Doing Business 2020 Lebanon Economy Profile Lebanon Page 1 Doing Business 2020 Lebanon Economy Profile of Lebanon Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling 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 Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Lebanon About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Lebanon Ease of Doing Business in DB RANK DB SCORE Region Middle East & North Africa Lebanon Income Category Upper middle income Population 6,848,925 143 54.3 City Covered Beirut Rankings on Doing Business topics - Lebanon 110 114 116 127 131 132 151 153 151 164 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 Topic Scores 78.2 53.7 62.7 59.4 40.0 44.0 67.5 57.9 50.8 29.1 Starting a Business (rank) 151 Getting Credit (rank) 132 Trading across Borders (rank) 153 Score of starting a business (0-100) 78.2 Score of getting credit (0-100) 40.0 Score of trading across borders (0-100) 57.9 Procedures (number) 8 Strength of legal rights index (0-12) 2 Time to export Time (days) 15 Depth of credit information index (0-8) 6 Documentary compliance (hours) 48 Cost (number) 42.3 Credit registry coverage (% of adults) 21.3 Border compliance (hours) 96 Paid-in min. capital (% of income per capita) 41.5 Credit bureau coverage (% of adults) 0.0 Cost to export Documentary compliance (USD) 100 Dealing with Construction Permits (rank) 164 Protecting Minority Investors (rank) 114 Border compliance (USD) 480 Score of dealing with construction permits (0-100) 53.7 Score of protecting minority investors (0-100) 44.0 Time to export Procedures (number) 22 Extent of disclosure index (0-10) 9.0 Documentary compliance (hours) 72 Time (days) 276 Extent of director liability index (0-10) 1.0 Border compliance (hours) 180 Cost (% of warehouse value) 7.7 Ease of shareholder suits index (0-10) 5.0 Cost to export Building quality control index (0-15) 14.0 Extent of shareholder rights index (0-6) 3.0 Documentary compliance (USD) 135 Extent of ownership and control index (0-7) 1.0 Border compliance (USD) 790 Getting Electricity (rank) 127 Extent of corporate transparency index (0-7) 3.0 Score of getting electricity (0-100) 62.7 Enforcing Contracts (rank) 131 Procedures (number) 4 Paying Taxes (rank) 116 Score of enforcing contracts (0-100) 50.8 Time (days) 89 Score of paying taxes (0-100) 67.5 Time (days) 721 Cost (% of income per capita) 128.0 Payments (number per year) 20 Cost (% of claim value) 30.8 Reliability of supply and transparency of tariff index (0-8) 0 Time (hours per year) 181 Quality of judicial processes index (0-18) 6.5 Total tax and contribution rate (% of profit) 32.2 Registering Property (rank) 110 Postfiling index (0-100) 27.5 Resolving Insolvency (rank) 151 Score of registering property (0-100) 59.4 Score of resolving insolvency (0-100) 29.1 Procedures (number) 8 Recovery rate (cents on the dollar) 30.8 Time (days) 37 Time (years) 3.0 Cost (% of property value) 6.0 Cost (% of estate) 15.0 Quality of the land administration index (0-30) 16.0 Outcome (0 as piecemeal sale and 1 as going 0 concern) Strength of insolvency framework index (0-16) 4.0 Page 4 Doing Business 2020 Lebanon Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is received -Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Lebanon Starting a Business - Lebanon Standardized Company Legal form Socièté a Responsabilité Limitée (SARL) Paid-in minimum capital requirement LBP 5,000,000 City Covered Beirut Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Procedure – Men (number) 8 6.5 4.9 1 (2 Economies) Time – Men (days) 15 19.7 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 42.3 16.7 3.0 0.0 (2 Economies) Procedure – Women (number) 8 7.1 4.9 1 (2 Economies) Time – Women (days) 15 20.3 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 42.3 16.7 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 41.5 8.9 7.6 0.0 (120 Economies) Figure – Starting a Business in Lebanon – Score 58.8 85.4 78.8 89.6 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Lebanon and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 93.1: Saudi Arabia (Rank: 38) 88.8: Turkey (Rank: 77) 87.8: Egypt, Arab Rep. (Rank: 90) 84.5: Jordan (Rank: 120) 84.0: Regional Average (Middle East & North Africa) 78.2: Lebanon (Rank: 151) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Lebanon Figure – Starting a Business in Lebanon – Procedure, Time and Cost Time (days) Cost (% of income per capita) 30 14 Cost (% of income per capita) 25 12 10 20 Time (days) 8 15 6 10 4 5 2 0 0 1 2 3 4 5 6 *7 *8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Lebanon Details – Starting a Business in Lebanon – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Designate a Lebanese lawyer 1 day LBP 3,000,000 (attorney Agency : Lawyer startup fees) + LBP Each newly formed company must retain and pay an attorney on an annual basis. On April 26 150,000 (Legalization of 2012, the Beirut Bar Association increased the minimum annual retainer to LBP 9,000,000 the Power of Attorney effective as of January 2013. This retainer can be paid by the company during the year. Startup before the Bar fees are set by the Beirut Bar Association at LBP 3,000,000. Association) 2 Deposit the capital in a bank 2 days no charge Agency : Bank This procedure can be carried out on the basis of a signed and notarized copy of the articles of association. 3 Register at the Company Registry 2 days see comments Agency : Commercial Register The applicant submits the following documents to the company registrar at the Commercial Court, along with the total amount of required fees: • Articles of association • Commercial circulars • Minutes of the first general meeting of the partners • Registration application and a draft of the registration certificate to be issued • Document attesting the capital deposit • Partners’ identity cards or passports (copy) • Documents evidencing that the company is entitled to occupy the premises where it exercises its activities Fee schedule for company registration: • Tax for the magistrates’ mutual fund: LBP 375,000 lump tax + 0.15% of the capital+ LBP 1,000 flat registration fee + LBP 500 application fee + LBP 1,000 certified copy + LBP 500 commercial publication fee • Stamp duty: equal to 0.4% of capital + LBP 750,000 lump sum stamp duty + LBP 2,000 flat registration fee + LBP 1,000 application fee + LBP 2,000 certified copy + enrollment fee (Qaydeyia) LBP 250+ LBP 1,000 commercial publication fee If the Bylaws are not signed before the Commercial Registry, additional fees are levied as follows: • Notarization of the articles of association: LBP 8,500 for each page. • Notarization fee: LBP 100,000 lump sum. • Notary public tax: 0.1% of capital. 4 Notify the Ministry of Finance of commencement of business operations 2 days no charge Agency : Ministry of Finance Within 2 months of registration, the company must submit a notification of commencement of business activities to the Ministry of Finance in order to register for income tax and VAT. 5 Register at the National Social Security Fund (NSSF) 1 day no charge Agency : National Social Security Fund This procedure has two functions: “Registration” of a new employee and “Confirmation” by the system. The “Registration” function entails submitting a file for each new employee at the NSSF regional office closest to the company premises and obtaining a file reference number (or a receipt acknowledging the registration) immediately upon the submission. Once this “Registration” function is completed, the business is considered to have fulfilled its legal obligations with the NSSF. The benefits to the newly registered employees, under NSSF rules, will also become immediately effective. The Time to complete this procedure is 1 day at no cost to the employer or the employee. The “Confirmation” function consists of issuing a hard copy document (printed on a special size sheet) in the name of the registered employee along with his/her unique NSSF ID. Due to the lack of printing equipment at NSSF, the confirmation documents are printed in batches every few days or so. Therefore, it could take up to 30 days for a confirmation sheet to be received by the newly registered employee. 6 File internal labor regulations (règlement intérieur) with the Ministry of Labor 1 day no charge Agency : Ministry of Labor When the number of employees at a company reaches 15 then the company will have to file internal labor regulations (règlement intérieur) with the Ministry of Labor according to Art. 66 of the Labor Code. 7 Register for VAT one week (simultaneous no charge Agency : VAT Department with previous procedure) Registration for VAT is done at the VAT Department. To obtain a VAT certificate of registration, it may take between 7 and 10 days. There are specific forms to fill out for each kind of registration. The VAT department is independent from the taxes’ department. The registration in both departments is free of charge. Page 8 Doing Business 2020 Lebanon 8 Obtain a company seal 1 day (simultaneous with LBP 20,000-35,000 Agency : Seal maker previous procedure) Although not mandated by law, the majority of companies prefer to have company stamps. they can be order at any seal-making company. Takes place simultaneously with previous procedure. Page 9 Doing Business 2020 Lebanon Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. 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 connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule The warehouse: • Procedure is considered completed once final document is - Will be used for general storage activities, such as storage of books or stationery. received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of 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 income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) 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 tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage • Quality control after construction (0-3) infrastructure, a septic tank in the smallest size available will be installed or built. - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 10 Doing Business 2020 Lebanon Dealing with Construction Permits - Lebanon Standardized Warehouse Estimated value of warehouse LBP 601,912,194.30 City Covered Beirut Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 22 15.7 12.7 None in 2018/19 Time (days) 276 123.6 152.3 None in 2018/19 Cost (% of warehouse value) 7.7 4.4 1.5 None in 2018/19 Building quality control index (0-15) 14.0 12.5 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Lebanon – Score 32.0 28.0 61.6 93.3 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Lebanon and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 78.3: Saudi Arabia (Rank: 28) 73.8: Turkey (Rank: 53) 71.2: Egypt, Arab Rep. (Rank: 74) 61.7: Regional Average (Middle East & North Africa) 60.3: Jordan (Rank: 138) 53.7: Lebanon (Rank: 164) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 11 Doing Business 2020 Lebanon Figure – Dealing with Construction Permits in Lebanon – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 2.5 250 Cost (% of warehouse value) 2 200 Time (days) 1.5 150 1 100 50 0.5 0 0 1 *2 *3 4 5 *6 7 8 9 10 11 12 13 * 14 15 16 17 18 * 19 * 20 21 22 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 12 Doing Business 2020 Lebanon Figure – Dealing with Construction Permits in Lebanon and comparator economies – Measure of Quality 16 14.0 14.0 14 13.0 12.5 12.0 Index score 12 11.0 10 8 6 4 2 0 Lebanon Egypt, Jordan Saudi Turkey Middle Arab Arabia East Rep. & North Africa Details – Dealing with Construction Permits in Lebanon – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain a geotechnical study / soil test 15 days USD 3,000 Agency : Geotechnical engineer BuildCo will request a soil test for the structural calculations for the foundation. This test is mandated by law according to article 18(3) of construction law no. 646/2004 2 Obtain a recent planning certificate 10 days LBP 24,600 Agency : Directorate General of Urban Planning (DGU) BuildCo must submit a recent planning certificate (they are usually valid for 3 months) among the necessary documents to request a building permit. BuildCo must have a receipt from the municipality and should pay the value of the stamps for this procedure. 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 read in conjunction with Decree no.7964/2012, companies must hire a technical auditor accredited by the government who must review and approve the drawings related to the project before the building permit can be issued. They may request that modifications be made to the drawings. Throughout the construction phase, the auditors must also ensure that construction works are duly performed through inspections at different stages of the construction. And upon completion of the works, they must attest that the construction work was carried out properly. 5 Request and receive inspection from Électricité du Liban for approval 15 days no charge Agency : Électricité du Liban (Electricity of Lebanon – EDL) also need to go to the EDL to make sure you have the electrical post or a transformer first, you must go to municipality to obtain a document that shows the parcel’s value as they will need this to issue the approval, then you must go to the Electricity company to see if Electricite du Liban will be able to supply electricity Before submitting the building permit application, Electricité du Liban has to verify if the construction site can be connected to an electrical post or transformer. 6 Obtain approval of file by Order of Engineers (where engineer is registered) and pay duties 4 days LBP 1,950,900 to Order Agency : Beirut Order of Engineers The file must be submitted to the Order of Engineers. The file should include the following: • A construction permit application signed by that same civil engineer or architect jointly with the real estate owner, • The design plans, • An agreement between the property owner and the architect or engineer responsible for the project described. In order to be submitted as part of the application for a building permit, the file must bear the seal and registration number of the relevant Order of Engineers. The Order of Engineers meets twice a week. 7 Submit building permit application to Urban Development Department 1 day no charge Agency : Urban Development Department, Directorat Général d'Urbanisme (DGU) BuildCo must submit the file described in the previous procedure to the Urban Development Department. The file is referred to the municipal engineering departments. The Urban Development Department is a subdivision of the Directorate General of Urbanism. Page 13 Doing Business 2020 Lebanon 8 Request and receive pre–approval inspection from Urban Development Department 40 days no charge Agency : Urban Development Department, Directorat Général d'Urbanisme (DGU) The Urban Development Department inspects the property and the plans to ensure that they are consistent with the construction laws and regulations, and then issues its clearance for the issuance of the building permit and calculates the building permit taxes. The inspection itself is completed in a day, but it takes a while from the date BuildCo requests the inspection until the date the inspector arrives. 9 Pay building permit taxes to the municipality 1 day LBP 9,748,390 Agency : Municipality The Urban Development Department refers the file to the relevant municipality (in the case of the city of Beirut, to the Administrator of the City of Beirut). The municipality collects the construction permit taxes and issues the construction permit in the name of the property owner. Payment is made at the municipality. 10 Obtain building permit 120 days no charge Agency : Municipality The average delay to obtain the building permit is 4 months. As per Section II of article 4 of Construction law (646/2004), approval or rejection must be given within no later than 6 months. Failure to issue approval or rejection within the above time limit, the concerned person has the right to present, within a 6 months' time period, a letter to the relevant agency, considering himself having been granted implicitly the permit. 11 Obtain starting order permit from Order of Engineers 3 days LBP 200,000 Agency : Beirut Order of Engineers To start construction the engineer and/or architect must pay the dossier fee according to the number of professionals involved in the construction work (civil engineer, mechanic engineer, electrical engineer, geotechnical engineer, among others). 12 Submit permit from Order of Engineers to the police 1 day no charge Agency : Police While this is not a requirement by law, in practice engineers submit a copy of the building permit to the police, informing them of the start of construction work. 13 Request and receive inspection from the Water of Beirut and Mount Lebanon for water 10 days no charge connection Agency : Water of Beirut and Mount Lebanon The Water of Beirut and Mount Lebanon agency will conduct an inspection for water connection Request and receive inspection from the Municipality of Beirut for sewage 10 days no charge 14 Agency : Municipality of Beirut While the inspection for water connection is done by the Water of Beirut and Mount Lebanon agency, the inspection for sewage connection is done by the Municipality of Beirut. Both inspections can be done simultaneously. 15 Submit application and receive approval for an occupancy permit from the Order of 4 days LBP 300,000 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. . 16 Submit application for an occupancy permit from the Directorate General of Urban 1 day no charge Planning (DGU) Agency : Urban Development Department, Directorate General of Urban Planning (DGU) Once construction has been completed, an application for approval of an occupancy permit must be submitted to the Urban Development Department. The Urban Development Department performs an on-site inspection of the building to ensure that it is in compliance with the construction permit and approved plans. The application for an occupancy permit must be accompanied by the plans related to the completed construction, signed by the engineer in charge, and stamped by the Order of Engineers. Following the clearance from the Urban Development Department, the file is forwarded to the relevant municipality (in the case of Beirut, to the Administrator of the City of Beirut) that will issue the occupancy permit in the name of the property owner. 17 Receive on-site inspection from the Directorate General of Urban Planning (DGU) 1 day no charge Agency : Urban Development Department, Directorate General of Urban Planning (DGU) After submitting the application of occupancy permit, the Directorate General of Urban Planning (DGU) will conduct a site inspection 18 Obtain occupancy permit 45 days LBP 25,000 Agency : Urban Development Department, Directorate General of Urban Planning (DGU) By law, the time limit for the procedure is 30 days, but in practice, it takes longer to obtain the occupancy permit Obtain water connection 14 days LBP 2,260,000 19 Agency : Water of Beirut and Mount Lebanon BuildCo submits an application and obtains water connection. Page 14 Doing Business 2020 Lebanon Obtain sewage connection 14 days USD 7,500 20 Agency : Municipality BuildCo submits an application and obtains the sewage connection 21 Receive onsite inspection from the Ministry of Finance and obtain estimate of leasing value 1 day LBP 5,000 of the warehouse Agency : Ministry of Finance Once the occupancy permit is issued, an inspector from the Ministry of Finance visits the site to prepare an estimate of the leasing value of the warehouse. This estimate is necessary to register the building. 22 Register the building with the Real Estate Registry 14 days LBP 6,687,578 Agency : Real Estate Registry BuildCo must register the buildiong with the Real Estate Registry. The fees will depend on the estimate of the building's leasing value prepared by the inspector from the Ministry of Finance. Takes place simultaneously with previous procedure. Page 15 Doing Business 2020 Lebanon Details – Dealing with Construction Permits in Lebanon – Measure of Quality Answer Score Building quality control index (0-15) 14.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 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 compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer; Private firm. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by 1.0 external engineer or firm; Unscheduled inspections; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency; Yes, external engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 2.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Professional in charge of the supervision; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 1.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance ; Owner or investor; Insurance is commonly taken in practice. Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans Minimum number of 2.0 or drawings are in compliance with existing building regulations? (0-2) years of experience; University degree in architecture or engineering; Being a registered architect or engineer. Page 16 Doing Business 2020 Lebanon What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 2.0 2) years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer. Page 17 Doing Business 2020 Lebanon Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final supply - Is a new construction and is being connected to electricity for the first time. - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts • Tools to monitor power outages (0–1) (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 18 Doing Business 2020 Lebanon Getting Electricity - Lebanon Standardized Connection Name of utility Electricité du Liban (EDL) Price of electricity (US cents per kWh) 13.0 City Covered Beirut Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 4 4.4 4.4 3 (28 Economies) Time (days) 89 63.5 74.8 18 (3 Economies) Cost (% of income per capita) 128.0 419.6 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 0 4.4 7.4 8 (26 Economies) Figure – Getting Electricity in Lebanon – Score 83.3 69.1 98.4 0.0 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Lebanon and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 91.8: Saudi Arabia (Rank: 18) 84.5: Turkey (Rank: 41) 80.5: Jordan (Rank: 69) 77.9: Egypt, Arab Rep. (Rank: 77) 72.4: Regional Average (Middle East & North Africa) 62.7: Lebanon (Rank: 127) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Lebanon – Procedure, Time and Cost Time (days) Cost (% of income per capita) 140 80 120 Cost (% of income per capita) 70 100 60 Time (days) 50 80 40 60 30 40 20 20 10 0 0 1 2 *3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 19 Doing Business 2020 Lebanon reflected here, see the summary below. Figure – Getting Electricity in Lebanon and comparator economies – Measure of Quality 7 6 6 6 5 5 Index score 5 4.4 4 3 2 1 0 0 Lebanon Egypt, Jordan Saudi Turkey Middle Arab Arabia East Rep. & North Africa Page 20 Doing Business 2020 Lebanon Details – Getting Electricity in Lebanon – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain neighbor's electricity bill (for address of closest building) 1 calendar day LBP 0 Agency : Neighbor The customer needs to obtain an electricity bill from their neighbor or the identification number of the neighbor’s meter box (showing the address of the closest building. This is needed when applying for electricity connection because it allows the electricity company, Electricité du Liban, locate the construction. 2 Submit application to EDL and await estimate 18 calendar days LBP 11,000 Agency : Electricité du Liban (EDL), Beirut The customer submits an application for electricity connection at Electricité du Liban’s offices. In addition to the application form, the client needs to submit: • copy of the title deed • copy of the ID card • the original building permit, and • electricity bill from the closest building (or meter box number) and its address 3 Receive external inspection by EDL 1 calendar day LBP 494,050.89 Agency : Electricité du Liban (EDL), Beirut The application is forwarded to the relevant department at the utility for review. A site inspection is usually carried out to determine the details of the connection. The inspector then prepares a report with the specifics of the connection and awaits clearance from the relevant authority at the utility. Once clearance is obtained and the inspector has prepared an estimate of the connection fees, the client will need to make the necessary payment at Electricité du Liban’s offices. The client is then given the approved file back along with a “C23” card (with the number of connections and the temporary meter, if needed). 4 Await and receive external works and meter installation from EDL’s service provider 70 calendar days LBP 14,907,000 Agency : Electricité du Liban (EDL), Beirut External works start after the client has paid the connection fees. For a connection of 3x200A, if the warehouse is less than 200 meters away from the closest distribution substation, the works will consist of laying out an underground cable from the building to that substation. Otherwise, a substation would be needed. Any permits needed for the works are obtained by the utility directly. The utility picks a contractor to do the external works, and possibly install the meter and turn the electricity on too. The utility however, always supervises the works. No inspection of the entire internal wiring is done during the process. Takes place simultaneously with previous procedure. Page 21 Doing Business 2020 Lebanon Details – Getting Electricity in Lebanon – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 0 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) .. System average interruption frequency index (SAIFI) .. What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A Mechanisms for monitoring outages (0-1) 0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 0 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? No Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? No Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.edl.gov.lb/page .php?pid=39&lang=en Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 22 Doing Business 2020 Lebanon Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. • Reliability of infrastructure index (0-8) - Has no occupants, and no other party holds a legal interest in it. • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 23 Doing Business 2020 Lebanon Registering Property - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 8 5.4 4.7 1 (5 Economies) Time (days) 37 26.6 23.6 1 (2 Economies) Cost (% of property value) 6.0 5.6 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 16.0 14.6 23.2 None in 2018/19 Figure – Registering Property in Lebanon – Score 41.7 82.8 59.9 53.3 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Lebanon and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 84.5: Saudi Arabia (Rank: 19) 81.6: Turkey (Rank: 27) 66.4: Jordan (Rank: 78) 63.4: Regional Average (Middle East & North Africa) 59.4: Lebanon (Rank: 110) 55.0: Egypt, Arab Rep. (Rank: 130) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 24 Doing Business 2020 Lebanon Figure – Registering Property in Lebanon – Procedure, Time and Cost Time (days) Cost (% of property value) 7 35 6 30 Cost (% of property value) 5 25 Time (days) 4 20 3 15 10 2 5 1 0 0 1 2 3 *4 5 6 7 8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 25 Doing Business 2020 Lebanon Figure – Registering Property in Lebanon and comparator economies – Measure of Quality 30 27.0 25 22.5 Index score 20 16.0 14.6 14.0 15 9.0 10 5 0 Lebanon Egypt, Jordan Saudi Turkey Middle Arab Arabia East Rep. & North Africa Details – Registering Property in Lebanon – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain a copy of the ownership deed from the Land Registry 1 day LBP 10,000 Agency : Land Registry The parties apply for a copy of ownership deeds. The deed details provide the location, number, and size of the plot, who is registered owner, whether there are any disputes over ownership or pending legal cases. Importantly there is a compulsory government order on the property or, for example, whether any roads are planned through the area. The procedure to obtain the Real Estate Certificate is a straight forward one which only requires submission of the request, and the certificate is immediately issued thereafter. Starting in 2016, there is a possibility to obtain the certificate online by going to http://www.lrc.gov.lb/en/content/viewing-title-register. 2 Obtain an official cadastral map and a location map of the property 1 day LBP 20,000 Agency : Cadastre Administration (Da'irat al Massaha) If the area is not specified in the real estate certificate and in the title deed, which is often the case, an official cadastral map and a location map of the property must be obtained from the cadastre administration (in Arabic “Dairat al Massaha”). 3 Obtain an urban plan certificate from the Urban Planning Authority and the Municipality 10 days LBP 6,000 Agency : Urban Planning Authority and Municipality Parties obtain an urban plan certificate from the Urban Planning Authority and the Municipality. This is not strictly required by the law, but it is usually requested by the buyer in order to make sure that no special easement or expropriation is planned on the property that he intends to purchase. 4 Obtain a Municipal Tax Clearance (Bara’et Zimma) 3 days LBP 8,000 Agency : Municipality Obtain clearance from the Municipality to make sure that municipal taxes prior to the sale agreement have been paid. This is not required by law, but it is usually requested by the buyer. 5 Preparation of the sale agreement by a lawyer 2 days LBP 1,500,000; (LBP Agency : Lawyer 1,500,000 (minimum set An attorney prepares the sale agreement on an official form. The participation of a lawyer is not by the Beirut Bar mandatory, but it is preferred to avoid any mistakes. The sale contract is often drafted by the Association)) notary public or by a qualified facilitator. However, for complex and delicate real estate transactions where either or both parties need to protect their rights, the contract is usually negotiated and drafted by both parties’ attorneys. The Beirut Bar Association on its decision of April 26th, 2012 has set a minimum fee of LBP 1,500,000 for the drafting of a contract. Such minimum fee shall be subject to an increase taking into consideration the contract's value and importance. 6 Obtain an official estimate of the property rental value from the Tax Authority 10 days LBP 5,000 Agency : Ministry of Finance An official estimate of the rental value of the property is requested together with a tax discharge (clearance). The Tax Authority at the Ministry of Finance orders an inspection of the property by a controller to obtain an official estimate of the rental value of the property. A copy of the sale agreement should be submitted to the Ministry of Finance to obtain the official estimate of the rental value. Page 26 Doing Business 2020 Lebanon 7 Apply for registration at the Land Registry 10 days LBP 34,701,000; ((i) Sale Agency : Land Registry transfer tax 5% + (ii) Flat The contract, together with the documentation, is presented, either a) directly to the Land Registry taxes (Deed fee 8,000; officer before whom the contract is signed and then the property is registered, or b) to the notary contract fee 8,000 seller public before whom the contract is signed and then both the contract and the documentation shall contract fee 8,000 buyer ) be presented to the Land Registry for registration of title. +(iii) New deed fee 50,000+ (iv) contract a) If it is presented to the Land Registry, all taxes and duties are paid at the tax authority cashier, which is located at the same building than the Land Registry. stamp fee 10,000 + (vi) The Contract is presented to the Assistant Land Registrar, then it will go through one or two Deed stamp fee 5 000 + officers before it reaches the Land Registrar who would: (vii) Municipality fee 5% (of (i)- either accept the contract if he/she agrees on the price that was set by the parties and finds the sale transfer tax + Flat that there are no irregularities in the documents, in which case the contract shall be immediately taxes) + (viii) Lawyers registered, and thereafter the new deed will be delivered to the buyer. syndicate fee 1 per (ii)- or refuse to register the contract until the price is amended (i.e. increased) or the irregularities thousand of the amount + in the documentation is rectified, in which case the Land Registrar’s request shall be satisfied and (ix) Stamp fee 4 per the contract is to be presented once again for review and acceptance. thousand of the amount) It is only when the Land Registrar approves the signed contract and accepts to record it that the title to the 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. All taxes and duties are paid directly at the notary public’s office, except for the stamp duty that is paid at the Ministry of Finance if its amount exceeds LBP 200,000 The documentation shall include: • Title deed, as proof of ownership (held by seller) • Real Estate Certificate (obtained in Procedure 1) • Official cadastral map and location certificate of the property (obtained in Procedure 2) • Official estimate of rental value of the property (obtained in Procedure 5) • Municipal tax clearance (obtained in Procedure 6) • Sale agreement (prepared in Procedure 7) 8 Update the property record at the Cadaster 3 days no charge Agency : Cadaster Once the registration at the land registry, the new owner must update the record at the Cadaster to reflect the new name. This is not yet done automatically. Takes place simultaneously with previous procedure. Page 27 Doing Business 2020 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 Type of land registration system in the economy: Deed Registration System What is the institution in charge of immovable property registration? Real Estate Registrar In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Fully digital 2.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional 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 past and newly issued cadastral plans kept at the mapping agency of the largest business Paper 0.0 city of the economy—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 cadastral information No 0.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Separate databases 0.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 3.0 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Anyone who pays the 1.0 in the largest business city? official fee Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: http://www.lrc.gov.lb/e n/content/required- documents Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property Yes, online 0.5 registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.lrc.gov.lb/e n/content/fees- simulation-0 Does the agency in charge of immovable property registration agency formally commit to deliver a legally No 0.0 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property No 0.0 registration agency? Number of property transfers in the largest business city in 2018: Who is able to consult maps of land plots in the largest business city? Anyone who pays the 0.5 official fee Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, on public boards 0.5 Link for online access: Page 28 Doing Business 2020 Lebanon Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and Yes, in person 0.0 if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 4.0 Are all privately held land plots in the largest business city formally registered at the immovable property Yes 2.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 5.0 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Code of Real Estate Ownership (1930) and the Article 11 of the Decision of Establishment the land registry Number 188 dated 15/3/1926 Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Legal basis: Code of Real Estate Ownership (1930) and the Article 13 of the Decision of Establishment the land registry Number 188 dated 15/3/1926 Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of government issued identity documents? Yes 1.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local Court of First businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located Instance of Beirut in the largest business city? ruling on real estate matters How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 2 and 3 1.0 appeal)? years Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Number of land disputes in the economy in 2018: Equal access to property rights index (-2–0) 0.0 Page 29 Doing Business 2020 Lebanon Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 30 Doing Business 2020 Lebanon Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of Credit registry coverage (% of adults) movable collateral. • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 31 Doing Business 2020 Lebanon Getting Credit - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Strength of legal rights index (0-12) 2 3.1 6.1 12 (5 Economies) Depth of credit information index (0-8) 6 5.3 6.8 8 (53 Economies) Credit registry coverage (% of adults) 21.3 15.8 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 0.0 16.3 66.7 100.0 (14 Economies) Figure – Getting Credit in Lebanon – Score 40.0 Score - Getting Credit Figure – Getting Credit in Lebanon and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 95.0: Jordan (Rank: 4) 75.0: Turkey (Rank: 37) 65.0: Egypt, Arab Rep. (Rank: 67) 60.0: Saudi Arabia (Rank: 80) 41.8: Regional Average (Middle East & North Africa) 40.0: Lebanon (Rank: 132) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 32 Doing Business 2020 Lebanon Figure – Legal Rights in Lebanon and comparator economies 12 11 10 Index Score 8 7 6 5 4 4 3.1 2 2 0 Lebanon Egypt, Jordan Saudi Turkey Middle Arab Arabia East Rep. & North Africa Page 33 Doing Business 2020 Lebanon Details – Legal Rights in Lebanon Strength of legal rights index (0-12) 2 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No 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 requiring a specific description No of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the No original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an No electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell No 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 9 8 8 8 8 8 Index Score 7 6 6 5.3 5 4 3 2 1 0 Lebanon Egypt, Jordan Saudi Turkey Middle Arab Arabia East Rep. & North Africa Page 34 Doing Business 2020 Lebanon Details – Credit Information in Lebanon Depth of credit information index (0-8) Credit bureau Credit 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 No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? No Yes 1 By law, do borrowers have the right to access their data in the credit bureau or No Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online No Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? 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 0 973,912 Number of firms 0 27,259 Total 0 1,001,171 Percentage of adult population 0.0 21.3 Page 35 Doing Business 2020 Lebanon Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James • Ease of shareholder suits index (0–10): Access to internal appointed 60% of the shareholder-elected members. corporate documents; Evidence obtainable during trial and - Has not adopted bylaws or articles of association that go beyond the minimum requirements. allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures • Extent of shareholder governance index (0–20): Sum of the made—that is, the transaction was not entered into fraudulently. extent of shareholders rights, extent of ownership and control - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and and extent of corporate transparency indices directors that approved the transaction. • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 36 Doing Business 2020 Lebanon Protecting Minority Investors - Lebanon Stock exchange information Stock exchange Beirut Stock Exchange Stock exchange URL http://www.bse.com.lb Listed firms with equity securities 10 City Covered Beirut Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Extent of disclosure index (0-10) 9.0 6.4 6.5 10 (13 Economies) Extent of director liability index (0-10) 1.0 4.8 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 5.0 4.7 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 3.0 3.2 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 1.0 3.6 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 3.0 3.5 5.7 7 (13 Economies) Figure – Protecting Minority in Lebanon – Score 44.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Lebanon and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 86.0: Saudi Arabia (Rank: 3) 76.0: Turkey (Rank: 21) 64.0: Egypt, Arab Rep. (Rank: 57) 51.9: Regional Average (Middle East & North Africa) 50.0: Jordan (Rank: 105) 44.0: Lebanon (Rank: 114) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 37 Doing Business 2020 Lebanon Figure – Protecting Minority Investors in Lebanon and comparator economies – Measure of Quality Lebanon 3 1 9 1 3 5 Egypt, Arab Rep. 6 3 8 6 6 3 Jordan 6 4 4 6 2 3 Saudi Arabia 7 9 9 6 5 7 Turkey 6 5 9 6 6 6 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 Middle East & North Africa 3.5 4.8 6.4 3.6 3.2 4.7 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 38 Doing Business 2020 Lebanon Details – Protecting Minority Investors in Lebanon – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 9.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) Yes 1.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Existence of a conflict 1.0 without any specifics Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 1.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Not liable 0.0 Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Not liable 0.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) No 0.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of fraud 0.0 or bad faith Ease of shareholder suits index (0-10) 5.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) No 0.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 3.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? No 0.0 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 shares? No 0.0 Do shareholders elect and dismiss the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 1.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Page 39 Doing Business 2020 Lebanon Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? No 0.0 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 Extent of corporate transparency index (0-7) 3.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and directorships in other No 0.0 companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? No 0.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 40 Doing Business 2020 Lebanon Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the • Collecting information, computing tax payable second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, • Social contributions, labor taxes paid by employer sales and the machine and the tax reporting period is every month. Input VAT will exceed Output VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 41 Doing Business 2020 Lebanon Paying Taxes - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Payments (number per year) 20 16.5 10.3 3 (2 Economies) Time (hours per year) 181 202.6 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 32.2 32.5 39.9 26.1 (33 Economies) Postfiling index (0-100) 27.5 53.3 86.7 None in 2018/19 Figure – Paying Taxes in Lebanon – Score 71.7 79.6 91.4 27.5 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Lebanon and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 86.6: Turkey (Rank: 26) 80.5: Saudi Arabia (Rank: 57) 78.7: Jordan (Rank: 62) 75.1: Regional Average (Middle East & North Africa) 67.5: Lebanon (Rank: 116) 55.1: Egypt, Arab Rep. (Rank: 156) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 42 Doing Business 2020 Lebanon Figure – Paying Taxes in Lebanon and comparator economies – Measure of Quality 120 100 100 Index score 80 60 53.3 36.3 35.7 32.2 40 27.5 20 0 Lebanon Egypt, Jordan Saudi Turkey Middle Arab Arabia East Rep. & North Africa Page 43 Doing Business 2020 Lebanon Details – Paying Taxes in Lebanon Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Social security 12.0 100.0 22.5% gross salaries 24.88 contributions Corporate 1.0 40.0 17% taxable profit 6.17 income tax Capital gains tax 0.0 jointly 15% capital gains 0.76 Municipality tax 1.0 8.5% property value 0.41 Value added tax 4.0 41.0 11% value added 0.00 not included (VAT) Vehicle tax 1.0 various rates 0.00 small amount Social security 0.0 jointly 3% gross salaries 0.00 withheld contributions on employee Stamp duty 1.0 0.4% contract value 0.00 small amount Totals 20 181 32.2 Page 44 Doing Business 2020 Lebanon Details – Paying Taxes in Lebanon – Tax by Type Taxes by type Answer Profit tax (% of profit) 6.9 Labor tax and contributions (% of profit) 24.9 Other taxes (% of profit) 0.4 Page 45 Doing Business 2020 Lebanon Details – Paying Taxes in Lebanon – Measure of Quality Answer Score Postfiling index (0-100) 27.5 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 6.0 Time to obtain VAT refund (weeks) 44.0 21.9 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 25% - 49% Time to comply with a corporate income tax correction (hours) 23.0 60.6 Time to complete a corporate income tax correction (weeks) 25.1 21.4 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 46 Doing Business 2020 Lebanon Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about • Inspections by other agencies (if applied to more than 20% of exchange rates. shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 47 Doing Business 2020 Lebanon Trading across Borders - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Time to export: Border compliance (hours) 96 52.5 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 480 441.8 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 48 66.4 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 100 240.7 33.4 0 (20 Economies) Time to import: Border compliance (hours) 180 94.2 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 790 512.5 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 72 72.5 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 135 262.6 23.5 0 (30 Economies) Figure – Trading across Borders in Lebanon – Score 40.3 54.7 72.2 75.0 35.8 34.2 70.3 80.7 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Lebanon and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 91.6: Turkey (Rank: 44) 79.0: Jordan (Rank: 75) 76.0: Saudi Arabia (Rank: 86) 61.8: Regional Average (Middle East & North Africa) 57.9: Lebanon (Rank: 153) 42.2: Egypt, Arab Rep. (Rank: 171) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 48 Doing Business 2020 Lebanon Figure – Trading across Borders in Lebanon – Time and Cost Time (hours) Cost (USD) 200 180 900 790 800 150 700 Time (hours) Cost (USD) 600 480 96 500 100 72 400 48 300 50 135 200 100 100 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 49 Doing Business 2020 Lebanon Details – Trading across Borders in Lebanon Characteristics Export Import Product HS 85 : Electrical machinery and equipment and HS 8708: Parts and accessories of motor vehicles parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Trade partner United Arab Emirates Germany Border Beirut port Beirut port Distance (km) 14 14 Domestic transport time (hours) 3 2 Domestic transport cost (USD) 250 250 Details – Trading across Borders in Lebanon – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 48.0 300.0 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 96.0 180.0 Import: Clearance and inspections required by 84.0 300.0 customs authorities Import: Clearance and inspections required by 84.0 165.0 agencies other than customs Import: Port or border handling 180.0 325.0 Page 50 Doing Business 2020 Lebanon Details – Trading across Borders in Lebanon – Trade Documents Export Import Bill of lading Bill of lading Commercial invoice Commercial invoice Customs export declaration Customs import declaration Packing list Packing list Customs inspection report Certificate of origin SOLAS certificate Cargo release order/Exit permit Certificate of origin Technical standards certificate SOLAS certificate Delivery order Page 51 Doing Business 2020 Lebanon Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. Page 52 Doing Business 2020 Lebanon Enforcing Contracts - Lebanon Standardized Case Claim value LBP 25,734,102 Court name Sole judge hearing commercial matters at the Beirut First Instance Tribunal City Covered Beirut Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Time (days) 721 622.0 589.6 120 (Singapore) Cost (% of claim value) 30.8 24.7 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 6.5 6.6 11.7 None in 2018/19 Figure – Enforcing Contracts in Lebanon – Score 50.7 65.5 36.1 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Lebanon and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 71.4: Turkey (Rank: 24) 65.3: Saudi Arabia (Rank: 51) 56.0: Regional Average (Middle East & North Africa) 55.6: Jordan (Rank: 110) 50.8: Lebanon (Rank: 131) 40.0: Egypt, Arab Rep. (Rank: 166) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 53 Doing Business 2020 Lebanon Figure – Enforcing Contracts in Lebanon – Time and Cost Time (days) Cost (% of claim value) Cost (% of claim value) 1200 31.2 35 1010 30.8 1000 26.2 27.5 30 24.7 24.9 Time (days) 21.5 25 800 721 642 622.0 623 20 589.6 575 600 15 400 10 200 5 0 0 Egypt, Jordan Lebanon Middle OECD Saudi Turkey Arab East high Arabia Rep. & income North Africa Page 54 Doing Business 2020 Lebanon Figure – Enforcing Contracts in Lebanon and comparator economies – Measure of Quality Lebanon 2 0.5 0 4 Egypt, Arab Rep. 2 0 2 Jordan 3 2 1 2 Saudi Arabia 2 3.5 2 4 Turkey 2.5 5 4 3.5 OECD high income 2.5 3.2 2.4 3.6 Middle East & North Africa 2.2 1.1 0.5 2.9 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Lebanon Indicator Time (days) 721 Filing and service 15 Trial and judgment 556 Enforcement of judgment 150 Cost (% of claim value) 30.8 Attorney fees 24.8 Court fees 3 Enforcement fees 3 Quality of judicial processes index (0-18) 6.5 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) 2.0 Page 55 Doing Business 2020 Lebanon Details – Enforcing Contracts in Lebanon – Measure of Quality Answer Score Quality of judicial processes index (0-18) 6.5 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 granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) No 0.0 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 competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0 Court automation (0-4) 0.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 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 general public No through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made No available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.0 1. Arbitration 1.0 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes 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 order or public policy— Yes that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 56 Doing Business 2020 Lebanon 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 57 Doing Business 2020 Lebanon Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 58 Doing Business 2020 Lebanon Resolving Insolvency - Lebanon Indicator Lebanon Middle East & OECD high Best Regulatory North Africa income Performance Recovery rate (cents on the dollar) 30.8 27.3 70.2 92.9 (Norway) Time (years) 3.0 2.7 1.7 0.4 (Ireland) Cost (% of estate) 15.0 14.0 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. .. Strength of insolvency framework index (0-16) 4.0 6.3 11.9 None in 2018/19 Figure – Resolving Insolvency in Lebanon – Score 33.2 25.0 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Lebanon and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 42.2: Egypt, Arab Rep. (Rank: 104) 39.7: Jordan (Rank: 112) 38.5: Turkey (Rank: 120) 34.5: Regional Average (Middle East & North Africa) 29.1: Lebanon (Rank: 151) 0.0: Saudi Arabia (Rank: 168) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 59 Doing Business 2020 Lebanon Figure – Resolving Insolvency in Lebanon – Time and Cost Time (years) Cost (% of estate) 6 25 22.0 5.0 Cost (% of estate) 5 20.0 20 Time (years) 4 15.0 14.0 14.5 3.0 3.0 15 3 2.5 2.7 9.3 10 2 1.7 1 5 0 0 Egypt, Jordan Lebanon Middle OECD No Turkey Arab East high Practice Rep. & income Saudi North Arabia Africa Page 60 Doing Business 2020 Lebanon Figure – Resolving Insolvency in Lebanon and comparator economies – Measure of Quality Lebanon 2 2 0 Egypt, Arab Rep. 4 2.5 2 1 Jordan 4 2.5 1 0.5 Saudi Arabia 3.5 3 2 2 Turkey 3 3 3 1.5 OECD high income 5.3 2.8 2.1 1.9 Middle East & North Africa 3.7 2.3 1.3 0.6 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Lebanon and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 35 30.8 30 27.3 27.3 25 23.3 20 15 10.5 10 5 0 No Practice Lebanon Egypt, Arab Rep. Jordan Saudi Arabia Turkey Middle East & North Africa Page 61 Doing Business 2020 Lebanon Details – Resolving Insolvency in Lebanon Indicator Answer Score Proceeding foreclosure BizBank will initiate foreclosure proceedings (saisie exécutoire), because it is faster and less costly than liquidation proceedings and allows BizBank to obtain the totality of its dues independently of other debtors. If Mirage management or other creditors commence insolvency proceedings, BizBank's enforcement claim will not be affected, except that a syndic may be appointed, who will represent the debtor in foreclosure proceedings. Outcome piecemeal sale The hotel is not likely to continue operating at the end of the foreclosure proceedings as the assets will be sold during BizBank's enforcement proceedings. Time (in years) 3.0 BizBank will file for "saisie exécutoire", which normally involves a simple enforcement of security right without review of the merits. However, it is likely that hotel management will try to dispute the validity of BizBank's security, which means that the proceedings will become more complex and will take longer than straightforward enforcement proceedings. After disputes over the validity of the debt are settled, the court will issue an execution order, which will be enforced by court clerks (huissiers), who will seize and attach the assets secured by the loan agreement. Prior to selling the assets in a public auction, the public auction is published in newspapers. Cost (% of estate) 15.0 Main expenses will include attorneys' fees (5-10%) and court fees, including the cost of 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 30.8 (cents on the dollar) Page 62 Doing Business 2020 Lebanon Details – Resolving Insolvency in Lebanon – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 4.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (b) Debtor may file for 0.5 liquidation only Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (a) Debtor is 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value generally unable to of its assets pay its debts as they mature Management of debtor's assets index (0-6) 2.0 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the No 0.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? No 0.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of No 0.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.0 Which creditors vote on the proposed reorganization plan? N/A 0.0 Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote No 0.0 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 appointment of the insolvency No 0.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting No 0.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 63 Doing Business 2020 Lebanon Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 64 Doing Business 2020 Lebanon Employing Workers - Lebanon Details – Employing Workers in Lebanon Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) 24.0 Maximum length of fixed-term contracts, including renewals (months) 24.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 431.2 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 Restrictions on weekly holiday? No Restrictions on overtime work? Yes Paid annual leave for a worker with 1 year of tenure (working days) 15.0 Paid annual leave for a worker with 5 years of tenure (working days) 15.0 Paid annual leave for a worker with 10 years of tenure (working days) 15.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 15.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 8.7 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 13.0 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 8.7 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 0.0 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 0.0 Page 65 Doing Business 2020 Lebanon Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 0.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 0.0 Unemployment protection after one year of employment? No Page 66 Doing Business 2020 Lebanon Business Reforms in Lebanon From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2020 Enforcing Contracts: Lebanon made enforcing contracts easier by adopting a law that regulates all aspects of mediation as an alternative dispute resolution mechanism. DB2016 Registering Property: Lebanon made transferring property more complex by increasing the time required for property registration. DB2012 Getting Electricity: Lebanon made getting electricity less costly by reducing the application fees and security deposit for a new connection. DB2011 Starting a Business: Lebanon increased the cost of starting a business. Getting Credit: Lebanon improved its credit information system by allowing banks online access to the public credit registry’s reports. DB2010 Starting a Business: Lebanon made starting a business easier by eliminating the requirement to have company books stamped—though it also made it more difficult by reversing a previous reform combining tax and company registration at LibanPost. Paying Taxes: Lebanon made paying taxes easier for companies by eliminating the requirement to obtain permission to use accelerated depreciation and by introducing electronic payment. DB2009 Starting a Business: Lebanon reduced the time required to start a business by streamlining the business registration process. Page 67 Doing Business 2020 Lebanon Page 68