However, in July 2012, the Libyan Minister of Economics issued decree no. 207 for year 2012, slightly amending 2012 decree no. 103. Decree no. 207 of 2012 organizes the legal framework of foreign investment in Libya. Foreign investment is allowed in all economic sectors except certain areas which are strictly limited to Libyan citizens. For foreign companies, the decree also details the form of the legal entities, i.e. limited liability, joint venture, branch of a foreign company and representative offices.
As for the oil and gas sectors, the Ministry of Economics decree no. 207 of 2012 granted oil and gas companies the right to directly open a branch in Libya. A branch of a foreign office means that the shares of the company are totally owned by the mother company. The only restriction is that a manager of Libyan branch of the foreign company, or his deputy, must be a Libyan citizen.
Decree no. 207 of 2012 allowed oil companies to open a branch offices engaging in the following activities:
- Oil exploration including ground surveys by various means such as geological, geophysical and geochemical.
- Examination and analysis of data and provision of geological and reservoir studies.
- Oilfields drilling and maintenance, which includes oil drilling equipment and submersible pumps maintenance and installation.
- Cementation, mud works and drilling fluids.
- Construction, maintenance and cathodic protection of storages, pipelines and pipelines transportation and pumping stations.
- Construction of offshore rigs.
- Installation and maintenance of oil refineries and petrochemical plants.
- Maritime transport services of materials, equipment and machinery for offshore drilling operations.
- Mines removal from oil fields and other sites.
As for taxes regulations, the New Libya witnessed a change in both personal and corporate tax laws. Before the revolution and subsequent downfall of the old regime, corporate tax was set at a flat rate of 20% of the net profit as per the Income Tax law no. 7 of the year 2010.
The new government, in 2012, has amended the same law by cancelling a 4% tax on the net profit which was known as the Jihad tax. All tax returns should be filed with the Tax Department no later than four months from the end of the company’s fiscal year. Tax filling should be certified by an external auditor (certified accountant).
Dr. Mohamed Karbal is a New York lawyer and founder of Karbal & Co, a full-service international law firm with offices in Libya and Dubai that serve the needs of businesses and governments in Libya and the United Arab Emirates.
