Doing Business 2019 Lebanon Economy Profile Lebanon Page 1 Doing Business 2019 Lebanon Economy Profile of Lebanon Doing Business 2019 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 Lebanon About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Lebanon Ease of Doing Business in DB 2019 Rank Region Middle East & North Africa 190 1 Lebanon Income Category Upper middle income 142 DB 2019 Ease of doing business score Population 6,082,357 0 100 City Covered Beirut 54.04 DB 2019 Ease of Doing Business Score 0 100 63.50: Saudi Arabia (Rank: 92) 60.98: Jordan (Rank: 104) 58.56: Egypt, Arab Rep. (Rank: 120) 58.30: Regional Average (Middle East & North Africa) 54.04: Lebanon (Rank: 142) 41.57: Syrian Arab Republic (Rank: 179) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Lebanon 1 28 55 82 Rank 105 109 113 124 124 135 136 140 146 150 151 163 170 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - Lebanon 100 78.63 80 67.94 62.75 59.44 57.90 Score 60 52.69 49.85 40.00 41.67 40 29.55 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 Lebanon Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a business or to leave the home to register the also collected for the second largest business city. company - The entire office space is approximately 929 square meters (10,000 square feet). - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 procedures cannot start on the same day) - Does not qualify for investment incentives or any special benefits. - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final document is received The owners: • No prior contact with officials - Have reached the legal age of majority. If there is no legal age of majority, they are assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 Lebanon Starting a Business - Lebanon Standardized Company Legal form Socièté a Responsabilité Limitée (SARL) Paid-in minimum capital requirement LBP 5,000,000 City Covered Beirut Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Procedure – Men (number) 8 7.2 4.9 1 (New Zealand) Time – Men (days) 15 20.5 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 40.0 22.6 3.1 0.0 (Slovenia) Procedure – Women (number) 8 7.9 4.9 1 (New Zealand) Time – Women (days) 15 21.2 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 40.0 22.6 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 38.9 8.1 8.6 0.0 (117 Economies) Figure – Starting a Business in Lebanon and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 84.43: Jordan (Rank: 106) 84.11: Egypt, Arab Rep. (Rank: 109) 82.00: Regional Average (Middle East & North Africa) 80.99: Syrian Arab Republic (Rank: 136) 80.07: Saudi Arabia (Rank: 141) 78.63: Lebanon (Rank: 146) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2019 Lebanon Figure – Starting a Business in Lebanon – Procedure, Time and Cost Time (days) Cost (% of income per capita) 30 14 Cost (% of income per capita) 25 12 10 20 Time (days) 8 15 6 10 4 5 2 0 0 1 2 3 4 5 6 *7 *8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2019 Lebanon Details – Starting a Business in Lebanon – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Designate a Lebanese lawyer 1 day LBP 3,000,000 Agency : Lawyer (attorney startup Each newly formed company must retain and pay an attorney on an annual fees) + LBP 150,000 basis. On April 26 2012, the Beirut Bar Association increased the minimum (Legalization of the annual retainer to LBP 9,000,000 effective as of January 2013. This retainer can Power of Attorney be paid by the company during the year. Startup fees are set by the Beirut Bar before the Bar Association at LBP 3,000,000. Association) 2 Deposit the capital in a bank 2 days no charge Agency : Bank This procedure can be carried out on the basis of a signed and notarized copy of the articles of association. 3 Register at the Company Registry 2 days see comments Agency : Commercial Register The applicant submits the following documents to the company registrar at the Commercial Court, along with the total amount of required fees: • Articles of association • Commercial circulars • Minutes of the first general meeting of the partners • Registration application and a draft of the registration certificate to be issued • Document attesting the capital deposit • Partners’ identity cards or passports (copy) • Documents evidencing that the company is entitled to occupy the premises where it exercises its activities Fee schedule for company registration: • Tax for the magistrates’ mutual fund: LBP 375,000 lump tax + 0.15% of the capital+ LBP 1,000 flat registration fee + LBP 500 application fee + LBP 1,000 certified copy + LBP 500 commercial publication fee • Stamp duty: equal to 0.4% of capital + LBP 750,000 lump sum stamp duty + LBP 2,000 flat registration fee + LBP 1,000 application fee + LBP 2,000 certified copy + enrollment fee (Qaydeyia) LBP 250+ LBP 1,000 commercial publication fee If the Bylaws are not signed before the Commercial Registry, additional fees are levied as follows: • Notarization of the articles of association: LBP 8,500 for each page. • Notarization fee: LBP 100,000 lump sum. • Notary public tax: 0.1% of capital. 4 Notify the Ministry of Finance of commencement of business operations 2 days no charge Agency : Ministry of Finance Within 2 months of registration, the company must submit a notification of commencement of business activities to the Ministry of Finance in order to register for income tax and VAT. 5 Register at the National Social Security Fund (NSSF) 1 day no charge Agency : National Social Security Fund This procedure has two functions: “Registration” of a new employee and “Confirmation” by the system. The “Registration” function entails submitting a file for each new employee at the NSSF regional office closest to the company premises and obtaining a file reference number (or a receipt acknowledging the registration) immediately upon the submission. Once this “Registration” function is completed, the business is considered to have fulfilled its legal obligations with the NSSF. The benefits to the newly registered employees, under NSSF rules, will also become immediately effective. The Time to complete this procedure is 1 day at no cost to the employer or the employee. The “Confirmation” function consists of issuing a hard copy document (printed on a special size sheet) in the name of the registered employee along with his/her unique NSSF ID. Due to the lack of printing equipment at NSSF, the confirmation documents are printed in batches every few days or so. Therefore, it could take up to 30 days for a confirmation sheet to be received by the newly registered employee. 6 File internal labor regulations (règlement intérieur) with the Ministry of 1 day no charge Labor Agency : Ministry of Labor When the number of employees at a company reaches 15 then the company will have to file internal labor regulations (règlement intérieur) with the Ministry of Labor according to Art. 66 of the Labor Code. Page 8 Doing Business 2019 Lebanon 7 Register for VAT one week no charge Agency : VAT Department (simultaneous with Registration for VAT is done at the VAT Department. To obtain a VAT certificate previous procedure) of registration, it may take between 7 and 10 days. There are specific forms to fill out for each kind of registration. The VAT department is independent from the taxes’ department. The registration in both departments is free of charge. 8 Obtain a company seal 1 day (simultaneous LBP 20,000-35,000 Agency : Seal maker with previous Although not mandated by law, the majority of companies prefer to have procedure) company stamps. they can be order at any seal-making company. Takes place simultaneously with previous procedure. Page 9 Doing Business 2019 Lebanon Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or • Registering and selling the warehouse after its completion topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering information - Will be used for general storage activities, such as storage of books or stationery. - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted Cost required to complete each procedure (% of as procedures. income per capita) - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is • Quality control before construction (0-1) no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 10 Doing Business 2019 Lebanon Dealing with Construction Permits - Lebanon Standardized Warehouse Estimated value of warehouse LBP 643,352,551.10 City Covered Beirut Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 22 16.6 12.7 None in 2017/18 Time (days) 277 137.4 153.1 None in 2017/18 Cost (% of warehouse value) 7.1 4.7 1.5 None in 2017/18 Building quality control index (0-15) 13.0 12.1 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Lebanon and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 75.71: Saudi Arabia (Rank: 36) 71.77: Egypt, Arab Rep. (Rank: 68) 60.47: Jordan (Rank: 139) 59.17: Regional Average (Middle East & North Africa) 52.69: Lebanon (Rank: 170) 0.00: Syrian Arab Republic (Rank: 186) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Lebanon – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 2 250 Cost (% of warehouse value) 1.5 200 Time (days) 150 1 100 0.5 50 0 0 1 *2 *3 4 5 *6 7 8 9 10 11 12 13 * 14 15 16 17 18 * 19 * 20 21 22 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2019 Lebanon Figure – Dealing with Construction Permits in Lebanon and comparator economies – Measure of Quality 15 14.0 13.0 12.0 12.1 11.0 Index score 10 5 0 No Practice Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Details – Dealing with Construction Permits in Lebanon – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain a geotechnical study / soil test 15 days USD 2,225 Agency : Geotechnical engineer BuildCo will request a soil test for the structural calculations for the foundation. While the soil test is not required by law, it is done in practice as it is used for the structural calculations for the foundation. 2 Obtain a recent planning certificate 10 days LBP 24,600 Agency : Directorate General of Urban Planning (DGU) BuildCo must submit a recent planning certificate (they are usually valid for 3 months) among the necessary documents to request a building permit. BuildCo must have a receipt from the municipality and should pay the value of the stamps for this procedure. The cost is as follows: 1- Land certificate stating the dimension and the content of the land: LBP 10,500 2- Cadastral plan showing the positioning of the land: LBP 10,000 3- Receipt from the municipality of the planning certificate: LBP 4,100 3 Obtain a topographic study 7 days USD 500 Agency : Topographic engineer BuildCo needs to obtain a topographic study at the beginning of the construction in order to have accurate details about the levels and limitations of the land plot. This study is required for the construction permit application. 4 Hire a technical auditor and obtain approval of drawings 3 days USD 5,000 Agency : Technical Auditor Based on Decision No. 1/1192 dated November 23, 2012, companies must hire a technical auditor accredited by the government who must review and approve the drawings related to the project before the building permit can be issued. They may request that modifications be made to the drawings. Throughout the construction phase, the auditors must also ensure that construction works are duly performed through inspections at different stages of the construction. And upon completion of the works, they must attest that the construction work was carried out properly. 5 Obtain approval of file by Order of Engineers (where engineer is registered) 4 days LBP 1,950,900 and pay duties to Order Agency : Beirut Order of Engineers The file must be submitted to the Order of Engineers if the engineer is registered (Beirut Order of Engineers or Tripoli Order of Engineers). The file should include the following: • A construction permit application signed by that same civil engineer or architect jointly with the real estate owner, • The design plans, • An agreement between the property owner and the architect or engineer responsible for the project described. In order to be submitted as part of the application for a building permit, the file must bear the seal and registration number of the relevant Order of Engineers. The Order of Engineers meets twice a week. A fee schedule for the permit to start construction works from the Order of Architects and Engineers has been implemented in Beirut since 2010: • For the area between 1 and 3,000 sq. m., the cost is de LBP 1,500.00 per sq. m. • For the area between 3,001 and 6,000 sq. m., the fee is LBP 3,000.00 per sq. m. • For the area between 6,001 and 9,000 sq. m., the fee is LBP 4,500.00 per sq. m. • Above 9,001sq. m., the fee is LBP 6,000.00 per sq. m. Page 12 The cost is LBP 1,950,900.00. Doing Business 2019 Lebanon 6 Request and receive inspection from Électricité du Liban for approval 15 days no charge Agency : Électricité du Liban (Electricity of Lebanon – EDL) also need to go to the EDL to make sure you have the electrical post or a transformer first, you must go to municipality to obtain a document that shows the parcel’s value as they will need this to issue the approval, then you must go to the Electricity company to see if Electricite du Liban will be able to supply electricity Before submitting the building permit application, Electricité du Liban has to verify if the construction site can be connected to an electrical post or transformer. 7 Submit building permit application to Urban Development Department 1 day no charge Agency : Urban Development Department, Directorat Général d'Urbanisme (DGU) BuildCo must submit the file described in the previous procedure to the Urban Development Department. In Beirut and Tripoli, the file is referred to the municipal engineering departments. The process takes up to 6 months. The Urban Development Department is a subdivision of the Directorate General of Urbanism. 8 Request and receive pre–approval inspection from Urban Development 40 days no charge Department Agency : Urban Development Department, Directorat Général d'Urbanisme (DGU) The Urban Development Department inspects the property and the plans to ensure that they are consistent with the construction laws and regulations, and then issues its clearance for the issuance of the building permit and calculates the building permit taxes. The inspection itself is completed in a day, but it takes a while from the date BuildCo requests the inspection until the date the inspector arrives. 9 Pay building permit taxes to the municipality 1 day LBP 10,316,123 Agency : Municipality The Urban Development Department refers the file to the relevant municipality (in the case of the city of Beirut, to the Administrator of the City of Beirut). The municipality collects the construction permit taxes and issues the construction permit in the name of the property owner. Payment is made at the municipality. According to Decree No. 60 of 1988 on Municipal Taxes, the building permit taxes paid to the Municipality are a certain value per square meter of the building. However, this value per square meter is calculated based on the value of 1 square meter of construction as follows: - From the value of LBP 1 - 25,000: 1.5% of the construction value of 1 square meter - From the value between LBP 25,000 - 100,000: 2% of the construction value of 1 square meter - From the value greater than LBP 100,000: 1% of the construction value of 1 square meter In the case of Doing Business, the value of 1 square meter of construction is the total construction value / 1,300.6 sq. m. Therefore, the value per square meter without taxes to be paid is calculated as follows: (1.5% * 25,000) + (2% * 75,000) + (1% * [total construction value - 100,000]). Then a 15% municipal tax is added to the value above + 0.05% of the construction value of 1 square meter to obtain the total value to be paid per sq. m. as a municipal contribution. A second tax of 12% of the value above must be paid per square meter as a national tax. A contribution of 5% of the value above must be paid per square meter to the Order of Engineers and Architects. Therefore, the above values would all be added to obtain the total cost per square meter paid to the municipality for all building permit fees, which is then multiplied by 1,300.6 sq. m. for the purposes of the Doing Business case study. 10 Obtain building permit 120 days no charge Agency : Municipality By law, construction work can start if no decision about the building permit application has been made 15 days after the submission date. In practice, however, this is not applied, and people wait 4 months on average. 11 Obtain starting order permit from Order of Engineers 3 days LBP 200,000 Agency : Beirut Order of Engineers To start construction the engineer and/or architect must pay the dossier fee according to the number of professionals involved in the construction work (civil engineer, mechanic engineer, electrical engineer, geotechnical engineer, among Page 13 others). The fee should not exceed LBP 200,000.00 Doing Business 2019 Lebanon 13 Request and receive inspection from the Water of Beirut and Mount 10 days no charge Lebanon for water connection Agency : Water of Beirut and Mount Lebanon With follow-up, it takes 10 days from the time an inspection is requested until an inspection begins. Without follow-up, however, the inspection might never take place. Request and receive inspection from the Municipality of Beirut for sewage 10 days no charge 14 Agency : Municipality of Beirut While the inspection for water connection is done by the Water of Beirut and Mount Lebanon agency, the inspection for sewage connection is done by the Municipality of Beirut. Both inspections can be done simultaneously. With follow-up, it takes 10 days from the time an inspection is requested until an inspection begins. Without follow-up, however, the inspection might never take place. 15 Submit application and receive approval for an occupancy permit from the 4 days LBP 300,000 Order of Engineers Agency : Beirut Order of Engineers Following completion of construction, an application for approval of an occupancy permit must be submitted to the Order of Engineers. The Order must give a written and stamped approval first. 16 Submit application and receive approval for an occupancy permit from the 1 day no charge Directorate General of Urban Planning (DGU) Agency : Urban Development Department, Directorate General of Urban Planning (DGU) Once construction has been completed, an application for approval of an occupancy permit must be submitted to the Urban Development Department. The Urban Development Department performs an on-site inspection of the building to ensure that it is in compliance with the construction permit and approved plans. The application for an occupancy permit must be accompanied by the plans related to the completed construction, signed by the engineer in charge, and stamped by the Order of Engineers. Following the clearance from the Urban Development Department, the file is forwarded to the relevant municipality (in the case of Beirut, to the Administrator of the City of Beirut) that will issue the occupancy permit in the name of the property owner. According to the law, the occupancy permit must be issued within a month. However, this time limit is not enforced in practice. 17 Receive on-site inspection from the Directorate General of Urban Planning 1 day no charge (DGU) Agency : Urban Development Department, Directorate General of Urban Planning (DGU) It takes about a week to schedule the inspection. 18 Obtain occupancy permit 45 days LBP 25,000 Agency : Urban Development Department, Directorate General of Urban Planning (DGU) By law, the time limit for the procedure is 30 days, but in practice, it takes much longer to obtain the occupancy permit -- about 45 days with follow-up. Obtain water connection 14 days LBP 2,260,000 19 Agency : Water of Beirut and Mount Lebanon BuildCo must submit an application for water connection accompanied by various documents. Obtain sewage connection 14 days USD 7,500 20 Agency : Municipality 21 Receive onsite inspection from the Ministry of Finance and obtain estimate 1 day LBP 5,000 of leasing value of the warehouse Agency : Ministry of Finance Once the occupancy permit is issued, an inspector from the Ministry of Finance visits the site to prepare an estimate of the leasing value of the warehouse. This estimate is necessary to register the building. 22 Register the building with the Real Estate Registry 14 days LBP 7,122,702 Agency : Real Estate Registry According to Tables 1 and 2 attached to the Decree Law No. 148 dated 12/6/1959 and its amendments, the registration fees consist of: (i) 1% of the leasing value of the warehouse (ii) minor taxes such as topography tax (approximately LBP 250,000) and deed and contract taxes (approximately LBP 100,000). There is an additional Municipality tax (5% of the total taxes in the aforementioned costs above), provided in Article 90 of the Law of the Municipality Duties and Taxes No. 60/88 dated 12/8/1988 and its amendments. Page 14 Takes place simultaneously with previous procedure. Doing Business 2019 Lebanon Details – Dealing with Construction Permits in Lebanon – Measure of Quality Answer Score Building quality control index (0-15) 13.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer; Private firm. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by 1.0 (0-2) external engineer or firm; Unscheduled inspections; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency; Yes, external engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 2.0 Which parties (if any) are held liable by law for structural flaws or problems in the building Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 1.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance ; Owner or investor; Insurance is commonly taken in practice. Professional certifications index (0-4) 3.0 Page 15 Doing Business 2019 Lebanon What are the qualification requirements for the professional responsible for verifying that the Minimum number 2.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) of years of experience; University degree in architecture or engineering; Being a registered architect or engineer. What are the qualification requirements for the professional who supervises the construction University degree 1.0 on the ground? (0-2) in engineering, construction or construction management; Being a registered architect or engineer. Page 16 Doing Business 2019 Lebanon Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and - Has two stories with a total surface area of approximately 1,300.6 square meters obtaining final supply (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all Cost required to complete each procedure (% of carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road. income per capita) - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or • Value added tax excluded switchboard and the meter base. The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that • Tools to monitor power outages (0–1) there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest • Regulatory monitoring of utilities’ performance supplier. (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor the ranking on the ease of getting electricity. Page 17 Doing Business 2019 Lebanon Getting Electricity - Lebanon Standardized Connection Price of electricity (US cents per kWh) 13.2 Name of utility Electricité du Liban (EDL) City Covered Beirut Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 4 4.7 4.5 3 (25 Economies) Time (days) 89 72.4 77.2 18 (3 Economies) Cost (% of income per capita) 119.4 479.9 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 0 4.2 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Lebanon and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 80.49: Jordan (Rank: 62) 79.89: Saudi Arabia (Rank: 64) 71.41: Egypt, Arab Rep. (Rank: 96) 69.45: Regional Average (Middle East & North Africa) 62.75: Lebanon (Rank: 124) 52.07: Syrian Arab Republic (Rank: 158) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 18 Doing Business 2019 Lebanon Figure – Getting Electricity in Lebanon – Procedure, Time and Cost Time (days) Cost (% of income per capita) 140 80 120 Cost (% of income per capita) 70 100 60 Time (days) 50 80 40 60 30 40 20 20 10 0 0 1 2 *3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Lebanon and comparator economies – Measure of Quality 8 7 6 6 6 Index score 5 4.2 4 3 3 2 1 0 0 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Page 19 Doing Business 2019 Lebanon Details – Getting Electricity in Lebanon – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain neighbor's electricity bill (for address of closest building) 1 calendar day LBP 0 Agency : Neighbor The customer needs to obtain an electricity bill from their neighbor or the identification number of the neighbor’s meter box (showing the address of the closest building. This is needed when applying for electricity connection because it allows the electricity company, Electricité du Liban, locate the construction. 2 Submit application to EDL and await estimate 18 calendar days LBP 11,000 Agency : Electricité du Liban (EDL), Beirut The customer submits an application for electricity connection at Electricité du Liban’s offices. In addition to the application form, the client needs to submit: • copy of the title deed • copy of the ID card • the original building permit, and • electricity bill from the closest building (or meter box number) and its address 3 Receive external inspection by EDL 1 calendar day LBP 451,143.69 Agency : Electricité du Liban (EDL), Beirut The application is forwarded to the relevant department at the utility for review. A site inspection is usually carried out to determine the details of the connection. The inspector then prepares a report with the specifics of the connection and awaits clearance from the relevant authority at the utility. Once clearance is obtained and the inspector has prepared an estimate of the connection fees, the client will need to make the necessary payment at Electricité du Liban’s offices. The client is then given the approved file back along with a “C23” card (with the number of connections and the temporary meter, if needed). 4 Await and receive external works and meter installation from EDL’s service 70 calendar days LBP 14,907,000 provider Agency : Electricité du Liban (EDL), Beirut External works start after the client has paid the connection fees. For a connection of 3x200A, if the warehouse is less than 200 meters away from the closest distribution substation, the works will consist of laying out an underground cable from the building to that substation. Otherwise, a substation would be needed. Any permits needed for the works are obtained by the utility directly. The utility picks a contractor to do the external works, and possibly install the meter and turn the electricity on too. The utility however, always supervises the works. No inspection of the entire internal wiring is done during the process. Takes place simultaneously with previous procedure. Page 20 Doing Business 2019 Lebanon Details – Getting Electricity in Lebanon – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 0 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) .. System average interruption frequency index (SAIFI) .. What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A Mechanisms for monitoring outages (0-1) 0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 0 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of No supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages No exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.edl.gov.lb/ ABOUTEDL.htm Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 21 Doing Business 2019 Lebanon Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past • Each procedure starts on a separate day - 10 years. though procedures that can be fully completed - Is registered in the land registry or cadastre, or both, and is free of title disputes. online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. - Has no trees, natural water sources, natural reserves or historical monuments of • Official costs only (such as administrative fees, duties and taxes). any kind. - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 22 Doing Business 2019 Lebanon Registering Property - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 8 5.6 4.7 1 (4 Economies) Time (days) 37 29.7 20.1 1 (New Zealand) Cost (% of property value) 6.0 5.7 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 16.0 14.2 23.0 None in 2017/18 Figure – Registering Property in Lebanon and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 81.61: Saudi Arabia (Rank: 24) 66.40: Jordan (Rank: 72) 62.11: Regional Average (Middle East & North Africa) 59.44: Lebanon (Rank: 105) 55.00: Egypt, Arab Rep. (Rank: 125) 46.88: Syrian Arab Republic (Rank: 157) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Lebanon – Procedure, Time and Cost Time (days) Cost (% of property value) 7 35 6 30 Cost (% of property value) 5 25 Time (days) 4 20 3 15 10 2 5 1 0 0 1 2 3 *4 5 6 7 8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 23 Doing Business 2019 Lebanon Figure – Registering Property in Lebanon and comparator economies – Measure of Quality 30 25 22.5 Index score 20 16.0 15 14.2 10.5 10.5 10 9.0 5 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Details – Registering Property in Lebanon – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain a copy of the ownership deed from the Land Registry 1 day LBP 10,000 Agency : Land Registry The parties apply for a copy of ownership deeds. The deed details provide the location, number, and size of the plot, who is registered owner, whether there are any disputes over ownership or pending legal cases. Importantly there is a compulsory government order on the property or, for example, whether any roads are planned through the area. The procedure to obtain the Real Estate Certificate is a straight forward one which only requires submission of the request, and the certificate is immediately issued thereafter. Starting in 2016, there is a possibility to obtain the certificate online by going to http://www.lrc.gov.lb/en/content/viewing-title-register. 2 Obtain an official cadastral map and a location map of the property 1 day LBP 20,000 Agency : Cadastre Administration (Da'irat al Massaha) If the area is not specified in the real estate certificate and in the title deed, which is often the case, an official cadastral map and a location map of the property must be obtained from the cadastre administration (in Arabic “Dairat al Massaha”). 3 Obtain an urban plan certificate from the Urban Planning Authority and the 10 days LBP 6,000 Municipality Agency : Urban Planning Authority and Municipality Parties obtain an urban plan certificate from the Urban Planning Authority and the Municipality. This is not strictly required by the law, but it is usually requested by the buyer in order to make sure that no special easement or expropriation is planned on the property that he intends to purchase. 4 Obtain a Municipal Tax Clearance (Bara’et Zimma) 3 days LBP 8,000 Agency : Municipality Obtain clearance from the Municipality to make sure that municipal taxes prior to the sale agreement have been paid. This is not required by law, but it is usually requested by the buyer. 5 Preparation of the sale agreement by a lawyer 2 days LBP 1,500,000; (LBP Agency : Lawyer 1,500,000 (minimum An attorney prepares the sale agreement on an official form. The participation of set by the Beirut Bar a lawyer is not mandatory, but it is preferred to avoid any mistakes. The sale Association)) contract is often drafted by the notary public or by a qualified facilitator. However, for complex and delicate real estate transactions where either or both parties need to protect their rights, the contract is usually negotiated and drafted by both parties’ attorneys. The Beirut Bar Association on its decision of April 26th, 2012 has set a minimum fee of LBP 1,500,000 for the drafting of a contract. Such minimum fee shall be subject to an increase taking into consideration the contract's value and importance. 6 Obtain an official estimate of the property rental value from the Tax 10 days LBP 5,000 Authority Agency : Ministry of Finance An official estimate of the rental value of the property is requested together with a tax discharge (clearance). The Tax Authority at the Ministry of Finance orders an inspection of the property by a controller to obtain an official estimate of the rental value of the property. A copy of the sale agreement should be submitted to the Ministry of Finance to obtain the official estimate of the rental value. Page 24 Doing Business 2019 Lebanon 7 Apply for registration at the Land Registry 10 days LBP 37,084,000; ((i) Agency : Land Registry Sale transfer tax 5% The contract, together with the documentation, is presented, either a) directly to + (ii) Flat taxes (Deed the Land Registry officer before whom the contract is signed and then the fee 8,000; contract property is registered, or b) to the notary public before whom the contract is fee 8,000 seller; signed and then both the contract and the documentation shall be presented to contract fee 8,000 the Land Registry for registration of title. buyer ) +(iii) New a) If it is presented to the Land Registry, all taxes and duties are paid at the tax deed fee 50,000+ (iv) authority cashier, which is located at the same building than the Land Registry. contract stamp fee The Contract is presented to the Assistant Land Registrar, then it will go through 10,000 + (vi) Deed one or two officers before it reaches the Land Registrar who would: stamp fee 5 000 +(vii) (i)- either accept the contract if he/she agrees on the price that was set by the Municipality fee 5% parties and finds that there are no irregularities in the documents, in which case (of the sale transfer the contract shall be immediately registered, and thereafter the new deed will be tax + Flat taxes) + delivered to the buyer. (viii) Lawyers (ii)- or refuse to register the contract until the price is amended (i.e. increased) or syndicate fee 1 per the irregularities in the documentation is rectified, in which case the Land thousand of the Registrar’s request shall be satisfied and the contract is to be presented once amount+ (ix) Stamp again for review and acceptance. It is only when the Land Registrar approves the signed contract and accepts to fee 4 per thousand of record it that the title to the property is transferred to the Buyer. the amount) Then, once the transaction is completed, the new title deed in the name of the Buyer is delivered in about 5-7 business days. As per the express and clear provisions of the law, the buyer acquires full ownership only when the sale contract is recorded (i.e. after its acceptance) in the Land Registry, regardless of when the new deed is delivered to him. b) In case the contract is delivered for signing to the notary public, then both the contract and the documentation shall be presented to the Land Registry for registration of title. All taxes and duties are paid directly at the notary public’s office, except for the stamp duty that is paid at the Ministry of Finance if its amount exceeds LBP 200,000 The documentation shall include: • Title deed, as proof of ownership (held by seller) • Real Estate Certificate (obtained in Procedure 1) • Official cadastral map and location certificate of the property (obtained in Procedure 2) • Official estimate of rental value of the property (obtained in Procedure 5) • Municipal tax clearance (obtained in Procedure 6) • Sale agreement (prepared in Procedure 7) 8 Update the property record at the Cadaster 3 days no charge Agency : Cadaster Once the registration at the land registry, the new owner must update the record at the Cadaster to reflect the new name. This is not yet done automatically. Takes place simultaneously with previous procedure. Page 25 Doing Business 2019 Lebanon Details – Registering Property in Lebanon – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 4.0 What is the institution in charge of immovable property registration? Real Estate Registrar In what format are the majority of title or deed records kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions Yes 1.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Cadastre Administration (Da'irat al Massaha) In what format are the majority of maps of land plots kept in the largest business city—in a Paper 0.0 paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing No 0.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Separate 0.0 or mapping agency kept in a single database, in different but linked databases or in separate databases databases? Do the immovable property registration agency and cadastral or mapping agency use the Yes 1.0 same identification number for properties? Transparency of information index (0–6) 3.0 Who is able to obtain information on land ownership at the agency in charge of immovable Anyone who 1.0 property registration in the largest business city? pays the official fee Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: http://www.lrc.gov .lb/en/content/req uired-documents Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.lrc.gov .lb/en/content/fee s-simulation-0 Does the agency in charge of immovable property registration commit to delivering a legally No 0.0 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the No 0.0 immovable property registration agency? Number of property transfers in the largest business city in 2017: Who is able to consult maps of land plots in the largest business city? Anyone who 0.5 pays the official fee Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, on public 0.5 and if so, how? boards Link for online access: Page 26 Doing Business 2019 Lebanon Does the cadastral or mapping agency commit to delivering an updated map within a Yes, in person 0.0 specific time frame—and if so, how does it communicate the service standard? Link for online access: No Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 4.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 5.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a property Court of First worth 50 times gross national income (GNI) per capita and located in the largest business Instance of Beirut city, what court would be in charge of the case in the first instance? ruling on real estate matters How long does it take on average to obtain a decision from the first-instance court for such a Between 2 and 3 1.0 case (without appeal)? years Are there any statistics on the number of land disputes in the first instance? No 0.0 Number of land disputes in the largest business city in 2017: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 27 Doing Business 2019 Lebanon Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions Credit registry coverage (% of adults) relating to the use of movable collateral. • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 28 Doing Business 2019 Lebanon Getting Credit - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Strength of legal rights index (0-12) 2 2.2 6.1 12 (5 Economies) Depth of credit information index (0-8) 6 5.1 6.7 8 (42 Economies) Credit registry coverage (% of adults) 23.6 14.7 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 0 15.5 65.3 100.0 (25 Economies) Figure – Getting Credit in Lebanon and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 65.00: Egypt, Arab Rep. (Rank: 60) 45.00: Saudi Arabia (Rank: 112) 40.00: Lebanon (Rank: 124) 36.00: Regional Average (Middle East & North Africa) 35.00: Jordan (Rank: 134) 15.00: Syrian Arab Republic (Rank: 175) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Lebanon and comparator economies 8 7 6 Index Score 5 5 4 3 2 2.2 2 1 1 1 0 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Page 29 Doing Business 2019 Lebanon Details – Legal Rights in Lebanon Strength of legal rights index (0-12) 2 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and No replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by No asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow No the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Lebanon and comparator economies 8 8 8 7 7 6 6 5.1 Index Score 5 4 3 2 2 1 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Page 30 Doing Business 2019 Lebanon Details – Credit Information in Lebanon Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative credit data distributed? No Yes 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? No Yes 1 By law, do borrowers have the right to access their data in the credit bureau or No Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online No Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 6 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 0 954,465 Number of firms 0 27,364 Total 0 981,829 Percentage of adult population 0 23.6 Page 31 Doing Business 2019 Lebanon Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-10): - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Governance safeguards protecting shareholders Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price from undue board control and entrenchment is equal to 10% of Buyer’s assets and is higher than the market value. - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 32 Doing Business 2019 Lebanon Protecting Minority Investors - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Extent of disclosure index (0-10) 9.0 6.4 6.5 10 (13 Economies) Extent of director liability index (0-10) 1.0 4.7 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 5.0 4.5 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 4.0 5.1 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 1.0 4.7 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 5.0 5.8 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Lebanon and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 80.00: Saudi Arabia (Rank: 7) 58.33: Egypt, Arab Rep. (Rank: 72) 53.33: Syrian Arab Republic (Rank: 95) 51.83: Regional Average (Middle East & North Africa) 46.67: Jordan (Rank: 125) 41.67: Lebanon (Rank: 140) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Lebanon and comparator economies – Measure of Quality Lebanon 5 1 9 1 4 5 Egypt, Arab Rep. 9 3 8 7 5 3 Jordan 8 4 4 6 3 3 Saudi Arabia 10 9 9 8 8 4 Syrian Arab Republic 6 5 7 5 6 3 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 Middle East & North Africa 5.8 4.7 6.4 4.7 5.1 4.5 0 10 20 30 40 50 60 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 33 Doing Business 2019 Lebanon Details – Protecting Minority Investors in Lebanon – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 5 Extent of disclosure index (0-10) 9.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) Yes 1.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Existence of a 1.0 conflict without any specifics Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 1.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Not liable 0.0 2) Can shareholders hold the other directors liable for the damage the transaction caused to Not liable 0.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by No 0.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 5.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) No 0.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 3.3 Extent of shareholder rights index (0-10) 4.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of No 0.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Page 34 Doing Business 2019 Lebanon Do shareholders automatically receive preemption rights every time Buyer issues new No 0.0 shares? Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a No 0.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a No 0.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to Yes 1.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 1.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board No 0.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of No 0.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0 period set by law? Extent of corporate transparency index (0-10) 5.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and No 0.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting No 0.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the No 0.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 35 Doing Business 2019 Lebanon Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and • Collecting information, computing tax payable mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The Total tax and contribution rate (% of commercial machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an • Dividend, capital gains, financial transactions incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. taxes discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 36 Doing Business 2019 Lebanon Paying Taxes - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Payments (number per year) 20 17.7 11.2 3 (Hong Kong SAR, China) Time (hours per year) 181 196.7 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 31.1 32.7 39.8 26.1% (32 Economies) Postfiling index (0-100) 27.48 50.08 84.41 None in 2017/18 Figure – Paying Taxes in Lebanon and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 75.00: Saudi Arabia (Rank: 78) 74.52: Regional Average (Middle East & North Africa) 73.97: Syrian Arab Republic (Rank: 85) 71.48: Jordan (Rank: 95) 67.94: Lebanon (Rank: 113) 52.73: Egypt, Arab Rep. (Rank: 159) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Lebanon and comparator economies – Measure of Quality 100 92.20 80 Index score 60 50.08 40 36.54 34.69 27.48 20 0.00 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Page 37 Doing Business 2019 Lebanon Details – Paying Taxes in Lebanon Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Social 12.0 100.0 22.5% gross salaries 24.53 security contributions Corporate 1.0 40.0 17% taxable profit 5.65 income tax Capital gains 0.0 jointly 15% capital gains 0.51 tax Municipality 1.0 8.5% property 0.41 tax value Value added 4.0 41.0 10% value added 0.00 not included tax (VAT) Vehicle tax 1.0 various rates 0.00 small amount Social 0.0 jointly 3% gross salaries 0.00 withheld security contributions on employee Stamp duty 1.0 0.4% contract value 0.00 small amount Totals 20 181 31.1 Page 38 Doing Business 2019 Lebanon Details – Paying Taxes in Lebanon – Tax by Type Taxes by type Answer Profit tax (% of profit) 6.2 Labor tax and contributions (% of profit) 24.5 Other taxes (% of profit) 0.4 Page 39 Doing Business 2019 Lebanon Details – Paying Taxes in Lebanon – Measure of Quality Answer Score Postfiling index (0-100) 27.48 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 75% - 100% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 47.0 6 Time to obtain a VAT refund (weeks) 43.6 21.92 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 25% - 49% Time to comply with a corporate income tax correction (hours) 23.0 60.55 Time to complete a corporate income tax correction (weeks) 25.1 21.43 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 40 Doing Business 2019 Lebanon Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its • Transport between warehouse and port/border natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 41 Doing Business 2019 Lebanon Trading across Borders - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Time to export: Border compliance (hours) 96 58.0 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 480 442.4 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 48 67.9 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 100 244.6 35.2 0 (20 Economies) Time to import: Border compliance (hours) 180 105.4 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 790 536.0 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 72 75.5 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 135 269.0 24.9 0 (30 Economies) Figure – Trading across Borders in Lebanon and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 79.03: Jordan (Rank: 74) 60.17: Regional Average (Middle East & North Africa) 57.90: Lebanon (Rank: 150) 54.31: Saudi Arabia (Rank: 158) 42.23: Egypt, Arab Rep. (Rank: 171) 29.83: Syrian Arab Republic (Rank: 178) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Lebanon – Time and Cost Time (hours) Cost (USD) 200 180 900 790 800 150 700 Time (hours) Cost (USD) 600 480 96 500 100 72 400 48 300 50 135 200 100 100 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 42 Doing Business 2019 Lebanon Details – Trading across Borders in Lebanon Characteristics Export Import Product HS 85 : Electrical machinery and HS 8708: Parts and accessories of motor equipment and parts thereof; sound vehicles recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Trade partner United Arab Emirates Germany Border Beirut port Beirut port Distance (km) 14 14 Domestic transport time (hours) 3 2 Domestic transport cost (USD) 250 250 Details – Trading across Borders in Lebanon – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 48.0 300.0 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 96.0 180.0 Import: Clearance and inspections required 84.0 300.0 by customs authorities Import: Clearance and inspections required 84.0 165.0 by agencies other than customs Import: Port or border handling 180.0 325.0 Page 43 Doing Business 2019 Lebanon Details – Trading across Borders in Lebanon – Trade Documents Export Import Bill of lading Bill of lading Commercial invoice Commercial invoice Customs export declaration Customs import declaration Packing list Packing list Customs inspection report Certificate of origin SOLAS certificate Cargo release order/Exit permit Certificate of origin Technical standards certificate SOLAS certificate Delivery order Page 44 Doing Business 2019 Lebanon Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are • Court fees not of adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Page 45 Doing Business 2019 Lebanon Enforcing Contracts - Lebanon Standardized Case Claim value LBP 23,623,972 Court name Sole judge hearing commercial matters at the Beirut First Instance Tribunal City Covered Beirut Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Time (days) 721 622.0 582.4 None in 2017/18 Cost (% of claim value) 30.8 24.7 21.2 None in 2017/18 Quality of judicial processes index (0-18) 6.0 6.1 11.5 None in 2017/18 Figure – Enforcing Contracts in Lebanon and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 63.41: Saudi Arabia (Rank: 59) 55.56: Jordan (Rank: 108) 55.04: Regional Average (Middle East & North Africa) 49.85: Lebanon (Rank: 135) 42.75: Egypt, Arab Rep. (Rank: 160) 42.58: Syrian Arab Republic (Rank: 161) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Lebanon – Time and Cost Time (days) Cost (% of claim value) Cost (% of claim value) 1200 31.2 35 1010 30.8 29.3 1000 26.2 27.5 30 24.7 872 Time (days) 21.2 25 800 721 642 622.0 20 582.4 575 600 15 400 10 200 5 0 0 Egypt, Jordan Lebanon Middle OECD Saudi Syrian Arab East high Arabia Arab Rep. & income Republic North Africa Page 46 Doing Business 2019 Lebanon Figure – Enforcing Contracts in Lebanon and comparator economies – Measure of Quality Lebanon 1.5 0.5 0 4 Egypt, Arab Rep. 2 0 3.5 Jordan 3 2 1 2 Saudi Arabia 2 2.5 2 4 Syrian Arab Republic 2 0 2 OECD high income 2.5 3.1 2.3 3.6 Middle East & North Africa 2.2 0.8 0.4 2.8 0 2 4 6 8 10 12 14 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Lebanon Indicator Time (days) 721 Filing and service 15 Trial and judgment 556 Enforcement of judgment 150 Cost (% of claim value) 30.8 Attorney fees 24.8 Court fees 3 Enforcement fees 3 Quality of judicial processes index (0-18) 6.0 Court structure and proceedings (-1-5) 4.0 Case management (0-6) 0.5 Court automation (0-4) 0.0 Alternative dispute resolution (0-3) 1.5 Page 47 Doing Business 2019 Lebanon Details – Enforcing Contracts in Lebanon – Measure of Quality Answer Score Quality of judicial processes index (0-18) 6.0 Court structure and proceedings (-1-5) 4.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? No 0.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 0.5 1. Time standards 0.5 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? No 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to No 0.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the No 0.0 competent court? 5. Are there any electronic case management tools in place within the competent court for No 0.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for No 0.0 use by lawyers? Court automation (0-4) 0.0 1. Can the initial complaint be filed electronically through a dedicated platform within the no 0.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme No court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 1.5 1. Arbitration 1.0 Page 48 Doing Business 2019 Lebanon 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public Yes order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 0.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or No consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation No (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 49 Doing Business 2019 Lebanon Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best • Assessors’ and auctioneers’ fees insolvency practices have been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 50 Doing Business 2019 Lebanon Resolving Insolvency - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Recovery rate (cents on the dollar) 31.7 26.3 70.5 None in 2017/18 Time (years) 3.0 2.8 1.7 0.4 (Ireland) Cost (% of estate) 15.0 13.8 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 4.0 5.9 11.9 None in 2017/18 Figure – Resolving Insolvency in Lebanon and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 42.27: Egypt, Arab Rep. (Rank: 101) 32.69: Regional Average (Middle East & North Africa) 30.31: Jordan (Rank: 150) 29.55: Lebanon (Rank: 151) 21.10: Syrian Arab Republic (Rank: 163) 0.00: Saudi Arabia (Rank: 168) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Lebanon – Time and Cost Time (years) Cost (% of estate) 4.5 4.1 25 22.0 Cost (% of estate) 4 20.0 3.5 20 Time (years) 3.0 3.0 16.0 3 15.0 2.8 2.5 13.8 15 2.5 2 1.7 9.3 10 1.5 1 5 0.5 0 0 Egypt, Jordan Lebanon Middle OECD No Syrian Arab East high Practice Arab Rep. & income Saudi Republic North Arabia Africa Page 51 Doing Business 2019 Lebanon Figure – Resolving Insolvency in Lebanon and comparator economies – Measure of Quality Lebanon 2 2 0 Egypt, Arab Rep. 4 2.5 2 1 Jordan 2 2 1 0 Saudi Arabia 0 2 0 Syrian Arab Republic 2 2 1 0 OECD high income 5.3 2.8 2.2 1.9 Middle East & North Africa 3.3 2.2 1.2 0.4 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Lebanon and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 80 60 40 31.7 27.3 26.3 23.4 20 10.2 0.0 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Page 52 Doing Business 2019 Lebanon Details – Resolving Insolvency in Lebanon Indicator Answer Score Proceeding foreclosure BizBank will initiate foreclosure proceedings (saisie exécutoire), because it is faster and less costly than liquidation proceedings and allows BizBank to obtain the totality of its dues independently of other debtors. If Mirage management or other creditors commence insolvency proceedings, BizBank's enforcement claim will not be affected, except that a syndic may be appointed, who will represent the debtor in foreclosure proceedings. Outcome piecemeal sale The hotel is not likely to continue operating at the end of the foreclosure proceedings as the assets will be sold during BizBank's enforcement proceedings. Time (in years) 3.0 BizBank will file for "saisie exécutoire", which normally involves a simple enforcement of security right without review of the merits. However, it is likely that hotel management will try to dispute the validity of BizBank's security, which means that the proceedings will become more complex and will take longer than straightforward enforcement proceedings. After disputes over the validity of the debt are settled, the court will issue an execution order, which will be enforced by court clerks (huissiers), who will seize and attach the assets secured by the loan agreement. Prior to selling the assets in a public auction, the public auction is published in newspapers. Cost (% of 15.0 Main expenses will include attorneys' fees (5-10%) and court fees, including the cost of publication estate) and notification (4-7%), as well as other smaller expenses, including fees of other professionals that may be involved in the foreclosure proceedings, such as accountants. Recovery rate 31.7 (cents on the dollar) Page 53 Doing Business 2019 Lebanon Details – Resolving Insolvency in Lebanon – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 4.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (b) Debtor may 0.5 file for liquidation only Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 2.0 Does the insolvency framework allow the continuation of contracts supplying essential goods No 0.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome No 0.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after No 0.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.0 Which creditors vote on the proposed reorganization plan? N/A 0.0 Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 0.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions No 0.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 54 Doing Business 2019 Lebanon Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 55 Doing Business 2019 Lebanon Labor Market Regulation - Lebanon Details – Labor Market Regulation in Lebanon Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) 24.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 435.9 Ratio of minimum wage to value added per worker 0.4 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.5 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 50.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? Yes Paid annual leave for a worker with 1 year of tenure (working days) 15.0 Paid annual leave for a worker with 5 years of tenure (working days) 15.0 Paid annual leave for a worker with 10 years of tenure (working days) 15.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 15.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 8.7 Notice period for redundancy dismissal for a worker with 10 years of tenure 13.0 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 8.7 Severance pay for redundancy dismissal for a worker with 1 year of tenure 0.0 Page 56 Doing Business 2019 Lebanon Severance pay for redundancy dismissal for a worker with 5 years of tenure 0.0 Severance pay for redundancy dismissal for a worker with 10 years of tenure 0.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 0.0 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? No Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 70.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? No Minimum contribution period for unemployment protection (months)? n.a. Page 57 Doing Business 2019 Lebanon Business Reforms in Lebanon In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2016 Registering Property: Lebanon made transferring property more complex by increasing the time required for property registration. DB2012 Getting Electricity: Lebanon made getting electricity less costly by reducing the application fees and security deposit for a new connection. DB2011 Starting a Business: Lebanon increased the cost of starting a business. Getting Credit: Lebanon improved its credit information system by allowing banks online access to the public credit registry’s reports. DB2010 Starting a Business: Lebanon made starting a business easier by eliminating the requirement to have company books stamped—though it also made it more difficult by reversing a previous reform combining tax and company registration at LibanPost. Paying Taxes: Lebanon made paying taxes easier for companies by eliminating the requirement to obtain permission to use accelerated depreciation and by introducing electronic payment. DB2009 Starting a Business: Lebanon reduced the time required to start a business by streamlining the business registration process. Page 58 Doing Business 2019 Lebanon Page 59