanon has an administrative court, the State Council, which handles all disputes involving the state.  Lebanon has a labor court in seven out of its nine governorates to hear claims of unfair labor practices.

Local courts accept investment agreements subject to foreign jurisdictions if they do not contravene Lebanese law.  Judgments of foreign courts are enforced subject to the Exequatur obtained.  The Lebanese Constitution guarantees the judicial system’s independence.  However, politicians and powerful lobbying groups often interfere in the court system.  Lebanon’s Parliament has discussed a draft law on the independence of the judiciary, but as of April 2023, it remains with Parliament’s Administration and Justice Committee. Additionally, judges and court officials have been intermittently on strike during 2022 and 2023, which has impeded normal judicial functions.

Laws and Regulations on Foreign Direct Investment

A foreigner may establish a business under the same conditions as a Lebanese national and must register the business in the Commercial Registry.  Foreign investors who do not manage their business from Lebanon need not apply for a work permit.  However, foreign investors who own and manage their businesses within Lebanon must apply for an employer work permit and a residency permit.  Previously, employer work permits stipulated that a foreign investor’s capital contribution cannot be less than LBP 100,000,000 (as of April 2023). The investor must also hire three Lebanese employees and register them in the National Social Security Fund within the first six months of employment.

Companies established in Lebanon must abide by the Lebanese Commercial Code and are required to retain the services of a lawyer to serve as a corporate agent.  Local courts are responsible for enforcing contracts.  There are no sector-specific laws on acquisitions, mergers, or takeovers, except for bank mergers.
Lebanese law does not differentiate between local and foreign investors, except in land acquisition (see Real Property section).  Foreign investors can generally establish a Lebanese company, participate in a joint venture, or establish a local branch or subsidiary of their company without difficulty.  Specific requirements apply for holding and offshore companies, real estate, insurance, media (television and newspapers), and banking.

Lebanese law allows the establishment of joint-stock corporations, limited liability, offshore, and holding companies.  However, offshore and holding companies must be joint-stock corporations (Société Anonyme Libanaise – SAL).  The Lebanese Commercial Code governs these entities.
IDAL’s website ( http://investinlebanon.gov.lb/ ) historically provided investors information on investment legislation, regulations, and starting a business; however, the website is not operational as of April 2023.  IDAL’s proposed changes to investment-related laws and regulations, including amending requirements for IT companies to benefit from IDAL incentives, are pending government approval.  IDAL has finalized a detailed Information and Communications Technology (ICT) plan aimed at expanding facilities, developing incentives, and facilitating investments in the ICT sector; it awaits Cabinet’s approval.  IDAL intends to focus its investment promotion strategy on attracting high value-added innovative investments related to all sectors under its mandate.

Competition and Antitrust Laws

Lebanon’s Parliament passed a new law on competition in February 2022. The law will nullify exclusive licenses granted to local companies in certain sectors and create a National Competition Commission to regulate competition. The law’s success in curtailing Lebanon’s many monopolies and attracting foreign investment depends, however, on its implementation. Local courts review claims on competition-related issues under various laws.

Expropriation and Compensation

The Law on Expropriation (Law No. 58, dated May 29, 1991, Article 1) and Article 15 of the Constitution specify that expropriation must be for a public purpose and calls for fair and adequate compensation.  The government pays compensation at the time of expropriation, but the rate is often perceived as below fair market value.  The government does not discriminate against foreign investors, companies, or their representatives on expropriations.

 

The government established three real estate companies in the mid-1990s to encourage reconstruction and development in Greater Beirut following the Lebanese Civil War:  1) private corporation Solidere for the development and reconstruction of Beirut’s downtown commercial district; 2) private corporation Linord, for northern Beirut; and 3) public institution Elyssar for the southwest suburbs of Beirut.  Linord has been dormant for years, and Elyssar’s projects have stalled since 2007.

Dispute Settlement

ICSID Convention and New York Convention

Lebanon is a member of the International Center for the Settlement of Investment Disputes (ICSID Convention).  Lebanon ratified the 1958 Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) in 2007.  Lebanese law conforms to both conventions.

Investor-State Dispute Settlement

The government accepts international arbitration related to investment disputes.  In cases involving concessions or public projects, the government does not accept binding international arbitration unless the contract includes an arbitration clause that was obtained through prior approval by Cabinet decree.  However, there is an exception for investors from countries that have a signed and ratified investment protection agreement with Lebanon, which provides for international arbitration in the case of disputes.  In the past, the government has faced challenges related to previously awarded contracts and resorted to international arbitration for resolution.

International Commercial Arbitration and Foreign Courts

International arbitration is accepted as a means to settle investment disputes between private parties.  The Lebanese Centre for Arbitration was created in 1995 by local economic organizations, including the Lebanese chambers of commerce, industry, and agriculture.  The Centre resolves domestic and international conflicts related to trade and investment.  Its statutes are similar to those of the International Chamber of Commerce (ICC) in Paris, and its conciliation and arbitration rules are modeled on those of the Paris ICC.  Judgments of foreign courts are enforced subject to the exequatur obtained.

Bankruptcy Regulations

Lebanon does not have a standalone Bankruptcy Law.  However, the Commercial Code (Book No. 5, Articles 459-668) and the Penal Code govern insolvency and bankruptcy for all private and public entities. Workers may resort to the Labor Court and the National Social Security Fund to recover pay and benefits from local and foreign firms that go bankrupt.  The law criminalizes fraudulent bankruptcy.  As of April 2023, Parliament is considering a new bank resolution law that outlines procedures for bank restructuring and liquidation, which seeks to address one of the IMF’s eight prior actions.

Investment Incentives

Lebanon’s Investment Law No. 360 encourages investment in information technology, telecom, media, tourism, industry, agriculture, and agro-industry.  The law divides the country into three investment zones, with different incentives in each one.  These include facilitating permits for foreign labor and tax benefits, which range from a five-year, 50 percent reduction on income and dividend distribution taxes to a total exemption of these taxes for 10 years, starting from the date of operation (tied to the issuance of the first invoice).  Companies that list 40 percent of their shares on the Beirut Stock Exchange (BSE) are exempt from income tax for two years.  The law also introduces tailored incentives through package deals for large investment projects, regardless of the project’s location.  These may include tax exemptions for up to 10 years, reductions on construction and work permit fees, and a total exemption on land registration fees.  IDAL exempts joint-stock companies that benefit from package deal incentives from the obligation to have a majority of a board of directors be Lebanese nationals (Law No. 771, dated November 2006).  Investors who seek to benefit from work permit incentives under package deals must hire two Lebanese for every foreigner and register them with the National Social Security Fund.  In 2019, Parliament approved amendments to Investment Law 360 that would expand incentives to existing projects and grant additional incentives to ICT and telecom projects. In July 2022, Cabinet approved implementation decrees for this legislation and included additional tax exemption incentives.  The government does not have a practice of issuing guarantees or jointly financing foreign direct investment projects.

Other laws and legislative decrees provide tax incentives and exemptions depending on the type of investment and its geographic location.  Industrial investments in rural areas benefit from tax exemptions of six or 10 years, depending on specific criteria (Law No. 27, dated July 19, 1980, Law No. 282, dated December 30, 1993, and Decree No. 127, dated September 16, 1983).  Exemptions are also available for investments in South Lebanon, Nabatiyeh, and the Bekaa Valley (Decree No. 3361, dated July 2, 2000).  For example, new industrial establishments manufacturing new products benefit from a 10-year income tax exemption.  Factories currently based on the coast, which relocate to rural areas or areas in South Lebanon, Nabatiyeh, or the Bekaa Valley, benefit from a six-year income tax exemption.
In the 2022 budget legislation, Parliament increased the income tax reduction on industrial exports from 50 to 75 percent, provided that proceeds of such exports are transferred back to Lebanon and reinvested in industrial activity in Lebanon.  Industrial and commercial companies also benefit from total income tax exemption for a period of seven years if operating in certain regions (in addition to a total exemption on construction fees), provided that 1) their invested capital is at least $1 million, and 2) they employ at least 50 Lebanese or more than 60 percent of their total employees are Lebanese. The 2022 budget law also exempts solar power and other clean energy equipment from value-added tax (VAT) and custom duties.

Domestic and foreign investors no longer benefit from Central Bank subsidies for the import of industrial raw materials. The government grants customs exemptions to industrial warehouses for export purposes.  Companies located in the Port of Beirut or the Port of Tripoli Free Zones benefit from customs exemptions and are exempt from the VAT for export purposes.  They are also not required to register their employees with the National Social Security Fund, if they provide equal or better benefits.

When operating, IDAL promotes and supports Lebanese exports, especially in the agriculture, agro-industry, and industry sectors, by providing assistance on export requirements and studies on potential new markets, supporting exporter participation in international fairs and exhibitions, as well as subsidizing export transportation costs.

Foreign Trade Zones/Free Ports/Trade Facilitation 

Foreign-owned firms have the same investment opportunities as Lebanese firms.  Lebanon has one duty-free zone at Beirut-Rafik Hariri International Airport and two free trade zones, the Ports of Beirut and Tripoli.  The WTO-compatible Customs Law issued by Decree No. 4461 fosters the development of free zones (Articles 242-261 cover free trade zones and Articles 262-266 cover duty free zones) and is available online at  www.customs.gov.lb . The government enacted Law No. 18, dated September 5, 2008, that established the Tripoli Special Economic Zone (TSEZ) to attract investment in trade, industry, services, storage, and other services, as well as to grant investors tax exemptions and offer other incentives such as relaxed allowances for foreign labor and unrestricted currency conversion.  On April 9, 2015, the Cabinet appointed a TSEZ Authority to regulate the zone, and according to the TSEZ Authority, it received from the International Finance Corporation a policy note for the licensing regime and the regulatory framework. The TSEZ Authority is developing its licensing regime to grant licenses for logistics and industrial activities and has completed the strategic environmental impact assessment and detailed design for all infrastructure.  The master plan for the industrial and logistics site next to the Port of Tripoli is complete and awaits Cabinet approval.

The Cabinet approved in 2018 expanding the TSEZ’s geographic area to include an additional 75,000 square meters of the Rachid Karami Fair and to establish a knowledge-innovation center.  The TSEZ Authority has completed the architectural concept for the Rachid Karami zone for knowledge and innovation center and will start with the Master Plan in 2023. The Cabinet has not yet approved projects for the TSEZ.

Performance and Data Localization Requirements

Registration with a chamber of commerce is required to import and handle a limited number of products subject to control requirements for safety reasons.  Products with such special import requirements constitute less than one percent of total tradable goods.  Registration with a chamber of commerce is required to ensure that established facilities meet safety, handling, and storage requirements.

 

Lebanon does not follow any forced localization policy and does not require foreign IT providers to turn over source code or provide access to surveillance.  Lebanon’s Central Bank requires all banks to keep data backups in Lebanon, while service providers are required to do the same.

Real Property

The right to private ownership is respected in Lebanon.  The concept of a mortgage exists, and secured interests in property, both movable and real, are recognized and enforced.  Such security interests must be recorded in the Commercial Registry and the Real Estate Registry.  The Real Estate Law governs acquisition and disposition of all property rights by Lebanese nationals, while Law No. 296, dated April 3, 2001, governs real estate acquisition by non-Lebanese.  Over 20 percent of land, mostly in rural and remote areas, does not have clear title.  The government is undertaking efforts to identify property owners and register land titles. As of April 2023, Lebanon’s public sector employees are intermittently on full or partial strike, and therefore investors may face substantial delays in registering real property transactions.

Intellectual Property Rights

While Lebanon is not a WTO member, its intellectual property rights (IPR) legislation is generally compliant with Trade-Related Intellectual Property Rights (TRIPS) standards. The Ministry of Economy and Trade’s (MOET) Intellectual Property Protection Office (IPPO) has led efforts to improve the IPR regime .  Lebanon’s Internal Security Forces (ISF) and Customs play roles in enforcement.  The understanding of IPR within the Lebanese judiciary has improved somewhat in recent years, but gaps remain.  The MOET’s draft Patent Cooperation Treaty law (approved by the Cabinet in 2022 but yet to be approved by Parliament), aims at improving the IPR environment and is geared toward compliance with IPR treaties. During the past year, Lebanon did not enact any new IP related laws or legislation. Lebanon does not track nor report on seizures of counterfeit goods.

Existing IPR laws cover copyright, patent, trademarks, and geographical elements.  Lebanon’s 1999 Copyright Law largely complies with WTO regulations.  Copyright registration in Lebanon is not mandatory, and copyright protection is granted without the need for registration.  The MOET launched an online registration service in 2013 for trademarks on https://portal.economy.gov.lb/ . This service simplified the registration process, and registrations of trademarks now take place online.  Due to the complexity of copyrights and patents, registration is still accepted in person at the MOET, and payment must also take place in person.  The switch from a deposit system to an objection system for trademarks also remains stalled due to the need for parliamentary approval.  However, the MOET noted that it implements the objection system in practice.

The Office of the United States Trade Representative (USTR) previously included Lebanon on its annual Special 301 “Watch List,” citing concerns about the country’s progress on IPR legislative reforms and inadequate protection against unfair commercial use. USTR also urged Lebanon to allocate sufficient resources for IPR protection and enforcement. However, Lebanon was removed from the “Watch List” in the 2022 report as stakeholders did not raise significant concerns about IPR protection during the review process, but this does not indicate that Lebanon has adequately addressed previously identified weaknesses in its IPR regime.
For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at  http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

There are no restrictions on portfolio investment, and foreign investors may invest in Lebanese equities and fixed income certificates.  While legally Lebanon is a free-market economy and does not restrict the movement of capital into or out of the country, Lebanese banks have imposed informal capital controls on dollar withdrawals and financial outflows since October 2019. There are de facto restrictions on outbound payments and transfers for current international transactions from deposits made on or prior to October 17, 2019, but these have yet to be codified into law. Banks do allow outward transfers of money from so-called “fresh dollar” accounts, which include post-October 17, 2019, foreign currency deposits. As of April 2023, Parliament has debated, but never passed, several versions of a capital controls law.

Lebanon’s stock market is the BSE. Currently, it lists six commercial banks; four companies including Solidere, one of the largest publicly held companies in the region; and eight sovereign Eurobond issues.  However, the BSE suffers from a lack of liquidity and low trading volumes in the absence of significant institutional and foreign investors. Weak market turnover discourages investors from committing funds to the market and discourages issuers from seeking listings on the BSE.  The Capital Markets Authority (CMA) regulates Lebanon’s capital markets. The Governor of Lebanon’s Central Bank oversees the CMA. Politicization of the CMA’s board and frequent vacancies have distracted the CMA from encouraging the development of Lebanon’s capital markets.

The Capital Markets Law calls for the corporatization and subsequent privatization of the BSE within a two-year period from the date that the CMA is appointed. The Cabinet appointed the CMA in 2012 and in 2017 issued a decree to corporatize the BSE. The corporatization has yet to occur.
Credit is allocated on market terms, and foreign investors may obtain credit facilities on the local market.  However, as Lebanon entered its economic crisis in fall 2019 and defaulted on its dollar-denominated debt in March 2020, local and international credit is virtually nonexistent. Banks have substantially reduced retail loans, such as housing, consumer, or personal loans.

Money and Banking System

The Lebanese banking sector covers the entire country, with 801 operating commercial and investment bank branches as of September 2022.  There are 6,242 residents per branch in Lebanon (assuming five million inhabitants), which compares favorably to regional and emerging markets.  According to 2021 World Bank Development indicators, there are 468 depositors with commercial banks per 1,000 adults, 129 borrowers from commercial banks per 1,000 adults, and 33 ATMs per 100,000 adults.  Central Bank data states that total domestic assets of Lebanon’s 15 largest commercial banks reached approximately $148 billion as of the end of 2022; however, this figure incorporates valuations at the official exchange rate (not the market rate) and therefore overstates the true amount of deposits.
Lebanon’s banks are insolvent, having accumulated more than $72 billion in losses. In a March 23 statement, the IMF noted that “banks are unable to extend credit to the economy and bank deposits are mostly inaccessible to customers.” Hence the economy has been heavily relying on cash transactions outside the banking system and on cash transfers from money transfer companies. Clients cannot transfer money deposited prior to October 2019 overseas. Lebanon has yet to adopt formal capital controls legislation, but most economic analysts believe such a law is necessary to preserve what limited foreign currency is left in the country, provide a legal framework for banks to limit withdrawals, and provide a level playing field to all Lebanese.

Financial experts estimated that 52 percent of customer loans with Lebanese banks were non-performing as of December 2022. Bankers reported that correspondent banks overseas have stopped providing them with lines of credit – or only provide facilities with onerous conditions because of increasing country risk – further hampering bank efficacy in Lebanon. Correspondent banks remain but likely place high levels of due diligence because of the incomplete implementation of anti-money laundering/countering the financing of terrorism (AML/CFT) standards. The government’s February 2022 draft financial sector recovery plan hinted at the conversion of dollar denominated deposits into local currency and a potential “haircut” on dollar deposits, in which wealthy account holders could lose some of their deposits to help recapitalize banks after shareholders “bail-in” (convert their deposits into bank shares) their financial institutions. The government has not implemented that plan, however.

Lebanon’s Central Bank was established in 1963. It imposes strict compliance with regulations on banks and financial institutions, and commercial banks, in turn, maintain strict compliance regimes.  However, the United States designated Jammal Trust Bank in August 2019 as a Specially Designated Global Terrorist for its role in financing Foreign Terrorist Organization Hizballah. In January 2023, the United States designated money exchanger CTEX Exchange and its owner, Hassan Moukalled, for facilitating financial activities for Hizballah.

Foreign banks and branches need the Central Bank’s approval to establish operations in Lebanon.  Moreover, any shareholder with more than five percent of a bank’s share capital must obtain prior approval from the Central Bank to acquire additional shares in that bank and must inform the Central Bank when selling shares.  In addition, any shareholder needs to obtain prior approval from the Central Bank if s/he wants to become a board member.  The use of cryptocurrencies is not regulated in Lebanon.  The Central Bank announced that it is developing a digital currency that it plans to issue for domestic use only.

There are no legal restrictions in Lebanon on foreigners’ or non-residents’ ability to open a bank account in local or foreign currency, provided they abide by Lebanese compliance regulations.  Currently, however, most banks are not taking on new clients or new accounts. Banks claim they have stringent inquiry mechanisms to ensure compliance with international and domestic regulations and implement Lebanon’s anti-money laundering and counterterror finance laws. Banks inform customers of Know-Your-Customer requirements and ask them about the purpose of opening new accounts and about the sources of funds to be deposited. Lebanese banks note they are compliant with the Foreign Account Tax Compliance Act (FATCA).  Lebanon adopted the OECD Common Reporting Standards since January 1, 2018.

Foreign Exchange and Remittances

Foreign Exchange

Commercial banks in late 2019 introduced informal capital controls on Lebanese depositors to stem the outflow of foreign currency; these controls have persisted today, and banks have barred virtually all overseas transfers from deposits made on or prior to October 17, 2019. As of April 2023, Parliament has debated but never passed, several versions of a capital controls law. In February 2022, the Central Bank allowed money transfer organizations to sell USD.

As of March 2022, Lebanon had several exchange rates in use: official rate, actual market rate, and Central Bank’s “Sayrafa” rate. From 1997 to February 2023, the LBP was pegged to the U.S. dollar at 1,507.5 LBP/USD. However, as Lebanese continue to demand scarce dollars in the Lebanese financial system, the currency depreciated on the market, the only source of USD banknotes for most Lebanese. The actual market rate reached a peak of 141,000 LBP/USD in March 2023; as of April 2023, the rate was closer to 100,000 LBP/USD. The official rate was changed to 15,000 LBP / USD on February 1, 2023. In December 2021, the Central Bank announced banks could convert LBP into USD – sourced from the Central Bank’s foreign currency reserves – using the Central Bank’s “Sayrafa” platform. However, the Sayrafa platform generally does not satiate local demand for USD banknotes. Money transfer organizations such as Western Union or MoneyGram can also convert incoming USD to LBP at the market rate. As a consequence of the rapid fluctuations in the exchange rate, many sectors of the economy are essentially dollarized.

Remittance Policies 

While capital controls curtailed the ability of those holding dollar-denominated bank accounts in Lebanon to withdraw or transfer their currencies overseas, those in Lebanon with access to “fresh dollars” (i.e., USD deposits made after October 17, 2019) were able to access, withdraw, and transfer overseas dollars. For the vast majority of Lebanese and businesses in Lebanon, remitting any money overseas, including investment returns, remained nearly impossible. Most economists believe capital controls must continue for the foreseeable future to prevent a bank run and preserve the limited foreign currency remaining in Lebanon, although they prefer formal and legal capital controls passed by Parliament.

Sovereign Wealth Funds

Lebanon does not have a sovereign wealth fund. The Offshore Petroleum Resource Law states that proceeds generated from oil and gas exploration must be deposited in a sovereign wealth fund.  Creating the fund requires a separate law, which the government has yet to adopt.  Following the agreement by Lebanon and Israel to demarcate their maritime boundary in October 2022, Parliament’s Budget and Finance Committee opened discussions on draft laws related to the establishment of a such a fund. Lebanon currently receives no proceeds from natural resources that could flow into a sovereign wealth fund.

The Lebanese government maintains several state-owned monopolies. State-owned Ogero owns and operates all fixed line telecommunications in Lebanon, while the two mobile and internet service provider operators, Touch and Alfa, are also owned by the state. Electricité du Liban (EdL) provides nationwide electricity production and transmission, and four regional authorities provide water service.

La Régie des Tabacs et Tombacs conducts tobacco procurement, manufacturing, and sales, and Casino du Liban operates as a mixed public-private enterprise.  The Central Bank owns 99.2 percent of national carrier Middle East Airlines, whose monopoly is scheduled to end in 2024.  Other major state-owned enterprises or public institutions include the Beirut, Tripoli, Sidon, and Tyre ports; the Rashid Karami International Fair (in northern Lebanon); the Sports City Center; and real estate development institution Elyssar.  The government also owns shares in Intra Investment Co., a mixed public-private investment company that owns 96.6 percent of Finance Bank, a Lebanese commercial bank.

There is no uniform definition of state-owned enterprises (SOEs), and each has separate internal by-laws.  Decree 4517 (dated 1972) establishes two types of public institutions, one administrative category that involves public enterprises such as the Lebanese University, and a second that holds commercial institutions such as EdL and La Régie.  The Ministry of Finance maintains an unpublished list of SOEs and public institutions.  They may purchase or supply goods or services from the private sector or foreign firms.  Their procurement process is governed by separate regulations but under the same terms and conditions as public procurement.  SOEs and public institutions benefit from certain tax exemptions.

The state electricity monopoly restricts production to EdL alone, but numerous private investors operate unlicensed generators across the country and sell electricity to citizens at significantly higher rates.  As of March 2023, these generators were the primary source of electricity for most Lebanese, given that EdL was only generating a maximum of 4-5 hours of electricity per day in most areas. EdL awarded several concessions to privately owned companies for power distribution in specific regions, and these companies are interested in meeting customer demand.  Independent Power Producers (IPP) may provide municipalities with 10 MW of electricity without receiving a direct concession from EdL.  In 2014, Parliament granted the Cabinet authority through 2018 to license private companies to generate electricity (Law 288).  In 2019, Parliament extended Law 288 and granted the Public Tender Office authority to oversee electricity contracts as part of the government’s electricity sector reform.  Law 462 of 2002 called for the corporatization and privatization of the electricity sector and for the creation of an electricity regulatory authority (ERA).  The Ministry of Energy and Water launched recruitment for ERA commissioners in December 2022. However, as implementation of the privatization law stalled, Law 288 delegated issuance of production permits and licenses for new electricity projects from the ERA to the Lebanese government. Since 2012, EdL has contracted three private companies to manage bill collection, maintenance, and power distribution.

Lebanon’s SOEs report to shareholders, whereas public institutions are subject to oversight by the concerned ministries as well as by the Ministry of Finance.  Public institutions require the approval of concerned ministries for major business decisions.  SOEs may independently prepare their budgets, which must be approved only by their board of directors.  The SOEs and public institutions are required by law to publish an annual report, submit their books for independent audits, and transmit their books to the Court of Audit.

SOEs and public institutions have independent boards staffed primarily by politically affiliated individuals, appointed by the Cabinet for public institutions and by shareholders for SOEs.  These boards always include a Cabinet-appointed Government Commissioner who reports to the concerned ministries.  SOEs do not currently adhere to the OECD Corporate Governance Guidelines.

Privatization Program

Lebanon enacted laws in 2002 for the privatization of the telecom sector (Law 431) and the electricity sector (Law 462). However, neither has been implemented.

Parliament passed a two-year law authorizing the Cabinet to issue Independent Power Producers (IPP) licenses to investors in 2014.  It later amended the law to extend its application through April 2018. In April 2019, Parliament passed a new law extending the application of Law 288 through April 2021, granting the Tender Office authority to tender IPP projects. The Ministry of Energy and Water launched tenders in 2017 for solar power plants under the IPP law and has issued three wind power plants licenses under IPP. It planned to issue tenders for two combined cycle gas turbine IPPs in 2019, but those efforts stalled. The Ministry of Energy and Water has long aimed to procure IPPs on a bilateral government-to-company negotiation process, although no country has offered to finance construction of IPPs given Lebanon’s default status and sovereign risk.

The High Council for Privatization and Partnerships (HCP) manages privatization and public-private sector partnership (PPP) projects. In accordance with the provisions of the Privatization Law 228 and the PPP Law 48, the HCP conducts competitive tendering processes for both privatization and PPP projects. The PPP law introduced a legal framework to attract local and international private investments in infrastructure projects. The PPP legislation is published on the HCP website http://hcp.gov.lb . The HCP has yet to fully manage or complete any privatization project.

Lebanese firms are aware of corporate social responsibility (CSR) and responsible business conduct (RBC), including on environmental, social, and governance issues.  This is true for the banking sector as well as companies in industry, which are slowly creating sustainable supply chains or pursuing social initiatives to appeal to consumers.  The Lebanese Standards Institution (LIBNOR), part of the Ministry of Industry, strives to expand the use of the ISO 26000 standard on Social Responsibility (SR) in Lebanon, one of the eight pilot countries in the Middle East.  On December 30, Parliament passed Law No. 205 criminalizing sexual harassment in the workplace. Lebanon has not instituted or proposed requirements for businesses to conduct due diligence and/or report on human rights or other responsible business conduct issues.

Prior to the economic crisis, the Central Bank of Lebanon worked with banks to direct their financial resources toward projects that improve society and the environment.  This includes issuing circulars to create favorable environmental and educational loans, encourage entrepreneurship through private equity investments, and facilitate improved governance through customer protection.  Lebanon’s economic crisis, however, has frozen project and corporate lending. In 2015, the banking sector started to implement Central Bank Circular No. 134, requiring banks to apply measures to ensure transparent and fair dealings with their customers, a reflection of the CSR principles of corporate governance and consumer protection.  The Central Bank also established the Institute for Finance and Governance (IFG). Some Lebanese banks attempt to align their business plans and CSR policy with the UN Sustainable Development Goals.  Several banks issue their own annual CSR reports.

The government does not require or encourage private companies to establish internal codes of conduct.  However, several companies have adopted a Code of Ethics and corporate governance codes, including business association “Rassemblement de Dirigeants et Chefs d’Entreprises Libanais” (RDCL) – Group of Lebanese Business Owners – Code of Business Ethics and the Lebanese Code of Corporate Governance (CG), which is under the auspices of the Lebanese Transparency Association (LTA).  However, these codes are strictly voluntary, and the government provides no incentives or enforcement for their adoption.

Additional Resources

Department of State

Department of the Treasury

Department of Labor

Climate Issues

Lebanon does not have a national climate strategy. It also does not have a net zero greenhouse gas emission goal for 2050, nor does it have a long-term climate strategy for reaching net zero emissions. However, Lebanon submitted its updated Nationally Determined Contribution (NDC) to the United Nations Framework Convention (UNFCCC) in March 2021. Lebanon’s new NDC increased the country’s commitments on climate change and reaffirmed the country’s commitment to the 1.5-degree goal of the Paris Agreement. Specifically, Lebanon committed to unconditionally increasing its greenhouse gas (GHG) emission reduction target relative to the business-as-usual scenario from 15 percent (2015) to 20 percent (2020). In addition, Lebanon committed to conditionally increasing its GHG emission reduction target relative to the business-as-usual scenario from 30 percent to 31 percent.

Lebanon committed to unconditionally generating 18 percent of its power demand and 11 percent of its heat demand from renewable energy sources in 2030, compared to its 15 percent combined commitment made in 2015. Moreover, Lebanon conditionally committed to generating 30 percent of its power demand and 16.5 percent of its heat demand from renewable energy sources in 2030, compared to a combined 20 percent in 2015. In April 2019, the Cabinet adopted an electricity reform plan that committed to 30 percent renewable energy for Lebanon’s power generation as well as 840 MW of solar and 600 MW of wind power.

Lebanon’s power generation sector is its largest polluter, with nearly all electricity generation sourced from heavy fuel oil and diesel. The Ministry of Energy and Water is seeking to import natural gas from Egypt under a proposed World Bank program. The Decentralized Renewable Energy Law (DRE), which was submitted to Parliament in May 2022, aims to position renewable energy generation as a significant contributor to Lebanon’s overall electricity supply. Under the DRE, private renewable enterprises (up to 10 megawatts) would be permitted to sell electricity directly to consumers. While the use of EdL’s electricity distribution infrastructure is required for these transactions, private generation under the DRE could provide consumers with a cheaper and cleaner alternative to EdL and the generator networks. As of April 2023, the DRE is pending Parliament’s approval.

U.S. firms have identified corruption as an obstacle to FDI, including in government procurement, award of contracts, dispute resolution, customs, and taxation.  A key demand of the anti-government protest movement that led to resignation of the government in October 2019 was stricter anti-corruption measures. Lebanese law provides criminal penalties for official corruption, but they are not implemented effectively.  For instance, Lebanon does not effectively enforce its Illicit Wealth Law, which applies to all state employees, government and senior officials, and municipality members and extends to family members. The law does not extend to political parties.  The legislation has articles to counter conflict-of interest in awarding contracts and government procurement, but they are not enforced. An amendment to this law from October 2020 obliges the declaration of wealth every three years. The Access to Information Law is not effectively implemented.

In April 2020, Parliament approved several laws seen as key to anti-corruption efforts: an anti-corruption law targeting public sector employees and creating a National Committee to Combat Corruption, and a law to lift immunity of (low-level) public service employees.

Implementations of these laws will be critical to their success. As mentioned previously, the government appointed six commissioners to the NACC in January 2022. In May 2020, the government approved its National Anti-Corruption Strategy.

In 1956, the Lebanese government passed legislation that prohibited Lebanese banks from disclosing client account information (except in strictly limited circumstances). This legislation aimed to facilitate foreign capital deposits in Lebanese banks. Over the years, critics have highlighted that this legal regime facilitated international tax evasion and other questionable financial activities. In response to IMF requirements, Parliament passed legislation in 2022 to remove various elements of bank secrecy. This legislation aimed to bring Lebanon in line with international standards in fighting corruption and allow for effective financial sector restructuring, tax administration, and bank supervision. However, in a March 2023 statement, the IMF noted that while the legislation passed in 2022 included “important improvements” to Lebanon’s prior bank secrecy law, further amendments are necessary to address remaining critical weakness in the country’s bank secrecy regime.

Lebanon ratified the UN Anticorruption Convention in 2009.  Lebanon is not a signatory to the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

As for civil society, the Lebanese Transparency Association (LTA) is a key advocate for stronger anti-corruption enforcement. The LTA also established the Lebanese Advocacy and Legal Advice Center (LALAC) to inform citizens of their rights and to encourage victims and witnesses to take action against cases of corruption.  LALAC operates a hotline for victims and witnesses to report cases of corruption and receive free legal advice and assistance with their case.  The program is currently funded by Transparency International (TI) and the German Foreign Office.  LTA also conducted several workshops targeting municipalities, public servants, investigative journalists, and civil society groups promoting access to information right in Lebanon.

Resources to Report Corruption

Lebanese Transparency Association
Sami El Solh Avenue, Kaloot Bldg, 9th Floor
Badaro, Beirut
P.O. Box 50-552, Lebanon
Tel/Fax: +961-1-388113/4/5
Cell: 70-035777
Email: info@transparency-lebanon.org

Sustained anti-government protests began on October 17, 2019, and led to the resignation of the government on October 29, 2019. The protests continued for months, with demonstrators demanding an end to corruption, poor governance, and economic stagnation. A new government did not form until January 21, 2020. This government resigned on August 10, 2020, in the wake of protests after the August 4 explosion at the Port of Beirut killed more than 200 people. It took until September 2021 for political leaders to form a new government. That government resigned after scheduled parliamentary elections in May 2022, and political leaders have failed to agree to a new cabinet. Therefore, the Cabinet has since acted in a caretaker capacity with reduced authorities per the constitution. Furthermore, Parliament has failed to elect a new president since the end of President Michel Aoun’s term in October 2022, and therefore the position remains vacant. This “double vacancy” – i.e. a caretaker cabinet with no president – is the first such double vacancy in Lebanon’s history.

Public demonstrations have continued since October 2019, albeit with lesser frequency. Some protests have turned violent and targeted property, particularly banks and public institutions. Depositors face monthly withdrawal restrictions on their accounts, and some have turned to armed robbery of their own banks to access their life savings. During periods of civil unrest, protesters routinely have blocked major roads. Lebanon’s declining economic situation has resulted in nearly three-quarters of the population falling below the income poverty line, according to the United Nations. Lebanon continues to host more refugees per capita than any other country in the world. The refugee presence led to increased social tensions and competition for low-skill jobs, and strained infrastructure and provision of public services.

Violent extremist groups, including U.S. government-designated terrorist organizations, operate in Lebanon. ISIS and Al-Nusra Front have claimed responsibility for suicide bombings in Lebanon. U.S. citizens have been the targets of terrorist attacks in Lebanon. The threat of anti-Western terrorist activity persists, as does the risk of death or injury to non-targeted bystanders. Clashes between Lebanese authorities and criminal elements continue to occur in areas of the Bekaa Valley and border regions. Hizballah maintains a strong presence in the Bekaa Valley, in addition to areas in southern Lebanon and south Beirut. Family, neighborhood, or sectarian disputes also can escalate quickly and can lead to gunfire or other violence.

The U.S. government considers the potential threat to U.S. Embassy personnel sufficiently serious enough to require all official U.S. personnel to live and work under security restrictions.  These limitations occasionally prevent the movement of U.S. Embassy officials and the provision of consular services in certain areas of the country.  U.S. citizen visitors are encouraged to contact the Embassy’s Consular Section for the most recent safety and security information concerning travel to Lebanon. More information may be found at https://lb.usembassy.gov/u-s-citizen-services.

The 1946 Labor Law provides for written and oral contracts and specifies a maximum workweek of 48 hours (with several exceptions, notably agricultural and domestic workers, who are not covered under the Labor Law).  The legal minimum wage stands at LBP 9,000,000 per month as of April 2023 but should be considered subject to change given crisis-related fluctuations in the LBP’s value. Lebanon is a member of the International Labor Organization (ILO) and signatory to all its fundamental conventions except on the Freedom of Association and Protection of the Right to Organize.  The Ministry of Labor issues an annual list of jobs restricted to only Lebanese.  The Lebanese Industrialists Association, in coordination with the Ministry of Industry, started issuing a list of job vacancies in the industry sector. Local unskilled labor is in short supply.  Arab (mainly Syrian, Egyptian, and Palestinian), Asian, and African laborers are often hired to work in construction, agriculture, industry, low-end tourism, and households, although Lebanon’s economic crisis has dampened construction and tourism.

The law provides for the right of private sector workers to form and join trade unions, strike, and bargain collectively, although the law places several restrictions on these rights.  It provides protection against anti-union discrimination.  Lebanon has a government-recognized General Labor Confederation (CGTL), whose membership is limited exclusively to Lebanese workers.  The CGTL’s activities are mainly limited to demanding cost-of-living increases and other social benefits for workers.  The general labor-management relationship remains difficult, and the Labor Law is not always properly enforced.  Strikes and demonstrations are not uncommon and are usually aimed at pressuring the government for better employment conditions.  The law requires businesses to adhere to safety standards, but enforcement is weak.

Lebanon’s labor force (defined locally as aged 15 and above) is estimated at 1,859,385 in 2021, according to the World Bank. The World Bank estimated Lebanon’s total population, including refugees, at 5,592,631 as of 2021. According to a study by the ILO and Lebanon’s Central Administration of Statistics (CAS), the unemployment rate stood at 29.6% in January 2022.

The informal economy is large in Lebanon and is only expanding as unemployment increases and most cash-based transactions bypass the insolvent financial sector. In previous years, Lebanon’s informal economy amounted to 30 percent of GDP, although that percentage has likely increased.

In 1981, Lebanon and the United States signed an Overseas Private Investment Corporation (OPIC) agreement, which become operational in 1996.  The U.S. International Development Finance Corporation (DFC) has provided more than $300 million in credit line guarantees for transactions in Lebanon.

The Lebanese government’s National Investments Guarantee Corporation (NIGC) continues to insure new investments against political risks, riots, losses due to non-convertibility of currencies, and transfer of profits.  Lebanon has been a member of the Multilateral Investment Guarantee Agency, part of the World Bank, since 1994.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($B USD) 2021 N/A 2021 $23.1  https://data.worldbank.org/country/lebanon
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2021 $93.85 2021 $346 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2021 $0 2021 -$1 BEA data available at https://apps.bea.gov/international/factsheet/
Total inbound stock of FDI as % host GDP 2021 0.44% 2021 2.8% UNCTAD data available at

https://stats.unctad.org/handbook/EconomicTrends/Fdi.html   

* Source for Host Country Data: GDP for 2021 is estimated by Lebanon’s Central Bank compiled FDI statistics without geographical breakdown, thus the inward/outward FDI positions from/to the United States are “partial figures” derived from the Coordinated Direct Investment Survey (CDIS). The CDIS includes banking, financial, and insurance sectors.

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $2,599 100.00% Total Outward $3,070 100.00%
Luxembourg $847 32.61% France $799 26.01%
United Arab Emirates $305 11.72% Turkey $262 8.52%
France $228 8.78% Australia $229 7.45%
Jordan $171 6.57% Jordan $216 7.04%
Virgin Islands, U.S. $152 5.86% Cyprus $184 5.98%
Others $895 34.45% Others $1,381 44.99%
“0” reflects amounts rounded to +/- USD 500,000.

Source: IMF Coordinated Direct Investment Survey(CDIS) , 2021

Brian Barone
Economic and Commercial Officer
+961 (0)4 542 600
U.S. Embassy Beirut

On This Page

  1. EXECUTIVE SUMMARY
  2. 1. Openness To, and Restrictions Upon, Foreign Investment
    1. Policies Towards Foreign Direct Investment
    2. Limits on Foreign Control and Right to Private Ownership and Establishment
    3. Other Investment Policy Reviews
    4. Business Facilitation
    5. Outward Investment
  3. 2. Bilateral Investment and Taxation Treaties
  4. 3. Legal Regime
    1. Transparency of the Regulatory System
    2. International Regulatory Considerations
    3. Legal System and Judicial Independence
    4. Laws and Regulations on Foreign Direct Investment
    5. Competition and Antitrust Laws
    6. Expropriation and Compensation
    7. Dispute Settlement
      1. ICSID Convention and New York Convention
      2. Investor-State Dispute Settlement
      3. International Commercial Arbitration and Foreign Courts
    8. Bankruptcy Regulations
  5. 4. Industrial Policies
    1. Investment Incentives
    2. Foreign Trade Zones/Free Ports/Trade Facilitation 
    3. Performance and Data Localization Requirements
  6. 5. Protection of Property Rights
    1. Real Property
    2. Intellectual Property Rights
  7. 6. Financial Sector
    1. Capital Markets and Portfolio Investment
    2. Money and Banking System
    3. Foreign Exchange and Remittances
      1. Foreign Exchange
      2. Remittance Policies 
    4. Sovereign Wealth Funds
  8. 7. State-Owned Enterprises
    1. Privatization Program
  9. 8. Responsible Business Conduct
    1. Climate Issues
  10. 9. Corruption
  11. 10. Political and Security Environment
  12. 11. Labor Policies and Practices
  13. 12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs 
  14. 13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
  15. 14. Contact for More Information
2023 Investment Climate Statements: Lebanon
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