On the Difficulties of Doing Business in Lebanon

The journey to company creation and establishing operations in Lebanon is known to quickly become an odyssey that takes entrepreneurship on a forced ride into the mazes of Lebanese administration and related work arounds that are sometimes situated at the fringe of legality.

From the very first day, one can notice the multiplicity of stakeholders and public offices that have a role to play in the formation of a company. You can always rely on a good lawyer to guide you through and give the proper advice on how to avoid future repercussions on any decision taken during the creation of the company. Dealing with the commercial register, National Social Security Fund, Ministry of Finance and VAT can thus be centralized at the level of an efficient tandem created with a legal advisor and a financial auditor.

In the process, other professions will benefit from your thrive to establish a company such as the notary public, the local “Mokhtar” or even the municipality in some cases.

Choosing the right type of company

Will it be an SARL, an SAL, or a Holding ? Well it depends on your future needs. An SARL for example is not appropriate for future fundraising as this type of company can’t be used to issue new shares which is not compatible with the system and methods venture capitalist funds use under regulation 331 from the Lebanese Central Bank (BDL).

A Holding , however, will not be able to issue invoices for clients within the Lebanese territory and an S.A.L will observe high taxation rate on income.

Experienced lawyers would better explain the pros and cons of each one…if you dare to ask.

Handling operations

Have you ever tried to import some technical hardware? I hope you didn’t and that you wisely rely on your local multimedia vendor. The simple act of importing Wi-Fi access points becomes a national security issue that requires not only the approval of the Telecommunications Ministry, but also the approval of the Ministry of Defense because it’s a “wireless” device and in Arabic wireless translates to “la selki” and this category of hardware falls under the scope of military material.

When you go through this kind of hassle while setting up your company and have to cope with the most expensive and least efficient internet bundles– it’s hard to keep your head in the cloud and think of innovative ways to manage your business.

Interacting with the Administration

There are certain cases where you will have to discuss with Public Officers working on your file and you may even have to visit the offices to complete a certain procedure. Get prepared as you will be tempted to fall in the trap of corruption very easily for there will always be a problem with your files until you do the same move that everybody advised you to do from the very beginning…persistence is key if you do not want to do that.

Some of these administrations may accommodate for online interaction like the Ministry of Finance, but there is one place in particular where you’d wish you have never been to: The Commercial Registry.

Accessible through the Ministry of Justice, the Commercial Registry is a public office where you have to carefully maneuver around and identify the right person who can help you get your company files copied. Most importantly, this exact person will help you put it back in place in this gloomy hangar place where company files can easily go missing forever.

There are numerous other stories that entrepreneurs in Lebanon can tell to show the difficulties faced on a daily basis, and this shouldn’t go on if we are expected to nurture a generation of entrepreneurs destined to establish a solid knowledge economy with technology at its core.

Share your story with us as we commit to establish a full report of the major issues faced by Lebanon’s entrepreneurs.