Doing Business 2018 Lebanon Economy Pro le of Lebanon Doing Business 2018 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 Procedures, time and cost to complete all formalities to build a warehouse and the quality control and permits safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, 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 and total tax 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 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 rms. 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 distance to frontier 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 e cient regulation; o ers 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 o ers detailed subnational reports, which exhaustively cover business regulation and reform in di erent 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 rst 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 bene ted 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. Page 2   for insolvency Doing Business Labor market 2018 regulation Lebanon Flexibility in employment regulation and aspects of job quality 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 rms. 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 distance to frontier 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 e cient regulation; o ers 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 o ers detailed subnational reports, which exhaustively cover business regulation and reform in di erent 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 rst 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 bene ted 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. The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is re ected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. The ranking of 190 economies is determined by sorting the aggregate distance to frontier scores, rounded to two decimals. More about Doing Business (PDF, 5MB) Ease of Doing Business in Middle East & North DB 2018 Rank Region 190 1 Africa Lebanon Income Category Upper middle income 133 DB 2018 Distance to Frontier (DTF) Population 6,006,668 0 100 GNI Per Capita (US$) 7,680 54.67 City Covered Beirut DB 2018 Distance to Frontier (DTF) 0 100 62.50: Saudi Arabia (Rank: 92) 60.58: Jordan (Rank: 103) 56.72: Regional Average (Middle East & North Africa) 56.22: Egypt, Arab Rep. (Rank: 128) 54.67: Lebanon (Rank: 133) Page 3   aggregate distance to frontier scores, rounded to two decimals. More Doingabout 2018 (PDF, Doing Business Business 5MB) Lebanon Ease of Doing Business in Middle East & North DB 2018 Rank Region 190 1 Africa Lebanon Income Category Upper middle income 133 DB 2018 Distance to Frontier (DTF) Population 6,006,668 0 100 GNI Per Capita (US$) 7,680 54.67 City Covered Beirut DB 2018 Distance to Frontier (DTF) 0 100 62.50: Saudi Arabia (Rank: 92) 60.58: Jordan (Rank: 103) 56.72: Regional Average (Middle East & North Africa) 56.22: Egypt, Arab Rep. (Rank: 128) 54.67: Lebanon (Rank: 133) 41.55: Syrian Arab Republic (Rank: 174) Note: The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is re ected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Lebanon 1 28 55 82 Rank 102 113 109 123 122 138 134 143 142 140 136 147 163 190 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 Distance to Frontier (DTF) on Doing Business topics - Lebanon 100 78.17 80 68.21 59.66 60.07 59.93 59.71 60 DTF 49.85 40.00 41.67 40 29.42 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Change:-0.02 Change:-0.01 Change:0.00 Investors Change:0.00 Borders Change:0.00 Change:-0.61 Change:-0.28 Permits Change:0.00 Change:0.00 Change:-0.13 Starting a Business Page 4   a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Change:-0.02 Change:-0.01 Change:0.00 Investors Change:0.00 Borders Change:0.00 Change:-0.61 Change:-0.28 Permits Change:0.00 Change:0.00 Doing Business 2018 Lebanon Change:-0.13 Starting a Business This topic measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized limited liability company to start up and formally operate in 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 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 distance to frontier score for each indicator is the average of the scores obtained for each of the component indicators. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and operate a To make the data comparable across economies, several assumptions company (number) about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay Pre-registration (for example, name verification no bribes. or reservation, notarization) Registration in economy’s largest business city The business: - Is a limited liability company (or its legal equivalent). If there is more than Post-registration (for example, social security one type of limited liability company in the economy, the most common registration, company seal) among domestic rms is chosen. Information on the most common form is Obtaining approval from spouse to start business obtained from incorporation lawyers or the statistical o ce. or leave home to register company - Operates in the economy’s largest business city and the entire o ce Obtaining any gender-specific permission that space is approximately 929 square meters (10,000 square feet). For 11 can impact company registration, company economies the data are also collected for the second largest business city. operations and process of getting national - Is 100% domestically owned and has ve owners, none of whom is a legal identity card entity; and has a start-up capital of 10 times income per capita and has a Time required to complete each procedure turnover of at least 100 times income per capita. (calendar days) - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does Does not include time spent gathering not perform foreign trade activities and does not handle products subject information to a special tax regime, for example, liquor or tobacco. It does not use Each procedure starts on a separate day (2 heavily polluting production processes. procedures cannot start on the same day) - Leases the commercial plant or o ces and is not a proprietor of real Procedures fully completed online are recorded estate and the amount of the annual lease for the o ce space is equivalent as ½ day to 1 times income per capita. Procedure is considered completed once final - Does not qualify for investment incentives or any special bene ts. document is received - Has at least 10 and up to 50 employees one month after the commencement of operations, all of whom are domestic nationals. No prior contact with officials - Has a company deed 10 pages long. Cost required to complete each procedure (% of The owners: income per capita) - Have reached the legal age of majority. If there is no legal age of majority, Official costs only, no bribes they are assumed to be 30 years old. No professional fees unless services required by - Are sane, competent, in good health and have no criminal record. law or commonly used in practice - Are married and the marriage is monogamous and registered with the authorities. Paid-in minimum capital (% of income per capita) - Where the answer di ers according to the legal system applicable to the Funds deposited in a bank or with third party woman or man in question (as may be the case in economies where there before registration or up to 3 months after is legal plurality), the answer used will be the one that applies to the incorporation majority of the population. Standardized Company Page 5   before registration or up to 3 months after is legal plurality), the answer used will be the one that applies to the incorporation majority of the population. Doing Business 2018 Lebanon Standardized Company Legal form Socièté a Responsabilité Limitée (SARL) Paid-in minimum capital requirement LBP 5,000,000 City Covered Beirut Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Procedure – Men (number) 8 7.7 4.9 1.00 (New Zealand) Time – Men (days) 15 18.6 8.5 0.50 (New Zealand) Cost – Men (% of income per capita) 42.0 18.7 3.1 0.00 (United Kingdom) Procedure – Women (number) 8 8.4 4.9 1.00 (New Zealand) Time – Women (days) 15 19.3 8.5 0.50 (New Zealand) Cost – Women (% of income per capita) 42.0 18.7 3.1 0.00 (United Kingdom) Paid-in min. capital (% of income per capita) 42.3 9.9 8.7 0.00 (113 Economies) Figure – Starting a Business in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 84.53: Egypt, Arab Rep. (Rank: 103) 84.40: Jordan (Rank: 105) 82.05: Regional Average (Middle East & North Africa) 80.43: Syrian Arab Republic (Rank: 133) 80.04: Saudi Arabia (Rank: 135) 78.17: Lebanon (Rank: 143) Note: The ranking of economies on the ease of starting a business is determined by sorting their distance to frontier scores for starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Starting a Business in Lebanon – Procedure, Time and Cost Time Cost 30 14 25 12 ost (% of income per capita) 10 20 Time (days) 8 15 6 10 Page 6   4 starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Lebanon Figure – Starting a Business in Lebanon – Procedure, Time and Cost Time Cost 30 14 25 12 Cost (% of income per capita) 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 di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Details – Starting a Business in Lebanon – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Designate a Lebanese lawyer 1 day LBP 3,000,000 Agency : Lawyer (attorney startup fees) + LBP 150,000 Each newly formed company must retain and pay an attorney on an annual (Legalization of the basis. On April 26 2012, the Beirut Bar Association increased the minimum Power of Attorney annual retainer to LBP 9,000,000 e ective as of January 2013. This retainer before the Bar can be paid by the company during the year. Startup fees are set by the Association) Beirut Bar Association at LBP 3,000,000. 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 rst general meeting of the partners • Registration application and a draft of the registration certi cate 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 Page 7   where it exercises its activities (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Doing Business 2018 Lebanon Details – Starting a Business in Lebanon – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Designate a Lebanese lawyer 1 day LBP 3,000,000 Agency : Lawyer (attorney startup fees) + LBP 150,000 Each newly formed company must retain and pay an attorney on an annual (Legalization of the basis. On April 26 2012, the Beirut Bar Association increased the minimum Power of Attorney annual retainer to LBP 9,000,000 e ective as of January 2013. This retainer before the Bar can be paid by the company during the year. Startup fees are set by the Association) Beirut Bar Association at LBP 3,000,000. 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 rst general meeting of the partners • Registration application and a draft of the registration certi cate 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 at registration fee + LBP 500 application fee + LBP 1,000 certi ed copy + LBP 500 commercial publication fee • Stamp duty: equal to 0.3% of capital + LBP 750,000 lump sum stamp duty + LBP 2,000 at registration fee + LBP 1,000 application fee + LBP 2,000 certi ed 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 noti cation 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 Page 8   This procedure has two functions: “Registration” of a new employee and commencement of business activities to the Ministry of Finance in order to Doing register Business 2018 tax for income and VAT. Lebanon 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 “Con rmation” by the system. The “Registration” function entails submitting a le for each new employee at the NSSF regional o ce closest to the company premises and obtaining a le reference number (or a receipt acknowledging the registration) immediately upon the submission. Once this “Registration” function is completed, the business is considered to have ful lled its legal obligations with the NSSF. The bene ts to the newly registered employees, under NSSF rules, will also become immediately e ective. The Time to complete this procedure is 1 day at no cost to the employer or the employee. The “Con rmation” 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 con rmation documents are printed in batches every few days or so. Therefore, it could take up to 30 days for a con rmation 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 le internal labor regulations (règlement intérieur) with the Ministry of Labor according to Art. 66 of the Labor Code. 7 Register for VAT one week no charge Agency : VAT Department (simultaneous with previous Registration for VAT is done at the VAT Department. To obtain a VAT procedure) certi cate of registration, it may take between 7 and 10 days. There are speci c forms to ll 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 LBP 20,000-35,000 Agency : Seal maker (simultaneous 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. Applies to women only. Takes place simultaneously with previous procedure. 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 noti cations, 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 certi cation requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information Page 9   Applies to women only. Takes place simultaneously with previous procedure. Doing Business 2018 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 noti cations, 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 certi cation requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility Submitting all relevant documents and obtaining connections are used. all necessary clearances, licenses, permits and certificates The construction company (BuildCo): Submitting all required notifications and - Is a limited liability company (or its legal equivalent) and operates in the receiving all necessary inspections economy’s largest business city. For 11 economies the data are also collected for the second largest business city. Obtaining utility connections for water and - Is 100% domestically and privately owned; has ve owners, none of whom sewerage is a legal entity. Has a licensed architect and a licensed engineer, both Registering and selling the warehouse after its registered with the local association of architects or engineers. BuildCo is completion not assumed to have any other employees who are technical or licensed Time required to complete each procedure experts, such as geological or topographical experts. (calendar days) - Owns the land on which the warehouse will be built and will sell the warehouse upon its completion. Does not include time spent gathering information The warehouse: Each procedure starts on a separate day— - Will be used for general storage activities, such as storage of books or though procedures that can be fully completed stationery. online are an exception to this rule - Will have two stories, both above ground, with a total constructed area of Procedure is considered completed once final approximately 1,300.6 square meters (14,000 square feet). Each oor will document is received be 3 meters (9 feet, 10 inches) high and will be located on a land plot of No prior contact with officials approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of - Will have complete architectural and technical plans prepared by a warehouse value) licensed architect. If preparation of the plans requires such steps as Official costs only, no bribes obtaining further documentation or getting prior approvals from external Building quality control index (0-15) agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative Sum of the scores of six component indices: and regulatory requirements). Quality of building regulations (0-2) The water and sewerage connections: Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer Quality control during construction (0-3) tap. If there is no water delivery infrastructure in the economy, a borehole Quality control after construction (0-3) will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. Liability and insurance regimes (0-2) - Will have an average water use of 662 liters (175 gallons) a day and an Professional certifications (0-4) average wastewater ow 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 ow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater ow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Standardized Warehouse Page 10   and 4 inches in diameter for the sewerage connection. Doing Business 2018 Lebanon Standardized Warehouse Estimated value of warehouse LBP 590,599,304.60 City Covered Beirut Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Procedures (number) 19 16.2 12.5 7.00 (Denmark) Time (days) 249 132.1 154.6 27.5 (Korea, Rep.) Cost (% of warehouse value) 5.6 4.3 1.6 0.10 (5 Economies) Building quality control index (0-15) 13.0 11.8 11.4 15.00 (3 Economies) Figure – Dealing with Construction Permits in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 75.52: Saudi Arabia (Rank: 38) 71.43: Egypt, Arab Rep. (Rank: 66) 65.74: Jordan (Rank: 110) 59.84: Regional Average (Middle East & North Africa) 59.66: Lebanon (Rank: 142) 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 distance to frontier scores for dealing with construction permits. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Dealing with Construction Permits in Lebanon – Procedure, Time and Cost Time Cost 1.8 1.6 200 Cost (% of warehouse value) 1.4 1.2 150 Time (days) 1 0.8 100 0.6 0.4 50 0.2 0 0 1 *2 *3 4 5 6 7 8 9 10 11 12 13 14 15 16 * 17 18 19 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Page 11   component indicators. Doing Business 2018 Lebanon Figure – Dealing with Construction Permits in Lebanon – Procedure, Time and Cost Time Cost 1.8 1.6 200 Cost (% of warehouse value) 1.4 1.2 150 Time (days) 1 0.8 100 0.6 0.4 50 0.2 0 0 1 *2 *3 4 5 6 7 8 9 10 11 12 13 14 15 16 * 17 18 19 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 di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Dealing with Construction Permits in Lebanon and comparator economies – Measure of Quality 16 14.0 14 13.0 12.0 11.8 12 11.0 Index score 10 8 6 4 2 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. Procedure 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 certi cate 10 days LBP 24,600 Agency : Directorate General of Urban Planning (DGU) BuildCo must submit a recent planning certi cate (they are usually valid for 3 months) among the necessary documents to request a building permit. Page 12   Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Doing Business 2018 Lebanon Details – Dealing with Construction Permits in Lebanon – Procedure, Time and Cost No. Procedure 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 certi cate 10 days LBP 24,600 Agency : Directorate General of Urban Planning (DGU) BuildCo must submit a recent planning certi cate (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 certi cate 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 certi cate: 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 modi cations be made to the drawings. Throughout the construction phase, the auditors must also ensure that construction works are duly performed. And upon completion of the works, they must attest that the construction work was carried out properly. 5 Obtain approval of le by Order of Engineers (where engineer is 4 days LBP 1,950,900 registered) and pay duties to Order Agency : Beirut Order of Engineers The le must be submitted to the Order of Engineers if the engineer is registered (Beirut Order of Engineers or Tripoli Order of Engineers). The le 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 Page 13   le must bear the seal and registration number of the relevant Order of construction works are duly performed. And upon completion of the works, Doing they must attest Business 2018 the construction work was carried out properly. that Lebanon 5 Obtain approval of le by Order of Engineers (where engineer is 4 days LBP 1,950,900 registered) and pay duties to Order Agency : Beirut Order of Engineers The le must be submitted to the Order of Engineers if the engineer is registered (Beirut Order of Engineers or Tripoli Order of Engineers). The le 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 le 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. The cost is LBP 1,950,900.00. 6 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 le described in the previous procedure to the Urban Development Department. In Beirut and Tripoli, the le 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. 7 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. 8 Pay building permit taxes to the municipality 1 day LBP 9,593,403 Agency : Municipality The Urban Development Department refers the le 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 Page 14   made at the municipality. day, but it takes a while from the date BuildCo requests the inspection until Doing the inspector date the2018 Business arrives. Lebanon 8 Pay building permit taxes to the municipality 1 day LBP 9,593,403 Agency : Municipality The Urban Development Department refers the le 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. 9 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. 10 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 others). The fee should not exceed LBP 200,000.00 11 Submit permit from Order of Engineers to the police 1 day no charge Page 15   (civil engineer, mechanic engineer, electrical engineer, geotechnical Doing engineer, Business 2018others). among The fee should not exceed LBP 200,000.00 Lebanon 11 Submit permit from Order of Engineers to the police 1 day no charge Agency : Police 12 Request and receive inspection from the Ministry of Public Works for 10 days no charge water and sewage Agency : Ministry of Public Works 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. 13 Submit application and receive approval for an occupancy permit from 4 days LBP 300,000 the 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 rst. 14 Submit application and receive approval for an occupancy permit from 1 day no charge the 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 le 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. 15 Receive on-site inspection from the Directorate General of Urban 1 day no charge Planning (DGU) Agency : Urban Development Department, Directorate General of Urban Planning (DGU) It takes about a week to schedule the inspection. 16 Obtain occupancy permit 30 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 55 days with follow-up. Obtain water connection 14 days LBP 2,260,000 17 Agency : Water of Beirut and Mount Lebanon BuildCo must submit an application for water connection accompanied by various documents. 18 Receive onsite inspection from the Ministry of Finance and obtain 1 day LBP 5,000 Page 16   estimate of leasing value of the warehouse BuildCo must submit an application for water connection accompanied by Doing various documents. Business 2018 Lebanon 18 Receive onsite inspection from the Ministry of Finance and obtain 1 day LBP 5,000 estimate 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. 19 Register the building with the Real Estate Registry 14 days LBP 6,568,793 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. Takes place simultaneously with previous procedure. 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 speci ed 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 rm. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during Inspections by 1.0 construction? (0-2) external engineer or rm; Unscheduled inspections; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 Page 17   inspections are Takes place simultaneously with previous procedure. Doing Business 2018 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 speci ed 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 rm. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during Inspections by 1.0 construction? (0-2) external engineer or rm; 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 nal inspection required by law to verify that the building was built in Yes, nal 2.0 accordance with the approved plans and regulations? (0-2) inspection is done by government agency; Yes, external engineer submits report for nal inspection. Do legally mandated nal inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 2.0 Page 18   Which parties (if any) are held liable by law for structural aws or problems in the Architect or 1.0 always occurs in Doing Business 2018 Lebanon practice. Liability and insurance regimes index (0-2) 2.0 Which parties (if any) are held liable by law for structural aws or problems in the Architect or 1.0 building 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 No party is 1.0 possible structural aws or problems in the building once it is in use (Latent Defect required by law Liability Insurance or Decennial Insurance)? (0-1) to obtain insurance ; Owner or investor; Insurance is commonly taken in practice. Professional certi cations index (0-4) 3.0 What are the quali cation requirements for the professional responsible for verifying Minimum 2.0 that the architectural plans or drawings are in compliance with existing building number of years regulations? (0-2) of experience; University degree in architecture or engineering; Being a registered architect or engineer. What are the quali cation requirements for the professional who supervises the University 1.0 construction on the ground? (0-2) degree in engineering, construction or construction management; Being a registered architect or engineer. 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 tari s index measures reliability of supply, transparency of tari s and the price of electricity. The most recent round of data collection for the project was completed in June 2017. 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 are Page 19   (number) used. architect or engineer. Doing Business 2018 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 tari s index measures reliability of supply, transparency of tari s and the price of electricity. The most recent round of data collection for the project was completed in June 2017. 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 are (number) 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 receiving all necessary inspections data are 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 purchasing material for these works in an area with no physical constraints. For example, the property is not Concluding any necessary supply contract and near a railway. obtaining final supply - Is a new construction and is being connected to electricity for the rst time. Time required to complete each procedure - Has two stories with a total surface area of approximately 1,300.6 square (calendar days) meters (14,000 square feet). The plot of land on which it is built is 929 Is at least 1 calendar day square meters (10,000 square feet). Each procedure starts on a separate day Does not include time spent gathering The electricity connection: information - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, Reflects the time spent in practice, with little when 1 kVA = 1 kilowatt (kW). follow-up and no prior contact with officials - Has a length of 150 meters. The connection is to either the low- or Cost required to complete each procedure (% of medium-voltage distribution network and is either overhead or income per capita) underground, whichever is more common in the area where the warehouse is located and requires works that involve the crossing of a 10- Official costs only, no bribes meter road (such as by excavation or overhead lines) but are all carried out Value added tax excluded on public land. There is no crossing of other owners’ private property The reliability of supply and transparency of because the warehouse has access to a road. tari s index (0-8) - Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service Duration and frequency of power outages (0–3) panel or switchboard and the meter base. Tools to monitor power outages (0–1) Tools to restore power supply (0–1) The monthly consumption: Regulatory monitoring of utilities’ performance - It is assumed that the warehouse operates 30 days a month from 9:00 (0–1) a.m. to 5:00 p.m. (8 hours a day), with equipment utilized at 80% of capacity Financial deterrents limiting outages (0–1) on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours Transparency and accessibility of tariffs (0–1) (kWh); hourly consumption is 112 kWh. Price of electricity (cents per kilowatt-hour)* - If multiple electricity suppliers exist, the warehouse is served by the Price based on monthly bill for commercial cheapest supplier. warehouse in case study - Tari s e ective in March of the current year are used for calculation of the price of electricity for the warehouse. Although March has 31 days, for * N o t e : Doing Business m e a s u r e s t h e p r i c e o f calculation purposes only 30 days are used. electricity, but it is not included in the distance to frontier score nor the ranking on the ease of getting electricity. Page 20   Standardized Connection frontier score nor the ranking on the ease of getting electricity. Doing Business 2018 Lebanon Standardized Connection Price of electricity (US cents per kWh) 13.3 Name of utility Electricité du Liban (EDL) City Covered Beirut Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Procedures (number) 5 4.8 4.7 2 (United Arab Emirates) Time (days) 75 81.4 79.1 10 (United Arab Emirates) Cost (% of income per capita) 130.2 780.3 63.0 0.00 (Japan) Reliability of supply and transparency of tariff 0 4.2 7.4 8.00 (28 Economies) index (0-8) Figure – Getting Electricity in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 83.33: Jordan (Rank: 40) 79.88: Saudi Arabia (Rank: 59) 71.24: Egypt, Arab Rep. (Rank: 89) 67.21: Regional Average (Middle East & North Africa) 60.07: Lebanon (Rank: 123) 51.99: Syrian Arab Republic (Rank: 153) Note: The ranking of economies on the ease of getting electricity is determined by sorting their distance to frontier scores for getting electricity. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Getting Electricity in Lebanon – Procedure, Time and Cost Time Cost 140 70 120 60 Cost (% of income per capita) 100 50 Time (days) 80 40 60 30 20 40 10 Page 21   20 getting electricity. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Lebanon Figure – Getting Electricity in Lebanon – Procedure, Time and Cost Time Cost 140 70 120 60 Cost (% of income per capita) 100 50 Time (days) 80 40 60 30 20 40 10 20 0 0 1 2 *3 4 5 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 di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Getting Electricity in Lebanon and comparator economies – Measure of Quality 8 7 7 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 Details – Getting Electricity in Lebanon – Procedure, Time and Cost No. Procedure 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 identi cation 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 Page 22   Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Doing Business 2018 Lebanon Details – Getting Electricity in Lebanon – Procedure, Time and Cost No. Procedure 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 identi cation 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 o ces. 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 462,509.76 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 speci cs 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 o ces. The client is then given the approved le 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 49 calendar days LBP 14,907,000 service 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. The contractor is in charge of applying for any required excavation permit with the municipality. Page 23   along with a “C23” card (with the number of connections and the temporary Doing meter, if needed). Business 2018 Lebanon 4 Await and receive external works and meter installation from EDL’s 49 calendar days LBP 14,907,000 service 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. The contractor is in charge of applying for any required excavation permit with the municipality. No inspection of the entire internal wiring is done during the process. 5 Obtain nal connection from EDL or its contractor 7 calendar days LBP 0 Agency : Electricité du Liban (EDL), Beirut or its contractor Usually it is the utility that turns on electricity, but it all depends on the agreement between the contractor and the utility. The contractor might have the right to also turn on the electricity. At times when the utility is overloaded, it normally delegates the works entirely to its contractor that does the works, installs the meter, and turns on the electricity. In this case, the utility only checks the nal connection at the end to make sure the installation has been done properly. Otherwise, if the agreement with the contractor does not give them this right, meter installation is done by the utility. Takes place simultaneously with previous procedure. Details – Getting Electricity in Lebanon – Measure of Quality Answer Reliability of supply and transparency of tari 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 Page 24   Does the distribution utility use automated tools to restore service? No Takes place simultaneously with previous procedure. Doing Business 2018 Lebanon Details – Getting Electricity in Lebanon – Measure of Quality Answer Reliability of supply and transparency of tari 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 No reliability of supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face nes by the regulator (or both) if outages No exceed a certain cap? Communication of tari s and tari changes (0-1) 1 Are e ective tari s available online? Yes Link to the website, if available online http://www.edl.gov.l b/ABOUTEDL.htm Are customers noti ed of a change in tari 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 tari 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. 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 ve 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 June 2017. See the methodology for more information. What the indicators measure Case study assumptions Page 25   If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Doing Business 2018 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 ve 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 June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable To make the data comparable across economies, several assumptions property (number) about the parties to the transaction, the property and the procedures are used. Preregistration procedures (for example, checking for liens, notarizing sales agreement, The parties (buyer and seller): paying property transfer taxes) - Are limited liability companies (or the legal equivalent). Registration procedures in the economy's largest - Are located in the periurban area of the economy’s largest business city. business citya. For 11 economies the data are also collected for the second largest Postregistration procedures (for example, filling business city. title with municipality) - Are 100% domestically and privately owned. Time required to complete each procedure - Have 50 employees each, all of whom are nationals. (calendar days) - Perform general commercial activities. Does not include time spent gathering information The property (fully owned by the seller): - Has a value of 50 times income per capita, which equals the sale price. Each procedure starts on a separate day - though - Is fully owned by the seller. procedures that can be fully completed online - Has no mortgages attached and has been under the same ownership for are an exception to this rule the past 10 years. Procedure is considered completed once final - Is registered in the land registry or cadastre, or both, and is free of title document is received disputes. No prior contact with officials - Is located in a periurban commercial zone, and no rezoning is required. Cost required to complete each procedure (% of - Consists of land and a building. The land area is 557.4 square meters property value) (6,000 square feet). A two-story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in Official costs only (such as administrative fees, good condition, has no heating system and complies with all safety duties and taxes). standards, building codes and legal requirements. The property, Value Added Tax, Capital Gains Tax and illicit consisting of land and building, will be transferred in its entirety. payments are excluded - Will not be subject to renovations or additional construction following the Quality of land administration index (0-30) purchase. - Has no trees, natural water sources, natural reserves or historical Reliability of infrastructure index (0-8) monuments of any kind. Transparency of information index (0–6) - Will not be used for special purposes, and no special permits, such as for Geographic coverage index (0–8) residential use, industrial plants, waste storage or certain types of agricultural activities, are required. Land dispute resolution index (0–8) - Has no occupants, and no other party holds a legal interest in it. Equal access to property rights index (-2–0) Standard Property Transfer Property value LBP 590,599,304.60 City Covered Beirut Page 26   Middle East & OECD high Doing Business 2018 Lebanon Standard Property Transfer Property value LBP 590,599,304.60 City Covered Beirut Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Procedures (number) 8 5.7 4.6 1.00 (4 Economies) Time (days) 34 30.3 22.3 1.00 (3 Economies) Cost (% of property value) 5.9 6.0 4.2 0.00 (5 Economies) Quality of the land administration index (0-30) 16.0 13.4 22.7 29.00 (Singapore) Figure – Registering Property in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 81.19: Saudi Arabia (Rank: 24) 66.40: Jordan (Rank: 72) 60.91: Regional Average (Middle East & North Africa) 59.93: Lebanon (Rank: 102) 55.50: Egypt, Arab Rep. (Rank: 119) 46.88: Syrian Arab Republic (Rank: 155) Note: The ranking of economies on the ease of registering property is determined by sorting their distance to frontier scores for registering property. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Registering Property in Lebanon – Procedure, Time and Cost Time Cost 6 30 5 Cost (% of property value) 25 4 Time (days) 20 3 15 2 10 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. Page 27   Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for registering property. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Lebanon Figure – Registering Property in Lebanon – Procedure, Time and Cost Time Cost 6 30 5 Cost (% of property value) 25 4 Time (days) 20 3 15 2 10 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 di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Registering Property in Lebanon and comparator economies – Measure of Quality 25 22.5 20 16.0 Index score 15 13.4 10.0 10.5 10 7.0 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. Procedure Time to Complete Associated Costs 1 Obtain an updated Real Estate Certi cate from the Land Registry 1 day LBP 10,000 Agency : Land Registry Parties obtain an updated Real Estate Certi cate from the Land Registry, such certi cate mentions the names of the owners, a description of the property and any encumbrance or easement or inscription, if any, on the property. The procedure to obtain the Real Estate Certi cate is a straight forward one which only requires submission of the request, and the certi cate is immediately issued thereafter. Starting in 2016, there is a possibility to obtain the certi cate online by going to http://www.lrc.gov.lb/en/content/viewing-title-register. Page 28   2 Obtain an o cial cadastral map 1 day LBP 20,000 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Doing Business 2018 Lebanon Details – Registering Property in Lebanon – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Obtain an updated Real Estate Certi cate from the Land Registry 1 day LBP 10,000 Agency : Land Registry Parties obtain an updated Real Estate Certi cate from the Land Registry, such certi cate mentions the names of the owners, a description of the property and any encumbrance or easement or inscription, if any, on the property. The procedure to obtain the Real Estate Certi cate is a straight forward one which only requires submission of the request, and the certi cate is immediately issued thereafter. Starting in 2016, there is a possibility to obtain the certi cate online by going to http://www.lrc.gov.lb/en/content/viewing-title-register. 2 Obtain an o cial cadastral map 1 day LBP 20,000 Agency : Cadastre Administration (Da'irat al Massaha) If the area is not speci ed in the real estate certi cate and in the title deed, which is often the case, an o cial cadastral map and an area certi cate must be obtained from the cadastre administration (in Arabic “Dairat al Massaha”). 3 Obtain an urban plan certi cate from the Urban Planning Authority and 10 days LBP 6,000 the Municipality (simultaneous with Agency : Urban Planning Authority and Municipality Procedures 4) Parties obtain an urban plan certi cate 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 tax clearance from the Municipality 3 days LBP 8,000 Agency : Municipality (simultaneous with Procedures 3) 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 2 days LBP 1,500,000 Agency : Notary/attorney (minimum set by the Beirut Bar An attorney or notary public or quali ed facilitator prepares the sale Association) agreement on an o cial form. The participation of a lawyer is not mandatory, but it is preferred to avoid any mistakes. The sale contract is often drafted by the notary public or by a quali ed 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 Inspection of the property by the Tax Authority to get an o cial 10 days no cost estimate of its rental value (simultaneous with Agency : Ministry of Finance procedure 7) Page 29   fee shall be subject to an increase taking into consideration the contract's Doing value and importance. Business 2018 Lebanon 6 Inspection of the property by the Tax Authority to get an o cial 10 days no cost estimate of its rental value (simultaneous with Agency : Ministry of Finance procedure 7) The Tax Authority at the Ministry of Finance orders an inspection of the property by a controller to obtain an o cial 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 o cial estimate of the rental value. 7 Obtain an o cial estimate of the rental value of the property from the 3 days LBP 5,000 Tax Authority (simultaneous with Agency : Ministry of Finance Procedure 6) An o cial estimate of the rental value of the property is delivered by the Tax Authority at the Ministry of Finance after the inspection together with a tax discharge (clearance). Sometimes, an occupancy certi cate from the Municipality is also requested. 8 Apply for registration at the Land Registry About 10 days LBP 74,000 (Flat Agency : Land Registry taxes) + 5% of property value The contract, together with the documentation, is presented, either a) (Transfer tax) + 5% of directly to the Land Registry o cer before whom the contract is signed and the sum of Transfer then the property is registered, or b) to the notary public before whom the Tax and Flat Taxes contract is signed and then both the contract and the documentation shall (Municipal Tax) + LBP be presented to the Land Registry for registration of title. 5,000 (stamp duty on a) If it is presented to the Land Registry, all taxes and duties are paid at the new deed) + 0.3% of tax authority cashier, which is located at the same building than the Land property value Registry. (stamp duty) + 0.1% The taxes and duties to be paid if the contract is presented at the Land of property value Registry are as follows: (bar association tax) • Proportional stamp duty: 0.3% of contract value. • Bar Association tax: 0.1% of contract value. • Various taxes, namely: - Flat tax on contract: LBP 8,000. - Flat tax (called in Arabic “kaydieh”): LBP 8,000. - Flat tax on title deed: LBP 8,000. - Flat tax on new title deed: LBP 50,000 Total of said at taxes: LBP 74,000 - Proportional transfer tax: 5% of contract value or of the value resulting from the o cial estimate, which is higher. - Proportional Municipal tax: 5% of the total amount (i.e. aforementioned 5% transfer tax + L.P. 74,000). - Flat stamp duty on new deed: L.P. 5,000 The Contract is presented to the Assistant Land Registrar, then it will go through one or two o cers before it reaches the Land Registrar who would: (i)- either accept the contract if he/she agrees on the price that was set by the parties and nds that there are no irregularities in the documents, in which case the contract shall be immediately registered, and thereafter the new deed will be delivered to the buyer. (ii)- or refuse to register the contract until the price is amended (i.e. increased) or the irregularities in the documentation is recti ed, in which case the Land Registrar’s request shall be satis ed and the contract is to be presented once again for review and acceptance. It is only when the Land Registrar approves the signed contract and accepts to record it that the title to property is transferred to the Buyer. 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 Page 30   clear provisions of the law, the buyer acquires full ownership only when the presented once again for review and acceptance. It is only when the Land Registrar approves the signed contract and accepts Business Doing to 2018 record it that Lebanon the title to property is transferred to the Buyer. 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, in which case the above mentioned costs shall be increased as follows: - Notary tax: 0.1% of contract value. - Flat tax: LBP 50,000 - Notary at tax: LBP 15,000 - Flat stamp duty on contract: LBP 10,000 - Flat tax (called in Arabic “Tahrir wa tanzim”): LBP 34,000 - Flat reconstruction tax: LBP 2,500 - Flat stamp duty on second copy of contract: LBP 1,000 - Notary public fees: LBP 200,000 All taxes and duties are paid directly at the notary public’s o ce, 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 Certi cate (obtained in Procedure 1) • O cial cadastral map (obtained in Procedure 2) • O cial estimate of rental value of the property (obtained in Procedure 5) • Municipal tax clearance (obtained in Procedure 6) • Sale agreement (prepared in Procedure 7) Takes place simultaneously with previous procedure. Details – Registering Property in Lebanon – Measure of Quality Answer Score Quality of the land administration index (0-30) 16.0 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 Computer/Fully 2.0 —in a paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions 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— Paper 0.0 in a 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 Page 31   cadastral information (geographic information system)? Takes place simultaneously with previous procedure. Doing Business 2018 Lebanon Details – Registering Property in Lebanon – Measure of Quality Answer Score Quality of the land administration index (0-30) 16.0 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 Computer/Fully 2.0 —in a paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions 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— Paper 0.0 in a 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 Separate 0.0 cadastral or mapping agency kept in a single database, in di erent but linked databases databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use Yes 1.0 the same identi cation 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 Anyone who 1.0 immovable property registration in the largest business city? pays the o cial fee Is the list of documents that are required to complete any type of property transaction Yes, online 0.5 made publicly available–and if so, how? Link for online access: http://www.lrc.go v.lb/en/content/r equired- 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.go v.lb/en/content/f ees-simulation-0 Does the agency in charge of immovable property registration commit to delivering a No 0.0 legally binding document that proves property ownership within a speci c time frame– and if so, how does it communicate the service standard? Page 32   v.lb/en/content/f Doing Business 2018 Lebanon ees-simulation-0 Does the agency in charge of immovable property registration commit to delivering a No 0.0 legally binding document that proves property ownership within a speci c time frame– and if so, how does it communicate the service standard? Link for online access: Is there a speci c and separate mechanism for ling complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available o cial 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 2015: Who is able to consult maps of land plots in the largest business city? Anyone who 0.5 pays the o cial 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: Does the cadastral or mapping agency commit to delivering an updated map within a Yes, in person 0.0 speci c time frame—and if so, how does it communicate the service standard? Link for online access: No Is there a speci c and separate mechanism for ling 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 No 0.0 property 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 Yes 0.5 guarantee? Is there a speci c 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 certi ed by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a Yes 0.5 Page 33   property transaction (e.g., checking the compliance of contracts with requirements of engaged in good faith in a property transaction based on erroneous information ed by the immovable certi Business Doing property registry? 2018 Lebanon Does the legal system require a control of legality of the documents necessary for a Yes 0.5 property 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 veri cation 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 Court of First property worth 50 times gross national income (GNI) per capita and located in the Instance of largest business city, what court would be in charge of the case in the rst instance? Beirut ruling on real estate matters How long does it take on average to obtain a decision from the rst-instance court for Between 2 and 3 1.0 such a case (without appeal)? years Are there any statistics on the number of land disputes in the rst instance? No 0.0 Number of land disputes in the largest business city in 2015: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes 0.0 Do married men and married women have equal ownership rights to property? Yes 0.0 Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the e ectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in June 2017. 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 Rights of borrowers and lenders through through 2 sets of indicators. The depth of credit information index collateral laws (0-10) measures rules and practices a ecting the coverage, scope and Protection of secured creditors’ rights through accessibility of credit information available through a credit registry or a bankruptcy laws (0-2) credit bureau. The strength of legal rights index measures the degree to Depth of credit information index (0–8) which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined Scope and accessibility of credit information whether a unitary secured transactions system exists. Then two case distributed by credit bureaus and credit scenarios, case A and case B, are used to determine how a nonpossessory registries (0-8) security interest is created, publicized and enforced according to the law. Credit bureau coverage (% of adults) Special emphasis is given to how the collateral registry operates (if Number of individuals and firms listed in largest registration of security interests is possible). The case scenarios involve a credit bureau as a percentage of adult population secured borrower, company ABC, and a secured lender, BizBank. Page 34   Credit registry coverage (% of adults) In some economies the legal framework for secured transactions will allow Do married men and married women have equal ownership rights to property? Yes 0.0 Doing Business 2018 Lebanon Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the e ectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in June 2017. 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 Rights of borrowers and lenders through through 2 sets of indicators. The depth of credit information index collateral laws (0-10) measures rules and practices a ecting the coverage, scope and Protection of secured creditors’ rights through accessibility of credit information available through a credit registry or a bankruptcy laws (0-2) credit bureau. The strength of legal rights index measures the degree to Depth of credit information index (0–8) which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined Scope and accessibility of credit information whether a unitary secured transactions system exists. Then two case distributed by credit bureaus and credit scenarios, case A and case B, are used to determine how a nonpossessory registries (0-8) security interest is created, publicized and enforced according to the law. Credit bureau coverage (% of adults) Special emphasis is given to how the collateral registry operates (if Number of individuals and firms listed in largest registration of security interests is possible). The case scenarios involve a credit bureau as a percentage of adult population secured borrower, company ABC, and a secured lender, BizBank. Credit registry coverage (% of adults) In some economies the legal framework for secured transactions will allow Number of individuals and firms listed in credit only case A or case B (not both) to apply. Both cases examine the same set registry as a percentage of adult population of legal provisions relating to the use of movable collateral. Several assumptions about the secured borrower (ABC) and lender (BizBank) 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. Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Strength of legal rights index (0-12) 2 1.7 6.0 12.00 (4 Economies) Depth of credit information index (0-8) 6 4.8 6.6 8.00 (34 Economies) Page 35   Credit registry coverage (% of adults) 22.9 14.0 18.3 100.00 (3 Economies) possible). ABC keeps ownership and possession of the assets. Doing Business 2018 Lebanon Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Strength of legal rights index (0-12) 2 1.7 6.0 12.00 (4 Economies) Depth of credit information index (0-8) 6 4.8 6.6 8.00 (34 Economies) Credit registry coverage (% of adults) 22.9 14.0 18.3 100.00 (3 Economies) Credit bureau coverage (% of adults) 0.0 14.2 63.7 100.00 (23 Economies) Figure – Getting Credit in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 50.00: Egypt, Arab Rep. (Rank: 90) 50.00: Saudi Arabia (Rank: 90) 40.00: Lebanon (Rank: 122) 32.25: Regional Average (Middle East & North Africa) 25.00: Jordan (Rank: 159) 15.00: Syrian Arab Republic (Rank: 173) Note: The ranking of economies on the ease of getting credit is determined by sorting their distance to frontier scores for getting credit. These scores are the distance to frontier score for the sum of the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Lebanon and comparator economies 2.5 2 2 2 2 1.7 Index score 1.5 1 1 0.5 0 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Details – Legal Rights in Lebanon Strength of legal rights index (0-12) 2 Does an integrated or uni ed 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 speci c description of collateral? Page 36   Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Doing Business 2018 Lebanon Details – Legal Rights in Lebanon Strength of legal rights index (0-12) 2 Does an integrated or uni ed 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 speci c description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring Yes a speci c description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds No or replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and Yes obligations be 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 uni ed geographically No and by 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 No performed online by any interested third party? Are secured creditors paid rst (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? Are secured creditors paid rst (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 No reorganization procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and/or 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 No allow 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 10 8 8 8 Index score 6 6 5 4.8 4 2 2 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Details – Credit Information in Lebanon Page 37   0 Lebanon Doing Business 2018 Egypt, Arab Rep. Lebanon Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Details – Credit Information in Lebanon Credit Credit Depth of credit information index (0-8) bureau registry Score 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 financial institutions - No No 0 distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more No Yes 1 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 credit registry? No Yes 1 Can banks and financial institutions access borrowers’ credit information online (for example, No Yes 1 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 banks and financial No No 0 institutions assess the creditworthiness of borrowers? 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 0 909,678 Number of firms 0 26,494 Total 0 936,172 Percentage of adult population 0.0 22.9 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 June 2017. 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 of - Is a publicly traded corporation listed on the economy’s most important minority shareholders to sue and hold interested stock exchange. If the number of publicly traded companies listed on that directors liable for prejudicial related-party exchange is less than 10, or if there is no stock exchange in the economy, it is assumed that Buyer is a large private company with multiple Page 38   transactions; Available legal remedies (damages, Percentage of adult population 0.0 22.9 Doing Business 2018 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 June 2017. 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 of - Is a publicly traded corporation listed on the economy’s most important minority shareholders to sue and hold interested stock exchange. If the number of publicly traded companies listed on that directors liable for prejudicial related-party exchange is less than 10, or if there is no stock exchange in the economy, it transactions; Available legal remedies (damages, is assumed that Buyer is a large private company with multiple disgorgement of profits, fines, imprisonment, shareholders. rescission of the transaction) - Has a board of directors and a chief executive o cer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not speci cally Ease of shareholder suits index (0–10): Access to required by law. internal corporate documents; Evidence - Has a supervisory board (applicable to economies with a two-tier board obtainable during trial and allocation of legal system) on which 60% of the shareholder-elected members have been expenses appointed by Mr. James, who is Buyer’s controlling shareholder and a Extent of conflict of interest regulation index member of Buyer’s board of directors. (0–10): Simple average of the extent of disclosure, - Has not adopted any bylaws or articles of association that di er from extent of director liability and ease of default minimum standards and does not follow any nonmandatory codes, shareholder indices principles, recommendations or guidelines relating to corporate Extent of shareholder rights index (0-10): governance. Shareholders’ rights and role in major corporate - Is a manufacturing company with its own distribution network. decisions Extent of ownership and control index (0-10): The transaction involves the following details: Governance safeguards protecting shareholders - Mr. James owns 60% of Buyer and elected two directors to Buyer’s ve- from undue board control and entrenchment member board. Extent of corporate transparency index (0-10): - Mr. James also owns 90% of Seller, a company that operates a chain of Corporate transparency on ownership stakes, retail hardware stores. Seller recently closed a large number of its stores. compensation, audits and financial prospects - Mr. James proposes that Buyer purchase Seller’s unused eet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer Extent of shareholder governance index (0–10): agrees. The price is equal to 10% of Buyer’s assets and is higher than the Simple average of the extent of shareholders market value. rights, extent of ownership and control and - The proposed transaction is part of the company’s ordinary course of extent of corporate transparency indices business and is not outside the authority of the company. Strength of minority investor protection index - Buyer enters into the transaction. All required approvals are obtained, (0–10): Simple average of the extent of conflict of and all required disclosures made (that is, the transaction is not interest regulation and extent of shareholder fraudulent). governance indices - The transaction causes damages to Buyer. Shareholders sue Mr. James and the other parties that approved the transaction. Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Extent of conflict of interest regulation index (0- 5 4.9 6.4 9.3 (New Zealand) 10) Extent of shareholder governance index (0-10) 3.3 4.7 6.4 Page 39   9.00 (Kazakhstan) and the other parties that approved the transaction. Doing Business 2018 Lebanon Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Extent of conflict of interest regulation index (0- 5 4.9 6.4 9.3 (New Zealand) 10) Extent of shareholder governance index (0-10) 3.3 4.7 6.4 9.00 (Kazakhstan) Figure – Protecting Minority Investors in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 75.00: Saudi Arabia (Rank: 10) 55.00: Egypt, Arab Rep. (Rank: 81) 53.33: Syrian Arab Republic (Rank: 89) 47.92: Regional Average (Middle East & North Africa) 41.67: Lebanon (Rank: 138) 40.00: Jordan (Rank: 146) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their distance to frontier scores for protecting minority investors. These scores are the simple average of the distance to frontier scores for the extent of con ict 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. 7 3 8 7 5 3 Jordan 7 4 4 5 2 2 Saudi Arabia 9 8 9 8 7 4 Syrian Arab Republic 6 5 7 5 6 3 OECD high income 7.3 5.6 6.5 5.2 6.3 7.4 Middle East & North Africa 5.2 4.6 6.2 4.2 4.7 4 0 5 10 15 20 25 30 35 40 45 50 Sub-Indicator Score Extent of corporate transparency index (0­10) Extent of director liability index (0­10) Extent of disclosure index (0­10) Extent of ownership and control index (0­10) Extent of shareholder rights index (0­10) Ease of shareholder suits index (0­10) Details – Protecting Minority Investors in Lebanon – Measure of Quality Answer Score Page 40   Extent of ownership and control index (0­10) Extent of shareholder rights index (0­10) Ease of shareholder suits index (0­10) Doing Business 2018 Lebanon Details – Protecting Minority Investors in Lebanon – Measure of Quality Answer Score Extent of con ict of interest regulation index (0-10) 5 Extent of disclosure index (0-10) 9 Which corporate body is legally su cient 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 con ict of interest to the board of directors? (0-2) Existence of a 1.0 con ict without any speci cs Must Buyer disclose the transaction in published periodic lings (annual reports)? (0-2) Disclosure on 2.0 the transaction and on the con ict of interest Must Buyer immediately disclose the transaction to the public and/or shareholders? (0- Disclosure on 2.0 2) the transaction and on the con ict of interest Extent of director liability index (0-10) 1 Can shareholders representing 10% of Buyer's share capital sue directly or derivatively Yes 1.0 for the damage the transaction caused to Buyer? (0-1) Can shareholders hold the interested director liable for the damage the transaction Not liable 0.0 caused to Buyer? (0-2) Can shareholders hold the other directors liable for the damage the transaction caused Not liable 0.0 to 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 pro ts made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disquali ed or ned and imprisoned upon a successful claim by No 0.0 shareholders? (0-1) 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 Before suing can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Page 41   shareholder Ease ofBusiness Doing suits index 2018 (0-10) Lebanon 5 Before suing can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plainti obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plainti request categories of documents from the defendant without No 0.0 identifying speci c ones? (0-1) Can the plainti 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 plainti s 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 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 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 a ected 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 members consent to add a new No 0.0 member? Assuming that Buyer is a limited company, must a member rst o er to sell their Yes 1.0 interest to the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 1 Is it forbidden to appoint the same individual as CEO and chair 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 Yes 1.0 end of their term? Must the board of directors include a separate audit committee exclusively comprising No 0.0 board members? Must a potential acquirer make a tender o er to all shareholders upon acquiring 50% No 0.0 Page 42   of Buyer? Must the board of directors include a separate audit committee exclusively comprising No 0.0 board Doing members? Business 2018 Lebanon Must a potential acquirer make a tender o er to all shareholders upon acquiring 50% No 0.0 of 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 No 0.0 o er to all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute pro ts within a No 0.0 maximum period set by law? Extent of corporate transparency index (0-10) 5 Must Buyer disclose direct and indirect bene cial 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 No 0.0 meeting agenda? Must Buyer's annual nancial 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 No 0.0 the meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual nancial statements be Yes 1.0 audited by an external auditor? 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 measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016). Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post- ling processes: VAT refund and tax audit. The data shows where post ling processes and practices work e ciently and what drives the di erences in the overall tax compliance cost across economies. The new section covers both the legal framework and the administrative burden on businesses to comply with post ling processes. See the methodology for more information. What the indicators measure Case study assumptions Page 43   Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory Assuming that Buyer is a limited company, must Buyer's annual nancial statements be Yes 1.0 audited by an external auditor? Doing Business 2018 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 measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016). Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post- ling processes: VAT refund and tax audit. The data shows where post ling processes and practices work e ciently and what drives the di erences in the overall tax compliance cost across economies. The new section covers both the legal framework and the administrative burden on businesses to comply with post ling processes. 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 2016 (number per year adjusted for electronic and contributions a medium size company must pay in a year, and measures joint ling and payment) the administrative burden of paying taxes, contributions and dealing with post ling processes. Information is also compiled on frequency of ling Total number of taxes and contributions paid, and payments, time taken to comply with tax laws, time taken to comply including consumption taxes (value added tax, with the requirements of post ling processes and time waiting. sales tax or goods and service tax) Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: Time required to comply with 3 major taxes - TaxpayerCo is a medium-size business that started operations on January (hours per year) 1, 2015. It produces ceramic flowerpots and sells them at retail. All taxes Collecting information, computing tax payable and contributions recorded are paid in the second year of operation Completing tax return, filing with agencies (calendar year 2016). Taxes and mandatory contributions are measured at all levels of government. Arranging payment or withholding Preparing separate tax accounting books, if The VAT refund process: required - In June 2016, TaxpayerCo. makes a large capital purchase: the value of the Total tax and contribution rate (% of pro t before machine is 65 times income per capita of the economy. Sales are equally all taxes) spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income per Profit or corporate income tax capita divided by 12). The machinery seller is registered for VAT and excess Social contributions, labor taxes paid by input VAT incurred in June will be fully recovered after four consecutive employer months if the VAT rate is the same for inputs, sales and the machine and Property and property transfer taxes the tax reporting period is every month. Input VAT will exceed Output VAT Dividend, capital gains, financial transactions in June 2016. taxes The corporate income tax audit process: Waste collection, vehicle, road and other taxes - An error in calculation of income tax liability (for example, use of incorrect Post ling Index tax depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income Time to comply with a VAT refund tax underpayment. TaxpayerCo. discovered the error and voluntarily Time to receive a VAT refund noti ed the tax authority. The value of the underpaid income tax liability is Time to comply with a corporate income tax audit 5% of the corporate income tax liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax Time to complete a corporate income tax audit return, but within the tax assessment period. Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Payments (number per year) 20 17.9 10.9 3 (Hong Kong SAR, China) Page 44   return, but within the tax assessment period. Doing Business 2018 Lebanon Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Payments (number per year) 20 17.9 10.9 3 (Hong Kong SAR, China) Time (hours per year) 181 203.4 160.7 55 (Luxembourg) Total tax and contribution rate (% of profit) 30.3 32.6 40.1 18.47% (32 Economies) Postfiling index (0-100) 27.48 50.56 83.45 99.38 (Estonia) Figure – Paying Taxes in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 75.00: Saudi Arabia (Rank: 76) 74.31: Regional Average (Middle East & North Africa) 73.97: Syrian Arab Republic (Rank: 81) 70.75: Jordan (Rank: 97) 68.21: Lebanon (Rank: 113) 50.67: Egypt, Arab Rep. (Rank: 167) Note: The ranking of economies on the ease of paying taxes is determined by sorting their distance to frontier scores on the ease of paying taxes. These scores are the simple average of the distance to frontier scores for each of the four component indicators – number of tax payments. time, total tax rate and post ling index – with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax rate. The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8. The threshold is de ned as the total tax 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 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 90 80 70 Index score 60 50.56 50 40 34.69 27.48 26.62 30 20 10 0.00 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Details – Paying Taxes in Lebanon Tax or mandatory Payments Notes on Time Statutory Total tax and contribution Notes contribution (number) Payments (hours) tax rate Tax base rate (% of profit) on TTR Social security 12 100 21.5% gross 23.77 Page 45   contributions salaries Doing Business 2018 Lebanon Figure – Paying Taxes in Lebanon and comparator economies – Measure of Quality 100 92.20 90 80 70 Index score 60 50.56 50 40 34.69 27.48 26.62 30 20 10 0.00 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Details – Paying Taxes in Lebanon Tax or mandatory Payments Notes on Time Statutory Total tax and contribution Notes contribution (number) Payments (hours) tax rate Tax base rate (% of profit) on TTR Social security 12 100 21.5% gross 23.77 contributions salaries Corporate income tax 1 40 15% taxable 5.64 profit Capital gains tax 0 jointly 10% capital 0.51 gains Municipality tax 1 8.5% property 0.41 value Value added tax (VAT) 4 41 10% value 0.00 not added included Vehicle tax 1 various 0.00 small rates amount Social security 0 jointly 2% gross 0.00 withheld contributions on salaries employee Stamp duty 1 0.3% contract 0.00 small value amount Totals 20 181 30.3 Details – Paying Taxes in Lebanon – Tax by Type Taxes by type Answer Profit tax (% of profit) 6.1 Labor tax and contributions (% of profit) 23.8 Other taxes (% of profit) 0.4 Page 46   Totals 20 181 30.3 Doing Business 2018 Lebanon Details – Paying Taxes in Lebanon – Tax by Type Taxes by type Answer Profit tax (% of profit) 6.1 Labor tax and contributions (% of profit) 23.8 Other taxes (% of profit) 0.4 Details – Paying Taxes in Lebanon – Measure of Quality Answer Score Post ling 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 audit (hours) 23.0 60.55 Time to complete a corporate income tax audit (weeks) 25.1 21.43 Notes: Names of taxes have been standardized. For instance income tax, pro t 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 post ling 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 audit and time to complete a corporate income tax audit. N/A = Not applicable. 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 tari s) 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 June 2017. See the methodology for more information. Page 47   Given the importance of trade digitalization, in Doing Business 2018, the Trading across Borders questionnaire included research a corporate income tax audit and time to complete a corporate income tax audit. N/A = Not applicable. Doing Business 2018 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 tari s) 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 June 2017. See the methodology for more information. Given the importance of trade digitalization, in Doing Business 2018, the Trading across Borders questionnaire included research questions on the availability and status of implementation of Electronic Data Interchange (EDI) and Single Window (SW) systems. With this information, Doing Business built a comprehensive dataset on the adoption and level of sophistication of electronic platforms in 190 economies. These data are not used to compute the distance to frontier score or ranking of the ease of doing business. The new dataset on EDI and SW systems is available here. 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 or border handling in origin economy days are recorded as 22×24=528 hours). If customs clearance takes 7.5 Obtaining, preparing and submitting documents hours, the data are recorded as is. Alternatively, suppose documents are required by destination economy and any transit submitted to a customs agency at 8:00a.m., are processed overnight and economies can be picked up at 8:00a.m. the next day. The time for customs clearance Covers all documents required by law and in would be recorded as 24 hours because the actual procedure took 24 practice, including electronic submissions of hours. information Border compliance Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Customs clearance and inspections Contributors are asked to convert local currency into U.S. dollars based on Inspections by other agencies (if applied to more the exchange rate prevailing on the day they answer the questionnaire. than 20% of shipments) Contributors are private sector experts in international trade logistics and Handling and inspections that take place at the are informed about exchange rates. economy’s port or border Assumptions of the case study: - For all 190 economies covered by Doing Domestic transport Business, it is assumed a shipment is in a warehouse in the largest Loading or unloading of the shipment at the business city of the exporting economy and travels to a warehouse in the warehouse or port/border largest business city of the importing economy. - It is assumed each Transport between warehouse and port/border economy imports 15 metric tons of containerized auto parts (HS 8708) Traffic delays and road police checks while from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each shipment is en route economy exports the product of its comparative advantage (de ned by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. - The mode of transport is the one most widely used for the chosen export or import 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, airport 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 48   of agriculture or industry, national security agencies and any other Doing Business 2018 Lebanon government authorities. Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Time to export: Border compliance (hours) 96 62.6 12.7 0 (17 Economies) Cost to export: Border compliance (USD) 410 464.4 149.9 0.00 (19 Economies) Time to export: Documentary compliance 48 74.3 2.4 1.0 (25 Economies) (hours) Cost to export: Documentary compliance (USD) 100 243.6 35.4 0.00 (19 Economies) Time to import: Border compliance (hours) 180 112.3 8.7 0.00 (21 Economies) Cost to import: Border compliance (USD) 695 540.7 111.6 0.00 (27 Economies) Time to import: Documentary compliance 72 94.5 3.5 1.0 (30 Economies) (hours) Cost to import: Documentary compliance (USD) 135 266.2 25.6 0.00 (30 Economies) Figure – Trading across Borders in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 85.93: Jordan (Rank: 53) 59.71: Lebanon (Rank: 140) 58.07: Regional Average (Middle East & North Africa) 49.59: Saudi Arabia (Rank: 161) 42.23: Egypt, Arab Rep. (Rank: 170) 29.83: Syrian Arab Republic (Rank: 176) Note: The ranking of economies on the ease of trading across borders is determined by sorting their distance to frontier scores for trading across borders. These scores are the simple average of the distance to frontier scores for the time and cost for documentary compliance and border compliance to export and import (domestic transport is not used for calculating the ranking). Figure – Trading across Borders in Lebanon – Time and Cost Time Cost 200 800 180 695 700 150 600 Time (hours) Cost (USD) 500 410 96 100 400 72 300 48 50 135 200 100 100 0 0 Export - Border Compliance Export - Documentary Compliance Import - Border Compliance Import - Documentary CompliancePage 49   Doing Business 2018 Lebanon Figure – Trading across Borders in Lebanon – Time and Cost Time Cost 200 800 180 695 700 150 600 Time (hours) Cost (USD) 500 410 96 100 400 72 300 48 50 135 200 100 100 0 0 Export - Border Compliance Export - Documentary Compliance Import - Border Compliance Import - Documentary Compliance Details – Trading across Borders in Lebanon Characteristics Export Import Product HS 85 : Electrical machinery and equipment and parts thereof; sound recorders and HS 8708: Parts and reproducers, television image and sound recorders and reproducers, and parts and accessories of motor accessories of such articles vehicles Trade partner United Arab Emirates Germany Border Beirut port Beirut port Distance (km) 14 14 Domestic 3 2 transport time (hours) Domestic 250 250 transport cost (USD) Details – Trading across Borders in Lebanon – Components of Border Compliance Time to Complete Associated Costs (hours) (USD) Export: Clearance and inspections required by customs authorities 72.0 300.0 Export: Clearance and inspections required by agencies other than customs 0.0 0.0 Export: Port or border handling 96.0 110.0 Import: Clearance and inspections required by customs authorities 84.0 390.0 Import: Clearance and inspections required by agencies other than customs 84.0 165.0 Import: Port or border handling 180.0 140.0 Page 50   Details – Trading across Borders in Lebanon – Trade Documents (USD) Doing Business 2018 Lebanon Details – Trading across Borders in Lebanon – Components of Border Compliance Time to Complete Associated Costs (hours) (USD) Export: Clearance and inspections required by customs authorities 72.0 300.0 Export: Clearance and inspections required by agencies other than customs 0.0 0.0 Export: Port or border handling 96.0 110.0 Import: Clearance and inspections required by customs authorities 84.0 390.0 Import: Clearance and inspections required by agencies other than customs 84.0 165.0 Import: Port or border handling 180.0 140.0 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 Technical standards certificate SOLAS certificate Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local rst-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and e ciency in the court system. The most recent round of data collection was completed in June 2017. 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 courts (calendar days) between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes Time to file and serve the case the case from simple debt enforcement. Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses Time to enforce the judgment several assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller courts (% of claim) and Buyer), both located in the economy’s largest business city. For 11 Attorney fees Page 51   economies the data are also collected for the second largest business city. SOLAS certificate Doing Business 2018 Lebanon Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local rst-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and e ciency in the court system. The most recent round of data collection was completed in June 2017. 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 courts (calendar days) between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes Time to file and serve the case the case from simple debt enforcement. Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses Time to enforce the judgment several assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller courts (% of claim) and Buyer), both located in the economy’s largest business city. For 11 Attorney fees economies the data are also collected for the second largest business city. - The buyer orders custom-made goods, then fails to pay. Court fees - The value of the dispute is 200% of the income per capita or the Enforcement fees equivalent in local currency of USD 5,000, whichever is greater. Quality of judicial processes index (0-18) - The seller sues the buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000. Court structure and proceedings (-1-5) - The seller requests a pretrial attachment 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. Standardized Case Claim value LBP 24,597,835.00 Court name Sole judge hearing commercial matters at the Beirut First Instance Tribunal City Covered Beirut Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Time (days) 721 638.5 577.8 164.00 (Singapore) Cost (% of claim value) 30.8 24.4 21.5 9.00 (Iceland) Quality of judicial processes index (0-18) 6.0 5.9 11.0 15.50 (Australia) Figure – Enforcing Contracts in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 58.78: Saudi Arabia (Rank: 83) 54.21: Regional Average (Middle East & North Africa) 53.71: Jordan (Rank: 118) Page 52   of judicial processes Quality Business Doing index (0-18) 2018 Lebanon 6.0 5.9 11.0 15.50 (Australia) Figure – Enforcing Contracts in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 58.78: Saudi Arabia (Rank: 83) 54.21: Regional Average (Middle East & North Africa) 53.71: Jordan (Rank: 118) 49.85: Lebanon (Rank: 134) 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 distance to frontier scores for enforcing contracts. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Enforcing Contracts in Lebanon – Time and Cost Time Cost 1200 35 31.2 30.8 1010 29.3 1000 27.5 30 Cost (% of claim value) 26.2 872 24.4 25 800 721 21.5 Time (days) 642 638.5 20 577.8 575 600 15 400 10 200 5 0 0 Egypt, Arab Rep. Jordan Lebanon Middle East & OECD high income Saudi Arabia Syrian Arab Republic North Africa 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 0 2 Saudi Arabia 2 2 0 4 Syrian Arab Republic 2 0 2 OECD high income 2.5 2.9 2 3.6 Middle East & North Africa 2.1 0.7 0.3 2.8 0 2 4 6 8 10 Page 53   12 Egypt, Arab Rep. Jordan Lebanon Middle East & OECD high income Saudi Arabia Syrian Arab Republic North Africa Doing Business 2018 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 0 2 Saudi Arabia 2 2 0 4 Syrian Arab Republic 2 0 2 OECD high income 2.5 2.9 2 3.6 Middle East & North Africa 2.1 0.7 0.3 2.8 0 2 4 6 8 10 12 Sub-Indicator Score Alternative dispute resolution (0­3) Case management (0­6) Court automation (0­4) Court structure and proceedings (­1­5) 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 Details – Enforcing Contracts in Lebanon – Measure of Quality Page 54   Alternative dispute resolution (0-3) 1.5 Doing Business 2018 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 case? Yes 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) No 0.0 time to 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 No 0.0 for use by judges? 6. Are there any electronic case management tools in place within the competent court No 0.0 for use by lawyers? Court automation (0-4) 0.0 1. Can the initial complaint be led electronically through a dedicated platform within No 0.0 the competent court? 2. Is it possible to carry out service of process electronically for claims led before the No 0.0 competent court? Page 55   1. Can the initial complaint be led electronically through a dedicated platform within No 0.0 Businesscourt? the competent Doing 2018 Lebanon 2. Is it possible to carry out service of process electronically for claims led 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 o cial 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 o cial gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 1.5 1. Arbitration 1.0 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 nancial incentives for parties to attempt mediation or conciliation (i.e., No if mediation or conciliation is successful, a refund of court ling fees, income tax credits or the like)? 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 for the project was completed in June 2017. 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 Measured in calendar years used: Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 Cost required to recover debt (% of debtor’s estate) suppliers. The hotel experiences nancial di culties. Page 56   Measured as percentage of estate value - The value of the hotel is 100% of the income per capita or the equivalent if mediation or conciliation is successful, a refund of court ling fees, income tax credits or the like)? Doing Business 2018 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 for the project was completed in June 2017. 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 Measured in calendar years used: Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 Cost required to recover debt (% of debtor’s estate) suppliers. The hotel experiences nancial di culties. Measured as percentage of estate value - The value of the hotel is 100% of the income per capita or the equivalent Court fees in local currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over Fees of insolvency administrators the hotel’s real estate. The hotel cannot pay back the loan, but makes Lawyers’ fees enough money to operate otherwise. Assessors’ and auctioneers’ fees In addition, Doing Business evaluates the adequacy and integrity of the Other related fees existing legal framework applicable to liquidation and reorganization Outcome proceedings through the strength of insolvency framework index. The index tests whether economies adopted internationally accepted good Whether business continues operating as a going practices in four areas: commencement of proceedings, management of concern or business assets are sold piecemeal debtor’s assets, reorganization proceedings and creditor participation. 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) Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Recovery rate (cents on the dollar) 31.4 25.5 71.2 93.1 (Norway) Time (years) 3.0 3.0 1.7 0.4 (Ireland) Page 57   Cost (% of estate) 15.0 13.8 9.1 1.00 (Norway) Creditor participation index (0-4) Doing Business 2018 Lebanon Middle East & OECD high Indicator Lebanon North Africa income Overall Best Performer Recovery rate (cents on the dollar) 31.4 25.5 71.2 93.1 (Norway) Time (years) 3.0 3.0 1.7 0.4 (Ireland) Cost (% of estate) 15.0 13.8 9.1 1.00 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 4.0 5.4 12.1 15.00 (6 Economies) Figure – Resolving Insolvency in Lebanon and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 38.89: Egypt, Arab Rep. (Rank: 115) 30.53: Jordan (Rank: 146) 30.45: Regional Average (Middle East & North Africa) 29.42: Lebanon (Rank: 147) 21.44: 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 distance to frontier scores for resolving insolvency. These scores are the simple average of the distance to frontier scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Lebanon – Time and Cost Time Cost 4.5 4.1 25 22.0 4 20.0 3.5 20 3.0 3.0 3.0 16.0 Cost (% of estate) Time (years) 3 15.0 2.5 13.8 15 2.5 2 1.7 9.1 10 1.5 1 5 0.5 0 0 Egypt, Arab Rep. Jordan Lebanon Middle East & OECD high income no practice Syrian Arab Republic North Africa Saudi Arabia Figure – Resolving Insolvency in Lebanon and comparator economies – Measure of Quality Lebanon 2 2 0 Page 58   Egypt, Arab Rep. 4 2 2 0 Egypt, Arab Rep. Jordan Lebanon Middle East & OECD high income no practice Syrian Arab Republic North Africa Saudi Arabia Doing Business 2018 Lebanon Figure – Resolving Insolvency in Lebanon and comparator economies – Measure of Quality Lebanon 2 2 0 Egypt, Arab Rep. 4 2 2 0 Jordan 2 2 1 0 Saudi Arabia 0 2 0 Syrian Arab Republic 2 2 1 0 OECD high income 5.4 2.8 2.3 1.9 Middle East & North Africa 3.3 2.1 0.9 0.2 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0­6) Commencement of proceedings index (0­3) Creditor participation index (0­4) Reorganization proceedings index (0­3) Figure – Resolving Insolvency in Lebanon and comparator economies – Recovery Rate Recovery Rate (cents on the dollar) 35 31.4 30 27.7 25.8 25.5 25 20 15 10.8 10 5 0.0 0 Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Details – Resolving Insolvency in Lebanon Indicator Answer Explanation 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 Page 59   become more complex and will take longer than straightforward enforcement proceedings. Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Syrian Arab Republic Middle East & North Africa Doing Business 2018 Lebanon Details – Resolving Insolvency in Lebanon Indicator Answer Explanation 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 estate) publication 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 (cents on the 31.4 dollar) 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 (b) Debtor may 0.5 proceedings? le for liquidation only Does the insolvency framework allow a CREDITOR to le for insolvency of the debtor? (b) Yes, but a 0.5 creditor may le 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 No 0.0 goods and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome No 0.0 Page 60   dollar) Doing Business 2018 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 (b) Debtor may 0.5 proceedings? le for liquidation only Does the insolvency framework allow a CREDITOR to le for insolvency of the debtor? (b) Yes, but a 0.5 creditor may le 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 No 0.0 goods 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 No 0.0 after 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 No 0.0 receive at least as much as what they would obtain in a liquidation? Are the creditors devided into classes for the purposes of voting on the reorganization No 0.0 plan, 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? Page 61   Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment Doing Businessof the 2018insolvency representative? Lebanon 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 No 0.0 information from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to No 0.0 decisions 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”. Labor Market Regulation Doing Business presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org/data/exploretopics/labor-market-regulation). The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions (i) whether xed-term contracts are prohibited for about the worker and the business are used. permanent tasks; (ii) maximum cumulative duration of xed-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 nonpregnant - Operates a supermarket or grocery store in the economy’s largest and nonnursing women can work same night hours business city. For 11 economies the data are also collected for the second as men; (v) length of paid annual leave. largest business city. - Has 60 employees. Redundancy rules - Is subject to collective bargaining agreements if such agreements cover (i) whether redundancy can be basis for terminating more than 50% of the food retail sector and they apply even to rms that workers; (ii) whether employer needs to notify are not party to them. and/or get approval from third party to terminate 1 - Abides by every law and regulation but does not grant workers more redundant worker and a group of 9 redundant bene ts than those mandated by law, regulation or (if applicable) collective workers; (iii) whether law requires employer to bargaining agreements. 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 Page 62   leave; (iv) whether employees on maternity leave the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”. Doing Business 2018 Lebanon Labor Market Regulation Doing Business presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org/data/exploretopics/labor-market-regulation). The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions (i) whether xed-term contracts are prohibited for about the worker and the business are used. permanent tasks; (ii) maximum cumulative duration of xed-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 nonpregnant - Operates a supermarket or grocery store in the economy’s largest and nonnursing women can work same night hours business city. For 11 economies the data are also collected for the second as men; (v) length of paid annual leave. largest business city. - Has 60 employees. Redundancy rules - Is subject to collective bargaining agreements if such agreements cover (i) whether redundancy can be basis for terminating more than 50% of the food retail sector and they apply even to rms that workers; (ii) whether employer needs to notify are not party to them. and/or get approval from third party to terminate 1 - Abides by every law and regulation but does not grant workers more redundant worker and a group of 9 redundant bene ts than those mandated by law, regulation or (if applicable) collective workers; (iii) whether law requires employer to bargaining agreements. 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 ve fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Details – Labor Market Regulation in Lebanon Answer Hiring Page 63   Fixed-term contracts prohibited for permanent tasks? No days of sick leave a year; (vi) eligibility requirements for unemployment protection. Doing Business 2018 Lebanon Details – Labor Market Regulation in Lebanon Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single xed-term contract (months) No limit Maximum length of xed-term contracts, including renewals (months) 24.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 438.9 Ratio of minimum wage to value added per worker 0.5 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 noti cation if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party noti cation if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Page 64   Third-party Doing approval Business 2018 if nine workers are dismissed? Lebanon 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 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 Business Reforms in Lebanon In the year ending June 1, 2017, 119 economies implemented 264 total reforms across the di erent areas measured by Doing Business. Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business since 2004. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are the reforms for Lebanon implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more di cult 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. Page 65   Minimum contribution period for unemployment protection (months)? N/A Doing Business 2018 Lebanon Business Reforms in Lebanon In the year ending June 1, 2017, 119 economies implemented 264 total reforms across the di erent areas measured by Doing Business. Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business since 2004. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are the reforms for Lebanon implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more di cult 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 di cult 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 66   DB2009 Starting Doing a Business: Business 2018 Lebanon reduced the time required to start a business by streamlining the business registration process. Lebanon Page 67