Law No. 64 of 1973 issuing the Income Tax Law

Law No. 64 Of 1973 Issuing The Income Tax Law

The Revolutionary Command Council,

• Having seen the Constitutional Proclamation issued on 2 Shawwal, 1389, corresponding to 11 December 1969.
• Law No. 21 of 1968 issuing the Income Tax Law and the laws issued in amendment thereof, and
• At the proposal of the Minister of Treasury and the concurrence of the Council of Ministers.

Issued the Following Law 

Income Tax Law

Article 1

The provisions of the accompanying Law in respect of income tax shall enter into force, and Law No. 21 of 1968 issuing the Income Tax Law shall be nullified and shall also be nullified every text running counter to the provisions of this Law.

Article 2

Suspension of the provisions of tax on the income of agriculture shall continue for ten years starting from the date of enforcement of this Law. This provision shall apply to the provisions of tax on companies and such is in respect of foreign companies and their affiliates, and public or private corporate bodies engaged in pure agricultural utilization, within the limits of their income from such activity.

In order that this provision applies to companies and public or private corporate bodies engaged in pure agricultural utilization besides other aspects of activity, it is stipulated that they should have regular and separate accounts for such agricultural utilization.

Article 3

The provisions of the accompanying Law shall not violate the provisions of the Petroleum Law No. 25 of 1955 and the laws issued in amendment thereof.

Article 4

Every income realized prior to the date of enforcement of the accompanying Law shall be subject to the Law which was in force at the time such income was realized.

Incomes realized after the date under reference shall be subject to the provisions of the accompanying Law, even if they pertain to periods prior to that date.

Article 5

Pending the issue of the Executive Regulation of the accom- panying Law, the Executive Regulation of the Income Tax Law issued under Law No. 21 of 1968 and the Decisions issued in im- plementation thereof shall continue to be in force as much as that does not contravene the provisions of this Law.

Article 6

The Minister of Treasury shall implement this Law which shall enter into force as from 1 October 1973, and shall be published in the Official Gazette.

• THE REVOLUTIONARY COMMAND COUNCIL 
• Major: Abdussalam Ahmed Jallud, Prime Minister.
• Issued on: 22 Sha'ban, 1393 corresponding to 19 September, 1973.
• Mohamed Ez-Zarrugh Rajab 
• Minister of Treasury

Part One General Provisions

Article 1

In accordance with the provisions of this Law, every income earned in the Libyan Arab Republic from any assets found in it, physical or otherwise, or from any activity or business therein, shall be liable to tax.

Incomes earned abroad shall be liable to tax in the cases set forth in this Law.

Article 2

There shall be exempt from tax:

1. Income of public corporate bodies other than those to whom reference is made in Article 94.
2. Income earned from deposits in a savings account with a bank if the amount of such an account is not in excess of five thousand dinars, and where it exceeds that, amount in excess shall be liable to tax.
3. Incomes of religious societies and other bodies, institutions and private institutes and schools recognized by the State established for purposes of education, welfare, charity, social reform or sports activities.
4. Proceeds of charitable waqfs.
5. Amounts payable to beneficiaries under life insurance policies whether upon death or at the lapse of a certain period specified in the policy.
6. Income of students to the extent received as scholarships or subsidies for the purpose of study.
7. Any other income exempt from tax pursuant to the law, or in accordance with a treaty or international agreement.

Article 3

In the event that tax is assessed on the basis of a decla- ration submitted by a taxpayer in respect of his income, tax shall be paid according to such declaration upon the expiration of the period fixed for its submission and on the dates specified in Article 21.

Article 4

Tax shall be assessed on every taxpayer in the light of the declaration under reference in the preceding Article if the same is approved by the Department, and in this case the assessment will be final and incontestable.

Article 5

Without prejudice to the penalties set forth in this Law, if a taxpayer abstains from submitting the declaration under reference in Article 3 or if he submits the same and the Department rejects it, the Department shall have the right to estimate the income as it may deem appropriate and assess the tax in accor- dance with such estimation.

Article 6

The Department shall, in all events, notify the taxpayer of tax assessment and the dates of payment thereof, and the tax- payer shall, subject to the provisions of Article 4, have the right to complain of such assessment before the First Arbitration Commission, within thirty days from the date of notifications.

Article 7

Settlement of grievances submitted by the concerned parties shall, in compliance with the provisions of this Law, be the res- ponsibility of the First Arbitration Commissions, and the area of jurisdiction, location, constitution and the compensation of their members shall be defined by a decision to be issued by the Minister. 

Such commissions shall be constituted of a Judge of the Civil Court of First Instance within whose jurisdiction the place of the commission is located and such judge shall be elected by the General Assembly, together with two members one of whom shall be an official of the Ministry of Treasury of not less than the Fourth Grade, provided that he will not be an official of the Revenue Department, and the second will be a person of experience to be elected by the Minister from among persons nominated by the Governor in whose jurisdiction the commission is located.

The Constitution may include the nomination of a number of reserve members.

Article 8

The First Arbitration Commission shall be concerned with the settlement of all aspects of a dispute between the taxpayer and Department.

Article 9

The grievance shall be submitted in a statement which the taxpayer shall lodge with the Secretariat of the First Arbitration Commission against a receipt, and shall be accompanied by evidence that a fee of 11% of the tax assessed on him had been paid, provided that such percentage shall not be less than one dinar, otherwise the grievance will be regarded as not existing.

The Secretary of the Commission shall send a copy of the grievance to the Department for comment within thirty days. from being notified of such grievances. The Chairman of the Com- mission shall fix a date for looking into the grievance provided that prior notice shall be served to both the taxpayer and Depart- ment one week, at least, in advance.

The taxpayer shall recover the fee paid by him if a decision. in his favour would be issued by the Commission, and the Com- mission shall determine the part of fee to be recovered in both cases of partial profit or compromise.

Article 10

The Commission may request both the Department and tax- payer to produce whatever information and documents required and the employees of both the Department and taxpayer have the right to appear before the Commission, and the taxpayer may delegate another person to appear on his behalf and the Department may delegate the Government Litigation Department.

Article 11

The meeting of the Commission shall not be valid except in the presence of all its members. Its sessions shall be secret and the adoption of its decisions shall be based on the majority of votes, and such decisions shall be caused and be signed by the Chairman of the Commission and the Secretary of the Commis- sion within thirty days from the date of their issue.

The Secretary of the Commission shall notify its decision to both the taxpayer and Department.

Article 12

The tax becomes due upon notifying the taxpayer of the decision of the First Arbitration Commission even if he contests it.

Article 13

Each of the Department and taxpayer has the right to con- test the decision of the First Arbitration Commission before the Appellate Commission referred to in the next Article, within fifteen days from the date of notification.

Article 14

An Appellate Commission, or more, shall undertake settle- ment of contested decisions of the First Arbitration Commissions. Each Appellate Commission shall be constituted of the Judge of the Civil Court of First Instance in whose jurisdiction the Com- mission is located, as Chairman, and a technical official from the Department of Audit, not less than Third Grade, to be nominated by the Head of the Department of Audit, and a person of re- cognized experience in commercial or accounting matters.

The scope of competence of each commission, its location, constitution and the compensation of its members shall be defined in a decision to be issued by the Minister. The decision on the constitution may include the nomination of a number of reserve members.

Article 15

The contest shall be submitted in a statement to be deposited by a contestant with the Secretariat of the Appellate Commission against a receipt, and the Secretary of the Commission shall fur- nish the other party with a copy of such statement in order to comment on the contest within fifteen days from the date of furnishing such copy.

In the event the contestant is the taxpayer, he must attach with the statement an evidence of paying a fee of 1% of the tax assessed by the First Arbitration Commission, provided that such fee shall not be less than two dinars.

As regards contesting before the Appellate Commission and the recovery of fee, the rules and procedures applied by the First Arbitration Commission shall prevail.

The decision of the Appellate Commission shall be final.

Article 16

The burden of proof before the First Arbitration Commis- sion or the Appellate Commission shall be the responsibility of the contestant.

Article 17

Without prejudice to the established penalties, no grievance or contest submitted by the payers of tax assessed on companies shall be accepted unless it is supported by the books and accounts which should, according to law, be maintained.

This provision shall, also, apply to the partners operating in commandite companies.

Article 18

The duties of the secretariat in each commission shall be un- dertaken by an official of the Department, to be delegated by the Director of the Department.

Article 19

The Department can reach a compromise with the taxpayer at any time before the issue of the First Arbitration Commission's decision in respect of the contest.

Compromise shall be undertaken by a committee to be constituted by a decision to be issued by the Director of the Depart- ment and shall be formed of three employees of the Department. In order that such compromise be effective, it requires the approval of the First Arbitration Commission if it takes place after the submission of a grievance to the committee.

Article 20

The assessment of tax shall be final and definitive if it is accepted by the taxpayer or if he does not contest it within the prescribed period, or if he has contested it and exhausted the prescribed methods of contest.

Notwithstanding, if the Department realizes that the taxpayer did not submit a true comprehensive declaration or concealed cer- tain activities, documents or others, or submitted incorrect infor-mation or use fraudulent ways to evade paying the tax, wholly or partly, or concealed or tried to conceal taxable funds, the Depart- ment shall then have the right to make an additional assessment, without prejudice to the penalties prescribed in this Law.

As well, the Department may, of its own initiative or at the request of the taxpayer, amend the original assessment in the event that a material error in computing the tax occurs.

The Department shall, if it inserts an amendment in the as- sessment it has already carried out, notify the taxpayer of the basis on which the original and additional assessments were made giving mention of the reasons on which the Department bas- ed in carrying out such amendment.

Article 21

Except where otherwise stated, tax shall be levied one pay- ment if it does not exceed fifteen dinars, and it will be levied in two installments if it does not exceed twenty dinars. Where it exceeds that, it will be levied in four installments to be due perio- dically on the 10th of each of March, June, September and December. The tax or first installment thereof, as the case may be, shall be paid on the first one of the above-mentioned dates falling after its due date.

Delay in the payment of any installment on the fixed date shall result in other installments becoming due, without prejudice to the provisions of the next Article.

Article 22

Without prejudice to any other penalties, in the event of delay in the payment or delivery of tax on the fixed date, a fine of 1% of the due tax shall be imposed in respect of each month of delay, or any part thereof not less than fifteen days.

Such fine shall be collected simultaneously with the tax.

Article 23

The tax debt shall be payable at the Department and there will be no need to claim it at the place of the debtor.

Article 24

The taxable year is the twelve-month period commencing from the first of January of each year. However, if the nature of activity carried out by the taxpayer necessitates the existence of a difference between his financial year and the taxable year, and his accounts were regular, the Director of the Department may decide to adopt the taxpayer's financial year as a basis for assessing the tax on him.

Article 25

In the event that the taxpayer is handicapped from admini- stering his activities or funds, or if he is not residing in the Libyan Arab Republic, the administrator or holder of such funds shall be regarded as his agent in respect of his obligations and rights under this Law.

Article 26

In the event of the death of the taxpayer, the tax shall become due upon his death. The heirs or administrator of the estate shall submit a statement in respect of the activity of the taxpayer until the date of death, and shall pay the tax according to such state- ment within six months from the date of death and before distributing the estate.

Article 27

The right of the Government to claim any amounts due to it, under this Law, shall drop by the lapse of five years.

The period of prescription shall commence, in the event the taxpayer is bound by the submission of annual declaration on his income, from the day subsequent to the expiration of the dead- line specified for the submission of such declaration; and, in the other cases, from the due date of the tax.

However, in the cases referred to in Paragraph 2 of Article 20, the period of prescription shall not commence except from the date of the knowledge of the Department of the elements of concealed income.

Beside the reasons established in the Civil Law, prescription shall desist on notifying the taxpayer or the person bound by the payment of tax, or on presenting the matter to the Grievance Commissions or Contest Commissions.

Article 28

The taxpayer's right to claim recovery of what he paid in excess of any amount due by him shall drop by the lapse of three years from the date of payment unless the right to claim recovery arises after the adoption of certain procedures by the Department in which case prescription starts from the date of notifying the taxpayer of his right of recovery.

The period will be interrupted upon submission by the taxpayer of an application to be sent by registered mail to the Department claiming recovery of the increase he paid.

Article 29

Judgment may not be passed against the Department to pay interest on the amounts adjudged to be recovered by the taxpayers.

Article 30

The sale by the taxpayer of his funds or taxable activity, or a part thereof, or any other disposition he performs, the result of which will be the assignment of all or a part of such funds or activity, shall not be recognized by the Department unless such is established in official minutes.

In all events, the Department may, when strong evidence are available to it, not heed any disposition or procedure done with the intent of evading tax.

Article 31

The tax shall be assessed annually after the end of the taxable year unless otherwise stated in the law.

Notwithstanding, the Department may, upon suspecting a tax evasion for any reason, estimate the taxable income during the taxable year and assess and levy the tax, without prejudice to the penalties provided for in this Law.

Article 32

In the event that the rights of Public Treasury appear to be liable to loss, the Director of the Department may, as an exception of the provisions of the Civil and Commercial Procedural Law, issue an order garnishing the funds he deems appropriate for recovering the tax therefrom in whomsoever hands they may exist. Pursuant to such order, such funds shall be considered as provisionally garnished.

Such funds may not be disposed of unless garnishment is lifted pursuant to a court judgment or a decision by the Director of the Department, or if six months passed from the date of garnishment without notifying the taxpayer of the amount of tax as assessed by the Department.

Article 33

Pursuant to the provisions of this Law, taxes and all other amounts due to the Government shall have preference to all funds of debtors or persons bound by delivering the same to the Public Treasury in accordance with this Law. Such preference is ranked after judicial fees.

Article 34

In the application of the provisions of this Law, a person shall be deemed to have been properly notified of any paper if he, or any legally-delegated person, signs an acknowledgement of it, or if it is sent to him by registered mail together with a notice of delivery, or if delivered to his agent or to one of his employees, relatives, brothers-in-law or servants residing with him.

In the event that the official serving the notice does not find any of the aforementioned individuals in the place of activity or residence of the person, or if the individual met there refused to receive the paper or it was established that he is not qualified, such must be put down and be supported by the witness of an- other person, and a copy of the paper must be delivered to the Mukhtar of the locality and, further, a letter to this effect must be sent by registered mail to the notified person.

If the notified person has no known address, the paper shall be posted on the notice board of the Municipality for eight days, and in such case posting shall be supported by a certificate to be issued by the Municipality, to this effect.

Part Two Specific Tax

Chabter 1 Specific Tax in General

Article 35

A certain specific tax shall be levied on the following incomes, at the rates and pursuant to the provisions set forth hereafter:

1. income from real estate.
2. income from agriculture.
3. income from commerce, industry and trades.
4. income from free professions.
5. wages and salaries, etc.
6. incomes earned abroad for residents in the country, and g income resulting from saving with banks and savings ac- counts.

Article 36

There shall be exempted from the taxes imposed on the in- comes referred to in Items a, b, c, d and e of the pre- ceding Article every natural person whose taxable annual income does not exceed 480 Dinars, if a bachelor, or 720 Dinars, if married and has no children to maintain, or 900 Dinars if married, widower or divorced and has children to maintain, and if his in- come exceeds the said limits-tax shall be imposed on the excess

amounts.

The limit of exemption shall be included in computing the first section of income.

A person may not enjoy the above referenced exemption more than once during the taxable year, and if the sources of income are numerous, the exemption shall be deducted from the tax base of the lowest rate.

Article 37

A part of the amount of exemption established in Article 36, proportionate with the period on which the tax is assessed, shall be computed, if such period is less than one taxable year.

Article 38

No change in the social or family status of the taxpayer shall become effective except as from the beginning of the taxable year subsequent to the date of occurrence.

Article 39

The following amounts shall be exempted from the taxes imposed on the incomes referred to in Items a, b, c, d, and e of Article 35 hereof:

a premiums of life insurance made to the benefit of the tax- payer or to his wife or children maintained by him, or any persons maintained by him at a maximum rate of 10% annually of the net taxable income, or 250 Dinars annually, whichever is less.

Premiums of general insurances such as fire and burglary destined to the benefit of the taxpayer at a maximum rate of 5% of the net taxable income, or 200 Dinars annually, whichever is less.

Article 40

The provisions of this part shall not apply to incomes subject to “tax on companies”. As well, they shall not apply to the segments of such incomes distributed to the partners or share- holders in a company.

Chabter 2 Tax of Real Estate Income

Article 41

Tax shall apply to income accruing from the investment of real estates, irrespective of the manner of investment or whether they are built estates or space lands, other than the agricultural lands, and whether they are attached to the buildings or separate, and whether they are fenced or otherwise.

Tax shall also apply to the usufruct of agricultural lands, whether cash or in kind, where the consideration is fixed regard- less of land yield.

Income shall be considered realized upon establishment of the right to it irrespective of whether it is paid or not.

Article 42

The taxable income shall be estimated on the basis of the gross income accruing from the real estates referred to in the preceding Article, provided that equivalent to 20% of their total income shall be deducted against the expenses incurred by the taxpayer which include maintenance and depreciation expenses.

Article 43

The rate of tax shall, annually, be as follows:

The first 6,000 Dinars of income15%.

The subsequent 4,000 Dinars of income 20%.

Amount of income beyond this 25%

Article 44

There shall be exempted from tax against usufruct the fol- lowing real estates:

1. what is assigned for the residence of the taxpayer, provided that will not be more than one dwelling.
2. the real estate or part thereof which is actually assigned for the taxpayer to engage in his activity pursuant to the pro- visions of this Law, if it is included in the assets of such activity.
3. real estates assigned for agricultural purposes or as accommodation for persons engaged in agriculture for the tax- payer.

Article 45

Every taxpayer shall be bound by submitting to the Depart- ment once every five years a declaration comprising details of the real estates invested by him and the income derived there- from, on the form and in accordance with the rules to be specified by the Executive Regulation, and the taxable income shall be estimated in the light of this declaration if accepted by the De- partment, otherwise, the Department has to estimate the said income as it deems appropriate, observing in that the rent of equivalent or valid rent or usufruct contracts if they are not suspected to be false or made as an accommodation. The deci- sion of the Department in this respect will be contestable, pur- suant to the provisions of Article 6 et. seq. of this Law.

Article 46

The estimation made pursuant to the provisions of the pre- ceding Article shall remain valid during the period under reference and shall be taken as a basis for annual taxation unless the Department decides, for good reasons, to reconsider it, and its decision in this case will be contestable.

Article 47

Every taxpayer shall be bound by notifying the Department of any change the condition of taxable real estates, or circum- stances of investment thereof, might undergo, which results in a change in the tax necessary, within sixty days from the date of the change.

However, if the change results in a reduction of the tax, the proof establishing that shall be attached with the notice. Reduction in this case shall take effect only from the date when the change is established provided that the notice on change is served within the limits of the date mentioned in the preceding Para- graph, if it is served after that, change shall not be considered except from the date of the notice:

Article 48

As regards the assignment of real estates, the provisions of Article 64 shall apply.

Chabter 3 Tax of Agriculture Income

Article 49

Tax shall apply to the net income resulting from pure agri- cultural exploitation of agricultural lands whether planted with trees or not. There shall not be considered as income resulting from agriculture, what the owner or tenant of land obtains, as a fixed consideration determined irrespective of land yield, against the usufruct by a third party.

Article 50

Taxable income shall be assessed by commissions the constitution of which, functions and compensations of their members shall be determined by a decision to be issued by the Minister and the taxpayer shall be notified of the decision of the Commission and he may contest it within thirty days from the date of notification, pursuant to the provisions of Article 6 et. seq. hereof.

Article 51

The rate of tax is 5 %, annually.

Article 52

For the purposes of this tax, agricultural lands shall be gene- rally listed in nominal rolls once every five years in accordance with the rules and procedures contained in the decision of the Minister.

Concerned persons shall notify the Department of any change occurring during the said period and necessitating a change in the tax due within sixty days from the occurrence of such change.

Chabter 4 Tax of Commerce, Industry and Trade Income

Article 53

The tax applies to the income resulting from the engagement in any commercial, industrial or trade activity. As well, it applies to every income arising from any other source not subject to any other specific tax, unless such income is accepted by a special provision in the Law.

There shall be, also, subject to tax any income from commercial business even if incidental and not related to the practice of the trade, in which case the taxpayer shall not enjoy the exemption referred to in Article 36, and the Executive Regulation will define the manner of collecting the tax on such income, the dates of payment thereof, as well as, any necessary information and declarations.

In implementation of the provisions of this tax, the follow- ing shall be considered commercial business:

• division and sale of lands after the accomplishment of the necessary leveling works.
• re-lease of uncultivable lands and furnished or unfurnished buildings.
• brokerage whatsoever.

Article 54

Every taxpayer shall submit to the Department a declaration, in writing, on his taxable income, within the sixty days following the expiration of the taxable year, and submission thereof shall be on the form and in compliance with the rules defined by the Executive Regulation. If the year expires in a loss, the declaration shall in this case specify the amount of loss, provided that in all events supporting documents and instruments shall be attached with the declaration.

Article 55

The tax shall, annually, be fixed on the basis of the amount of the net income realized during the taxable year, and the taxable income shall be fixed on the basis of the result of operations of various kinds which the taxpayer engaged in, after deducting all costs proved to have been actually expended for the sake of ob- taining such income, particularly: –

1. premiums of depreciation of equipment, machinery, build- ings and all assets utilized in producing the income, and the premiums of depreciation shall be computed at annual rates to be fixed by the Executive Regulation, within the limits of the purchase price of such assets.
2. any debt due by third parties and established to have become dead during the period on which income is computed, provid- ed that such debt shall be included in the accounts of the activity or arising from lending related to the practice of such activity, provided, also, that recovered amounts of such debt shall be considered as income.
3. premiums paid in the interest of employees under the Social Insurance Scheme or any alternative private scheme provid- ed that, in this case, such premiums shall not exceed 10 % of the total benefits received by the employees during the period on which such premiums are paid.
4. taxes and fees paid by the taxpayer in respect of his activity. rather than the tax paid in compliance with the provisions of this Chapter and the general tax on income.
5. contributions made to charitable societies recognized by the State not exceeding 2 % of the net income.

Article 56

Incorporation fees necessary for the start-up of practicing the activity shall be charged to income and shall be deducted at annual rates to be fixed by the Executive Regulation.

Article 57

Any amounts not charged to income may not be deducted from the taxable income, particularly:-

1. any other premiums, rather than those referred to in Item a of Article 55, for the depreciation of any asset.
2. any amounts expended on increasing or enlarging the assets, or their improvement in a permanent manner, without prejudice to the right of the taxpayer to add them to the value of the assets and to depreciate them in accordance with Item a of Article 55.
3. personal or family expenses of the taxpayer.
4. any amounts withheld by the taxpayer as a salary or re- muneration against his work or the work of his wife or minor children.
5. any amounts withheld as reserve to face losses, slump of prices or doubtful debts or else to face another purpose and generally any amounts withheld in respect of an obligation dependent on a certain condition or tied to a future date.

Article 58

There shall be subject to tax the amounts added to profits or assigned to increase the capital if they have not already been subject to tax as a result of deducting them from the gross in- come pursuant to Article 55, and such amounts shall be con- sidered an income realized during the year in which they were distributed or placed at the disposal of the persons making bene- fit of them in any manner.

Article 59

If the account of any year ends in a loss, such loss shall be included in the expenditure of the subsequent year and be deducted from its profits. If the profit was insufficient to cover the loss entirely, the balance shall be carried forward to the subsequent year or years until the fifth year and shall be covered by their profits. Thereafter no part of the loss may be carried forward to the account of any subsequent year.

Article 60

The rate of tax shall, annually, be as follows:

The first 4,000 Dinars of income 15%.

The subsequent 4,000 Dinars of income 20%.

The subsequent 4,000 Dinars of 25%.

income Income beyond this 30%.

Article 61

In the case of joint venture companies, tax shall be imposed on each partner personally, in respect of a share in the income of the company proportionate with his share in it. In the event that the articles of incorporation state that any partner receives a certain amount or share of the income in any manner or under any description prior to the distribution of income, such amount will be considered as part of the partner's share in the income of the company.

Obligation to submit the declaration provided for in Article 54 shall be the responsibility of the company which shall, also, be obliged to pay the tax due by the company, and for enjoyment by the partners of the exemption provided for in Article 36, it is stipulated that each of them should submit, in company with the company's declaration, a declaration showing that he did not enjoy the said exemption in respect of any other income which is subject to the tax, otherwise, his right to such exemption shall drop.

Article 62

There shall be subject to tax the active partners in the partnership is commendam companies, and in their respect the rules established for partners in the joint venture companies as regards the calculation of income and recognition thereof, as well as, the assessment and payment of tax, shall apply.

Article 63

In the event that a taxpayer discontinues the activity on which income he pays the tax, whether permanently or for a certain period, the tax shall be collected on the income earned until the date of discontinuing activity. In this case, the tax- payer shall notify the Department accordingly within sixty days from the date of discontinuing the activity, and shall submit to it the documents and data necessary for the clearance of tax.

Article 64

In the event of assigning the activity, in whole or in part, assignor and assignee shall notify the Department accordingly within sixty days from the date of occurrence, and both the as- signor and assignee shall be jointly responsible for the taxes falling due on the assigned activity until the date of assignment.

The assignee may request the Department to notify him of the taxes due to it on the assigned activity, and the Department shall furnish him with the requested statement within sixty days from the date of the request, and the joint responsibility provided for in this Article shall be limited to the amounts mentioned in the said statement, without prejudice to the right of the Department vis-a-vis the assignor.

If the Department does not notify the assignee within the said period of what is due to it, he will be absolved of such amounts.

Article 65

There shall be considered as taxable income, the profit aris- ing from the sale of the activity or any source of the material assets or otherwise. Profit shall be fixed by the difference be- tween the selling price and the cost price after deducting the depreciation premiums or what the Department estimates as equi- valent to depreciation if the taxpayer does not maintain regular accounts.

If the selling price is less than the market value, such value will be considered as a price for it, and there shall be considered sale, in the application of the provisions of this Article, the change of the legal form of the activity, including merger.

Chabter 5 Tax of Free Trades Professions Income

Article 66

Tax shall be imposed on the incomes from free professions practiced by the taxpayer independently and in which the main factor is work.

The taxpayer shall be exempted from this tax in the first two years of practicing the profession. There shall be included in the referenced period, the time spent by the taxpayer in practicing his professions outside the Libyan Arab Republic.

Article 67

Tax shall, annually, be assessed on the basis of the net in- come realized during the taxable year, and determination of the taxable income shall be on the basis of the result of transactions, whatsoever, practiced by the taxpayer after deducting all the costs required for the engagement in the profession. The tax on the income from free professions and the general tax on income paid pursuant to the provisions of this Law shall not be considered as costs.

Article 68

The rate of tax shall, annually, be as follows:

The first 4,000 Dinars of income 15%.

The subsequent 4,000 Dinars of income 18%.

The subsequent 4,000 Dinars of income 20%.

The subsequent 4,000 Dinars of income 25%.

Income beyond this 35%.

Article 69

Every taxpayer shall submit to the Department a declaration, in writing, on his income within the sixty days subsequent to the expiration of the taxable year, on the form and in accordance with the rules specified by the Executive Regulation. In respect of the declaration, loss account and cessation of the activity and assignment thereof, the provisions established in Articles 54, 55, 57, 63 and 64 shall prevail. As well, the provisions of tax on in- come from commerce, industry and trades shall apply insofar as they are not contrary to the provisions of this Chapter.

Article 74

Tax shall be imposed on the amounts beyond the limit of exemption of the taxpayer's gross taxable income, and payment thereof shall be due immediately after establishment of the right to income, irrespective of the method and place of payment thereof.

Article 75

The rate of the tax shall, annually, be as follows:

The first 1,800 Dinars of income 8%.

The subsequent 1,200 Dinars of income 10%.

The subsequent 1,800 Dinars of income 15%.

The subsequent 1,800 Dinars of income 20%.

The subsequent 1,800 Dinars of income 25%

Any income beyond this 35%.

The tax shall be conclusively assessed on every part of the year in which the right to any taxable income is established, and assessment in this case shall include any occasional incomes the taxpayer may obtain during that period.

For the purpose of computing the exemption from this tax, the year will be considered 360 days divided into twelve equal months.

Article 76

Owners of work and payers of income referred to in Article 70 are the parties obliged by payment of the tax to the Department against its deduction from the amounts due by them, in the manner and on the dates specified by the Executive Regulation.

In the events where the owner of work or payer of income is not resident in the Libyan Arab Republic and has no representative in it, or where it is not possible to bind him by the payment of tax for any reason whatsoever, the taxpayer shall be bound by the payment of tax directly to the Department, in the manner specified by the Executive Regulation.

Article 77

Owners of work and payers of income referred to in Clauses b and c of the First Paragraph of Article 70, shall submit to the Department a list of the names, places of residence, jobs and the incomes received by their employees, on the dates and in accordance with the rules specified by the Executive Regulation.

The Department shall, in all events, be notified of any change such information might undergo, on the dates specified by the Executive Regulation.

Chapter 7 Tax of External Income for country's residents

Article 78

There shall be subject to tax any kind of the incomes accrued abroad for residents in the country, whether Libyan or foreign.

Notwithstanding, the wages, salaries, etc. paid to the per- sons referred to in the preceding Article against their work abroad, shall be exempted from this tax.

Article 79

In the application of the provisions of this tax, there shall be considered resident, any person whose residence in the Libyan Arab Republic exceeds six months during the taxable year, even if not continuous. As well, every person taking the Libyan Arab Republic as a place of his main residence or his main interests exist in it even if his residence during the taxable year does not exceed the said period.

As well, there shall be considered resident, every Libyan working abroad for the account of the Government, any public artificial body or any concern operating in the Libyan Arab Republic which has no self-run organization abroad with separate accounts.

Article 80

There shall be exempted from tax on their incomes accrued from sources outside the Libyan Arab Republic, the foreign em- ployees who came to it pursuant to employment agreements with the Government, a public or private body or company, or an in- dividual operating in the Libyan Arab Republic, and such exemption includes the wives and dependents of such persons.

Article 81

Tax shall be imposed on the gross taxable income upon estab- lishment of the right to it, without making any discount or exemption thereof.

The taxpayer shall submit to the Department a declaration on his income within thirty days from the date of its realization, in accordance with the conditions and terms specified in the Executive Regulation.

Article 82

The rate of the tax shall be 15% of the taxable income, and the Executive Regulation shall specify the method and dates of payment thereof.

Chapter 8 Tax of deposits Interests with Banks and Savings Accounts

Article 83

There shall be subject to tax the following:

1. interests arising from deposits with banks, irrespective of their terms.
2. b.interests of savings accounts with banks in excess of the limits of the exemption provided for in Item 2 of Article 2 hereof.

Article 84

Banks shall deduct the tax from the interests referred to in the preceding Article when it becomes due and shall deliver it to the Department according to the method and within the dates specified in the Executive Regulation.

Article 85

The rate of the tax shall be 15% of the taxable income.

Part Three General Tax of Income

Article 86

The general tax on income shall be imposed annually on the income of the natural persons, whether Libyan or foreign.

Tax shall become due on the first of January of each year on the income realized by the taxpayer during the preceding year. However, tax shall, in all events, become due upon the death of the taxpayer or when he leaves the country.

Article 87

There shall be subject to tax the following:

1. the total of incomes, subject to the specific tax, earned by the taxpayer during the taxable year estimated in accordance with the provisions established for each tax, prior to carry- ing out any exemption and after deducting the specific taxes paid during the year.
2. the amounts distributed to partners or shareholders of the income of the company which is subject to the tax on companies.

Article 88

Without prejudice to the provisions of Article 59, the loss in any of the incomes subject to the specific taxes may not be deducted from an income subject to another specific tax.

Article 89

Every taxpayer having an income from all sources in excess of the limit of exemption provided for in Article 90 shall, with- in the sixty days subsequent to the expiration of the taxable year of every year, submit to the Department a declaration of the taxable income he obtained during such year, on the form and in accordance with the rules and conditions specified in the Executive Regulation.

In the event that the taxpayer departs the country during the taxable year, the declaration must be submitted thirty days, at least, prior to departure, unless his departure is sudden owing to a reason beyond his capacity in which case the declaration must be submitted before departure. In the event of death of the tax- payer, the provisions of Article 26 shall apply.

Article 90

The rate of the general tax shall, annually, be as follows:

The first 4,000 Dinars of income Exempt.

The subsequent 3,000 Dinars of income 15%.

The subsequent 5,000 Dinars of income 25%.

The subsequent 8,000 Dinars of income 35%.

The subsequent 15,000 Dinars of income 45%.

The subsequent 25,000 Dinars of income 55%.

The subsequent 40,000 Dinars of income 65%

The subsequent 100,000 Dinars of income 75%.

Any income in excess of 200,000 90%.

Article 91

The grievance or contest in respect of the assessment of the general tax shall not be accepted if such is concerning one of the elements of the income on which the tax was definitively assessed.

Article 92

The general tax shall not be due as regards the elements of income subject of grievance or contest before the commissions be- cause of the assessment of tax.

The decision adopted in respect of the grievance or contest shall be taken as a basis for the amendment of the assessment of the general tax and collecting the outstanding part of it.

Part Four Tax of Companies

Article 93

Tax shall be imposed on the incomes arising in the Libyan Arab Republic and abroad for companies and foreign company affiliates, whatever the type of their activity or purpose might be.

In the application of the provisions of this Law, “companies” shall mean, the companies governed by the provisions of the Libyan Commercial Code, including public companies except joint companies.

As well, “foreign company affiliates” shall mean, the aspects of activity and capitals invested by foreign companies in the Libyan Arab Republic, irrespective of their organization or legal status.

Article 94

In addition to companies, there shall be subject to tax, the other corporate bodies, whether public or private, if their main activity is commercial, industrial or real estate investment.

Article 95

Subject to the provisions of Article 62, tax shall be im- posed on the incomes of the partnership in commendam panies which exceed the shares of their active partners.

Article 96

The company which undergoes liquidation shall continue to be subject to tax pending completion of final distribution of its assets, and the liquidator shall be responsible for the taxes due on the company until that date and those which, for any reason whatsoever, could not be collected.

Article 97

Tax shall annually be imposed on the basis of the net in- come realized during the taxable year, and the taxable income shall be determined on the basis of the result of operations, what- soever, implemented during the year, after deducting all costs proved to have been expended in obtaining such income.

The general expenses, amounts paid for services rendered, interests or commissions burdened by a foreign company to its branch in the Libyan Arab Republic shall not be considered, except to the extent necessary or essential for the realization of the purposes of the branch.

Article 98

The Department may estimate the income of any branch of the foreign companies on the basis of a percentage of the total income of the foreign company proportionate with the outcome of the activities of such branch, provided that the estimation of such income shall be made in a manner identical with the manner specified in this Law.

Article 99

Incomes of the branches of foreign companies arising from telecommunications or transport activities, whatsoever, from the Libyan Arab Republic to the abroad world, shall be considered realized in the Libyan Arab Republic.

Article 100

The provisions of Articles 55, 56, 57, 58, 59, 63, 64 and 65 shall apply to the companies and foreign companies affiliates and other corporate bodies, without prejudice to the provisions of this Part.

Alteration of the legal status of a company shall be con- sidered a cessation of its activity. Likewise, its merger with other companies shall be considered a relinquishment of that activity. In this case, there shall be subject to tax the difference between the book value of the merged company assets and the value re- presented by these assets in the capital of the new company.

Article 101

There shall be considered an income of a company and shall be subject to tax, compensations of any kind paid to the managers and the control committee members from among shareholders or partners.

Article 102

The rate of the tax shall, annually, be as follows:

The first 10,000 Dinars 20%.

The subsequent 20,000 Dinars 25%.

The subsequent 30,000 Dinars 30%.

The subsequent 40,000 Dinars 40%.

The subsequent 50,000 Dinars 45%.

Any income in excess of 150,000 Dinars 60%.

Part Five Penalties

Article 105

Anyone who fails, without good reason, to submit the decla- rations, notices and statements provided for in Articles 45, 47, 52, 53, 54, 63, 69, 77, 81, 89, and 104, shall be liable to a fine not less than twenty Dinars and not more than five hundred Dinars, besides the payment of a compensation not less than 25% and not more than three times the tax value, and there shall be considered as failure to submit the de- claration, notice or statement, if such was submitted without satisfying the conditions established for it.

Article 106

Without prejudice to any severer penalty, anyone in charge of the management of a concern subject to the tax on companies and fails to keep the books, registers and records of accounts which he is required to keep or maintain under Article 125 of this Law, shall be liable to a fine not less than two hundred Dinars and not more than one thousand Dinars.

Article 107

Anyone who fails, in other than the cases provided for in the preceding Article, to keep the books and registers required under Article 125 of this Law, shall be liable to a fine not less than fifty Dinars and not more than two hundred Dinars.

Article 108

There shall be liable to a fine not more than one hundred

Dinars.

1. Everyone refuses to submit what is requested from him of statements, books or registers as required.
2. Everyone prevents, without good reason, any officer enforcing this Law from entering any building to do his duty or to allow him to do so.

In the event of repetition, the penalty shall be imprisonment for a period not more than six months and a fine not less than fifty Dinars and not more than two hundred Dinars, or either penalty.

Article 109

Anyone who commits, aids or abets in the commission of any- one of the following acts, with the intention of evading the whole or part of the tax, shall be liable to imprisonment for not more than one year and a fine of not less than fifty Dinars and not more than five hundred Dinars or either, penalty, together, with a compensation equivalent to three times the amount of unpaid tax:

1. making untrue statements in declarations or papers submitted in implementation of this Law.
2. preparation of any accounts, books, registers, reports or ba- lance sheets which are untrue.
3. resorting to any fraudulent method to conceal or attempt to conceal amounts which are subject to tax.

Article 110

Anyone failing to deduct or pay the tax which he is under obligation to deduct and pay on time, shall be liable to imprison- ment for not more than six months and a fine not less than twenty Dinars and not more than one hundred Dinars or either penalty, besides a compensation equivalent to double the amount of unpaid tax.

Article 111

Anyone violating any other provision of this Law or the regulations issued in implementation thereof shall be liable to a fine not more than fifty Dinars. A compromise may be reached in respect of such violations by payment of five Dinars within ten days from the date of offering compromise with the violator.

Article 112

Criminal cases shall not be filed in respect of the misde- meanours referred to in the foregoing Articles save upon written request by the Director of the Department who may, if he so thinks, waive any such case at any time before a final judgment is issued in it.

Article 113

In the event that the Director of the Department decides not to file an action or waive it, he may compromise compensations on the basis of paying an amount not less than the prescribed mini- mum amount of compensation in the cases referred to in Article 105 or an equivalent to the amounts of unpaid tax in the other cases.

Part Six Final Provisions

Article 115

No Government department, corporation or public body may in any way, under the pretext of keeping office secrets, refuse to allow the officials of the Department to have access to what they wish to see of its documents and papers with the purpose of implementing this Law.

The Public Prosecution may show the Department the files of any civil criminal case.

Article 116

Companies, bodies, concerns and those who engage in commercial professions and others shall submit to the officials of the Department any time they are requested, the books maintain- ed pursuant to the Law and the other instruments and documents attached thereto, as well as, the papers pertaining to the proceeds and expenses so that the said officials may be able to ascertain the due implementation of this Law, whether as regards them- selves or other taxpayers.

In any event, the officials of the Revenue Department may be pre- vented from having access under the pretext of keeping the secrets of the profession.

Such access shall take place where the respective books and papers exist during the normal working hours and without need to prior notice. Access may, also, take place at the Department if that is necessary.

Article 117

Subject to the legal provisions in force, every person must submit to the Department any statement he deems necessary for the implementation of the provisions of this Law, within thirty days from the date on which he was notified of that.

Article 118

Every public employee shall, through established administrative channels, notify the Department of any information related to his work and may lead to practicing fraudulence in respect of the taxes or practicing deception with the purpose of, or the result of which shall be, evading the payment of tax or jeopardizing it to non-payment.

Article 119

The Immigration authorities may not issue an exit visa to any taxpayer not enjoying the citizenship of the Libyan Arab Republic unless upon the submission of a clearance from the Department establishing that he paid the tax due on him. In the event that such taxpayer is responsible for the application of this Law to any company, body or concern, he may not be granted this clearance unless such company, body or concern pays the due tax up to the date of obtaining the clearance or after the submission of a guarantee acceptable to the Department.

The Executive Regulation shall specify the categories of officials in charge of the application of the Law to the companies, bodies and concerns.

There shall be excepted from the condition of obtaining the tax payment clearance, the employees of the Government and corporations and employees of foreign public bodies, except in the event of final exit.

Other categories may be excepted from this restriction by a decision by the Council of Ministers.

Article 120

Notaries public and other persons who are legally concerned with notarizing or publicizing instruments, shall notify the De- partment immediately of any disposition or contract in respect of which an action is taken before them and results in an income subject to tax.

Without prejudice to the provisions of Article 64, they may not carry out any surrender on the taxable activity, in whole or in part, except after the submission by surrender of a certificate from the Department reflecting his tax status.

Article 121

The Bailiffs' Office of the court before which measures of execution in respect of the property are initiated shall notify the Department, by a registered letter with notice of delivery, of depositing the sale conditions list, within the fifteen days sub- sequent to the date of depositing.

The Bailiffs' Office of the court before which sale is made and everyone undertaking sale in a public auction, whether such is compulsory or voluntary, shall notify the Department by registered mail with notice of delivery of the dates of sale of movable or immovable properties, fifteen days, at least, before the date of the sale.

Article 122

Administrative departments competent with the issue of licenses for building or engagement in any activity subject to tax; or with the issue of licenses for the possibility of using a real estate for the engagement of such activity, shall notify the De- partment upon granting any license of the relevant information.

There shall be considered a license, every concession, commit- ment, monopoly or permit necessary for the engagement in the activity.

The authorities under reference shall desist from renewing the license before making sure that the holder thereof has paid the taxes due by him.

Article 123

Without prejudice to the legal provisions in force, no bid may be accepted in the contracts concluded by government departments or public bodies if such is submitted by a person whose de- lay in paying the taxes due by him, pursuant to the provisions of this Law, is established.

Article 124

Every person who, ex-officio or by virtue of his jurisdiction or job, is concerned with the assessment or collection of tax, pur- suant to the provisions of this Law, or is competent with the settlement of the disputes connected therewith, shall be bound by keeping the secrets of his office, otherwise, Article 236 of the Penal Code shall apply to him.

Article 125

Persons governed by the provisions of this Law may be bound by keeping books and accounts in addition to those which they are required to keep under other legislations, in accordance with the rules and procedures specified in the Executive Regu- lation.

Article 126

The Minister may, at the proposal of the Director of the De- partment, grant a bonus to any official of the Department or others, not exceeding 5%, of any amounts due to the Govern- ment pursuant to this Law, established to have been collected as a result of a special effort exerted by him.

A percentage not exceeding 40% of the charges of garnish- ment and sale procedures may, also, be allocated as a collection bonus payable to the officials undertaking collection, in accor- dance with the rules to be announced in a decision issued by the Director of the Department.

Article 127

The Director of the Department may authorize other officials of the Department to exercise some of his functions establish- ed in accordance with this Law.

Article 128

Officials of the Department defined by a decision issued by the Minister shall have the capacity of judicial officers to check any violations of the provisions of this Law.

Article 129

The Executive Regulation of this Law shall be issued by a decision passed by the Minister at the proposal of the Director of the Department.

Article 130

In the application of the provisions of this Law, “Minister” shall mean the Minister of Treasury; “Director of the Department” shall mean the Director of the Revenue Department; “Department” shall mean the Administration, Division or Office which belongs to the Revenue Department and in whose jurisdiction the center of running the taxpayer's activity, the place of his principal establishments or his taxable funds, is located.