Lebanon provides a recognized legal framework for individuals seeking to operate a business as a sole proprietorship. This article covers the availability, legal obligations, and tax requirements for individual business owners in Lebanon as of 2025.
Sole Proprietorship Status in Lebanon
Lebanon officially recognizes the Sole Proprietorship (تاجر فردي / Individual Merchant) as a legitimate form of business structure. This status enables individuals to operate businesses in their own name without establishing a separate legal entity. It is actively used in practice, with availability for Lebanese citizens and residents.
Key Features of the Sole Proprietorship
- Business name: Operates under the individual’s name.
- Separate legal entity: Not required—business and owner are legally the same person.
- Personal liability: The owner is personally liable for all business debts and obligations.
Registration Process
- Commercial Register: Registration with the Commercial Register is mandatory to legally operate in Lebanon. This step formally recognizes the sole proprietorship and gives it legal standing.
Taxation of Sole Proprietors (2025)
Sole proprietorship income is subject to Lebanon’s personal income tax system. Profits are taxed progressively based on net annual income.
| Tax Base | Progressive Rate (%) |
|---|---|
| Net Profits | 2% – 25% |
* All figures reflect applicable rates for 2025. Tax due varies based on the total net profit of the sole proprietorship.
VAT Obligations
If the annual turnover of the sole proprietorship exceeds LBP 100 million, VAT registration is required. This threshold is set by Lebanese authorities and applies to the gross business revenues. Business owners should monitor income closely to ensure compliance once the threshold is reached.
Social Security Contributions
Sole proprietors are required to make social security contributions if they employ staff. These contributions are mandatory for employee coverage and are calculated based on Lebanese social security regulations.
Summary Table: Sole Proprietorship in Lebanon (2025)
| Requirement | Condition / Rate / Threshold (LBP) |
|---|---|
| Legal Form | Sole Proprietorship (تاجر فردي / Individual Merchant) |
| Eligibility | Lebanese citizens & residents |
| Personal Liability | Unlimited |
| Taxation | Personal income tax (2% – 25% on net profits) |
| VAT Threshold | LBP 100,000,000 |
| Social Security (with employees) | Mandatory contributions apply |
Pro Tips for Sole Proprietorship in Lebanon
- Track annual turnover diligently—VAT registration becomes mandatory if your gross revenues exceed LBP 100 million in a 12-month period.
- Remember that all business liabilities are also personal liabilities; keep detailed records and monitor obligations carefully.
- Register promptly at the Commercial Register for legal recognition and to avoid operational penalties.
- If you plan to hire employees, prepare for additional social security obligations and factor these costs into your business strategy.
Official Sources
- Lebanon Ministry of Economy & Trade – Starting a Business
- Lebanon Ministry of Finance – Taxation Main Page
- Invest in Lebanon – Doing Business
Lebanon’s sole proprietorship status provides a straightforward pathway for individuals to establish and operate a business with streamlined registration. The primary considerations remain the unlimited personal liability, the progressive income tax structure ranging from 2% to 25%, and VAT obligations over the specified threshold. Staying compliant with registration, tax, and social security rules is essential for successful business management in Lebanon in 2025.