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05 August 2025

Libya cancels Jihad Tax, in place since 1970

  • The Libyan Minister of Finance officially canceled the Jihad Tax on 14 July 2025, following a court ruling declaring it unconstitutional.
  • The cancellation is effective immediately from the date of the Minister's directive, which means it applies to all taxpayers from 14 July 2025 onward.
  • Taxpayers previously subject to the Jihad Tax are no longer required to include it in their tax filings or comply with any related obligations.
  • Affected entities should reassess any outstanding assessments or payments associated with the Jihad Tax in light of its cancellation.
 

Executive summary

The Libyan Tax Authority (LTA) has officially communicated that the Jihad Tax is canceled, in accordance with a directive by the Minister of Finance (No. 380/33 6 M, dated 14 July 2025), which references a pertinent Higher Courtruling on the matter. The LTA announced that the cancellation of the Jihad Tax was communicated on 16 July 2025 in a circular issued to the directors of the tax offices across Libya. The cancellation takes effect on 14 July 2025 (the date the Minister of Finance's directive was issued) and applies prospectively to all taxpayers previously subject to the Jihad Tax.

Detailed discussion

The Jihad Tax was introduced under Law No. 44 of 1970 as a national contribution levy to support defense-related activities. The tax applied to Libyan companies and branches of companies operating in Libya at a rate of 4% of their profits, and to employment income at a rate of 3% for salaries exceeding one hundred (100) Libyan dinars (LYD) (e.g., LYD100 equals approximately €15.85). Recently, the application of the Jihad Tax has become largely procedural with growing debate over its legal validity.

On 3 February 2025, the Constitutional Department of the Higher Court issued a ruling declaring Law No. 44 of 1970 unconstitutional. The Minister of Finance's directive comes in the context of this ruling, formally abolishing the Jihad Tax and eliminating any remaining obligations to assess, remit or report it.

Implications

Effective 14 July 2025, taxpayers who have been subject to the Jihad Tax are no longer required to include the Jihad Tax in their tax filings. Any outstanding assessments, payments or compliance matters related to the Jihad Tax should be reassessed in accordance with its cancellation.

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Contact Information

For additional information concerning this Alert, please contact:

Al Mutadaminon for Accounting & Auditing and Financial & Administrative Services LLC, Tripoli, Libya

Ernst & Young LLP (United States), Middle East Tax Desk, New York

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2025-1651

 

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