For starters, you will need to get your tax identification number to avoid a 7.5% fee on your earnings (if the company you are working for takes their accounting seriously). Yes, you do have options to do things under the table (this is Lebanon after all!), but if you are serious about being able to grow your services into a full-fledged business (like me), you will need to do things the right way.
I recently went to get my tax identification number so that I can start doing some contract work in my field of Web Development and Agile Consulting. I worked as a consultant for 3 years in the US as part of a small consultancy called OpenSource Connections, before starting work on Jogabo (you can take a look at my past experiences here). But now that I am in Lebanon, I am starting to give workshops (eg. Best Practices Workshop) and trying to get some consulting work done.
So, as a freelancer or contractor what do you have to do to be able to bill for your work, legally? I asked a couple of friends who are in the same field as I am to get an idea what I’m up against. These two friends are people who have already gone through the process themselves. So theoretically they should have valid and valuable information.
Friend number 1 had done this outside of Beirut, since that’s where his residence is, so when I asked him he said the following:
- Go to the Ministry of Finance office in DT
- Take take a copy of your ID
- Take a copy of your diploma
- Take a “tasemo7″ signed by your father saying he gives you permission to use the apartment he is renting as your location of work. And that this could not get us in trouble with the landlord and that we would not be evicted (important, since we still have an old lease)
- Fill 2 forms they will give you there, it will only cost you LL2,000 the cost of a stamp
Friend number 2 had done this in order to become part of the Engineering Syndicate in Lebanon, he told me the following:
- Go the Ministry of Finance office next to Jiser el Naher, after Mat7af, next to el 3adliyeh (Ministry of Justice), the one in DT is actually the office of the minister. According to your profession, they will tell you what to paperwork you need
So I called my father asking him to prepare the paper for the lease. He objected saying that this would cause us big trouble with the landlord and that he would ask a Moukhtar (local notary) friend of ours about this. My dad then called back saying he had talked to another friend who works at the Ministry of Finance and that he got the required documents.
I decided to have my father come with me, just in case we were asked about some paperwork related to the lease or whatnot, he’d be there ready to answer. We gathered all paperwork we thought we might need, according to 3 different sources. Of course, the third source had told us that we had to go the ministry’s offices on Bechara El Khoury (neither one of the other locations I was told about by my friends). Here’s what I had with me:
- My ID and a photocopy
- My father’s ID and a photocopy
- A photocopy of my diploma notarized by a notary public in Virginia (where I got my diploma)
- A photocopy of my diploma notarized by a notary public, signed by the Virginia Commonwealth and the Ministry of Interior of the US government
- A recent lease agreement in my father’s name, with a photocopy
- A signed “tasemo7″, nautorized by the Moukhtar
- Myself and my father
We were taking no prisoners
We get there. Again, the offices on Bechara El Khoury, before Sodeco, the building on the island separating the two ways going to and coming from the Downtown. Go up to the first floor. Enter the first office on the right. “Saba7o”, “Ahla”. “Mishein el ra2em el meleh”, “eh hon, tfaddal”. Great! We were in the right spot. That’s achievement number 1. We get our turn, we ask what we need to do. The guy asks me immediately: are you an Engineer (“Mhandis”), or a Doctor? Limited choices, right? My father immediately answers “Engineer,” proudly, before I get to give my answer. The guy immediately said that I have to be part of the Syndicate of Engineers to apply for the my tax number. Now, my dad gave the correct answer, but not the appropriate answer. See, I do have a computer engineering degree. Except that my 4 year degree from the US, no matter how much more advanced it might be, is still only a 4 year degree and does not qualify me to be part of the syndicate, since their requirements are a 5 year degree (because that’s how long it takes at the Lebanese University). So I cut in and said that I want to work as a Web Developer, not as an Engineer. That seemed to solve everything.
So, we asked again, what do we need? He got 2 forms for us: the M10 and the M11. Told us that we need to fill them out. Have a copy of my ID. Then he asked what’s our living situation, do we own or rent and is the rent old or new. When we said we rent and it’s an old rent, he told us that all we need is a copy of the receipt of a recent tax payment on the rental and a copy of the rental agreement. That was it! BUT… that was the one thing we didn’t bring! Oh, the irony!
No problem. We filled out the forms. Went back home. Got the proper paper. Came back. Gave it to the guy who we talked to. He circled some things, signed the papers and told us to go have the papers signed by another guy in the same office. That person then looked over the papers, circled something else, signed them and then told us to go to the window outside the office and give them the paperwork. We went there, gave the women the paperwork, she typed the data into her computer and then passed the papers to the guy sitting next to her. I just did a simple slide to the right (now clap your hands!), that guy also signed some things, filed something in this HUGE book he had in front of him, gave us a paper which was the equivalent of a receipt saying the paperwork was filed and told us to come back in 2 days for pick up.
Typical Lebanese procedures. You ask 3 different people what needs to be done, you get 3 different answers. In fact, when we got there, we saw signs all over the wall saying that a “tasemo7″ will not be accepted for a lease, only from the owner of the apartment. At that point we thought we were screwed. But even one of the employees was on the phone talking to her boss asking about this policy to check. Of course I did try to look for information on the ministry’s website but it had no relevant information. Your best bet is always to go there, put on a good smile with a nice “saba7o”, maybe even wear bright colors (I was wearing an orange UVA hoodie) and hope the person you’re dealing with had his chill pill
But in case you were wondering, and you want to be a web development freelancer, here’s what I had to have:
- A copy of my ID
- A copy of the lease
- A copy of a recent tax receipt on the payment of the lease
- Forms M10 and M11 (very basic, name and address and signature) that you get from there
Four business days later (they said two, but I gave them a grace period), I went back to same place for the pickup. I brought the application receipt they had given me on the first day, a copy of my ID and a 1,000L.L. stamp, and I received my company registration certificate:
That’s it! It seems like a complicated process, it may deter many from even trying, yet it’s very simple and straight forward. Surprising for a bureaucratic country like Lebanon, right?
BONUS 1: the process is the same if you’re a business consultant (or marketing, or designer, etc)
BONUS 2: if you own the house or apartment, you only need a copy of the deed, even if it’s owned by one of your parents, and you do not need an authorization paper (“tasemo7″)
N.B.: bring all orignal documents with you for authenticity verification purposes (you’ll only submit the copy though)
As for foreigners, my understanding is that for you to work in Lebanon, you have to have a work permit and that work permit has to be sponsored by your employer. But for freelancing gigs, you will be forced to take the 7.5% deduction since you will not be paying taxes in Lebanon, instead you’ll be paying your taxes back in your home country.