Libya Ties Companies' Foreign Currency Ceiling to Economic Activity

Libya's Ministry of Economy and Trade, under the Government of National Unity, has approved a new mechanism to regulate the ceiling on companies' external commercial transactions, linking the value of documentary credits and foreign transfers to a firm's actual economic activity and its contribution to production and employment.

Under the mechanism, the annual ceiling for external transactions is set at 30 times the average income tax paid over the past three years, plus 10 times the average payroll and wages tax paid over the same period. Companies must also demonstrate continued, regular business activity to qualify.

The ministry said the measure is intended to improve the allocation of foreign currency, strengthen tax compliance and disclosure, and limit the ability of inactive or paper companies to access foreign exchange, according to a ministry statement.