Consultant Atkins is planning to open an office in Libya by next summer.
The firm, which is Britain’s biggest consultant, had a permanent office in the country in the 1980s. It closed this after the breakdown in relations between the Gadaffi regime and the UK in the middle of the decade.
Atkins began its rapprochement with Libya two years ago, after the political situation eased, and it began to find work with clients such as the Libyan Football Federation.
The firm hopes that the establishment of an office will enable it to expand its turnover beyond the £1m it has achieved in the country so far.
Two other UK consultants, Mott MacDonald and architect LCE Archimed, are undertaking work in the country. Contractor Laing O’Rourke, US engineering group Halliburton and support services firm Interserve attended a conference in Tripoli last month that looked at opportunities in the country.
The Libyan market is likely to provide challenges to UK firms. One particular problem is the country’s tax system, which assesses foreign firms on turnover rather than profit. The tax authorities then issue a tax demand based on a standard rate for the industry.
As a consultant, Atkins is likely to be taxed on 35% of its turnover – more than its probable profit margin. The tax begins at 15% on the first 200,000 dinars of profit to 40% on anything more than 2 million dinars.
Another problem is likely to be the increasingly competitive nature of the market. Mediterranean contractor J&P is believed to be cutting its workforce in Libya from 4000 to fewer than 3000 as a result of an influx of Chinese firms.