Tips for Incorporating Your Startup, A Cheat Sheet for Lebanon
This piece is coauthored by Adib Tohme, the founder of Citizen L, a law firm with offices in Lebanon, Riyadh, Dubai, Paris and New York, Abdallah Absi, CEO at Zoomaal and President of eClub Lebanon, and Rabih Nassar, CEO at ElementN.
As a Lebanese entrepreneur, legal questions can seem like a huge barrier to starting up. But it’s important to realize that there is a way to work through the system if you’re willing to put in some effort to learn the process.
At eClub’s Weekly Entrepreneurs Brunch last week, the topic was “Where should you incorporate/register your company?” The discussion covered different locations including Lebanon, the US, the UK, and elsewhere, taking into consideration key factors for startups, including:
- Taxes
- Regulations
- Investment rules
- Payment gateways
- Employment requirements
Below, the discussion leaders share a brief cheat sheet for Lebanese entrepreneurs on their options for incorporating or registering their company:
Incorporation Comparison
| Lebanese SAL | Lebanese Offshore | Delaware, US | UK | Tax Havens | |
| Taxes: | 15% (10% on dividends) | 0% | 0% + Franchise Tax | 21% | 0% |
| Allowed Target Market: | Entire World | Entire World, except Lebanon | Entire World | Entire World | Entire World |
| Accounting Required: | Yes | Yes | Yes | Yes | No |
| Lawyer Required: | Yes | No | No | No | No |
| Bank Account Difficulty: | Easy | Hard | Easy | Easy | - |
| Payment Gateway: | Easy | Hard | Easy | Easy | Hard |
| Open Regulations & Laws: | No | No | Yes | Yes | Yes |
| Setup Fee: | - | - | US $1,137 | $2,490 | Varies |
| Annual Recurrent Fee: | - | $700 | $350 | $2,010 | Varies |
| Capital Requirement: | $20,000* | $20,000* | $0 | $0 | $0 |
*Only 1/4 must be paid at time of subscription.
Tax Havens: British Virgin Islands, Dubai FZ, Cayman Islands, Seychelles, Hong Kong
Banks are sometimes restrictive to opening accounts for offshore companies (i.e. companies not registered in the same country as the bank account). Some banks still do accept offshore accounts, but require the company documents to be legalized by the country they are located in.
Recommended Options
| Selling to Lebanon | Selling to the World, Not Lebanon | Selling to the World | |
| Online Services: | Lebanese SAL | Lebanese Offshore | UK/US |
| E-Commerce (Physical Goods): | Lebanese SAL | Lebanese Offshore | Lebanese SAL for Lebanon + Offshore for Other |
| Funds & Financial Institutions: | Tax Havens | Tax Havens | Tax Havens |
The charts above are intended for startup companies that have low to zero revenues. The discussion touched on the idea that payment gateways in the Arab world can be hard to deal with when it comes to implementing novel ideas in the region, notably crowdfunding. Be sure that your potential payment gateway partner agrees to deal with your company before you go ahead with the incorporation.
Lebanon is a great place for incorporating a company’s back office due to a relatively low cost of human resources such as recruiting good engineers, programmers, or designers who are fresh graduates from local universities.
Check out our Lebanon legal series for a more in-depth discussion on these topics.
