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The Law #66 (Budget 2017) was published in the Official Gazette #52 dated 7th November 2017 (attached a scanned copy) and includes some major tax amendments and discounts that we hereby summarize:
- Article 40: Extension period for tax objections on past due tax adjustments made by the Ministry of Finance. Any taxpayer, who has been notified by the Ministry of Finance (MoF) of a tax adjustment since the 1st January 2009 and who didn’t pay all the due taxes and penalties till the 7th November 2017 or didn’t objected the tax adjustment within the legal period of 2 months according to the Law #44/2008 (Law on the tax procedures) or has objected the tax adjustment within the legal period but his tax objection was refused in its form by the MoF or by the tax claim committee, has the ability to submit a new tax objection to the MoF or the tax claim committee before the 8th January 2018, if he settles 25% of the due taxes and penalties before submitting his new tax objection.
- Article 41: Transformation of legal entities (e.g. from a partnership or SARL to SAL) are free of any tax should the transformation be done at the par value of the shares and the shareholding structure remains the same (i.e. no transfer of shares and no change in the number or % of shares) within a period two years from the transformation date. Any change in the shareholding structure within the period of two years from the transformation date will subject the company to a revaluation of its shares (i.e. valuation of its Goodwill) and to a capital gain tax of 15% on the revaluation variance plus penalties.
- Article 43: Tax discount of 85% on the delay declaration and payment penalties for any tax infringement that occurred before this law was published at the condition of settling their taxes and the discounted penalties within 6 months from the date this law was published (before the 7th May 2018). Moreover, the taxpayers who have multiple employers and who didn’t declare and pay the difference in their income tax according to the specific tax form (i.e. R8) are exempted of any delay declaration and payment penalties for the years up to 2016 at the condition of declaring (i.e. file their R8 forms) and pay the related taxes within 3 months from the date this law was published (before the 7th February 2018).
- Articles 45 & 46: Tax discount of 90% on the penalties related to the Car Mechanic fees and the Municipality tax if these fees or taxes and the discounted penalties are paid before end of February 2018.
- Article 49: an Exceptional Revaluation of Fixed Assets is allowed for one time only to any taxpayer (companies and establishments) except the real estate companies (i.e. companies holding properties available for sale in their current assets) within a period of 12 months from the date this law was published (before the 7th November 2018). The purpose of this exceptional revaluation that covers any kind of fixed asset (lands, buildings, machineries, shares in other companies, etc…) is to adjust their book values to their fair market values. These fixed assets should be recorded in the books of the taxpayer before the 1st January 2016 at the condition that its revaluated value should not exceed its market value as at 31 December 2015. This revaluation can be done by any certified accountant or sworn expert of the taxpayer’s choice. The revaluation variance resulting from this exceptional revaluation is subject to 5% tax and should be paid together with a request for approval from the Ministry of Finance who has the right to refuse this revaluation. Taxpayers who benefit or used to benefit from an income tax exemption are not allowed to undertake such exceptional revaluation of their fixed assets. If the taxpayer disposes part or all the revaluated fixed asset within a period of 3 years from the revaluation date, this disposal is subject to the 15% capital gain tax on the difference between the selling price and the net book value of the fixed asset before revaluation.
- Article 50: Amendment of the Value Added Tax (VAT) Law to reduce the turnover threshold that entitles a taxpayer to registered for VAT from LBP 150 million to LBP 100 million over a period of one to 4 consecutive quarters. Thus, all businesses subject to VAT with a turnover in excess of LBP 100 million over a period of one to 4 consecutive quarters must register for VAT. Moreover, any importer or exporter should also register for VAT whatever is the level of his turnover. It is worth noting that the calculation of this threshold by the Ministry of Finance will be based on the past quarters of the year 2017 to define those who should register for VAT starting form the first quarter of the year 2018 including the importers and exporters who would have done at least one import or export transaction in 2017. The optional VAT registration has now on a threshold of LBP 50 million (minimum) over a period of one to 4 consecutive quarters. No optional registration for VAT will be accepted below this threshold.
This Law also includes some important amendments on the succession tax such as the increase of the tax rebate by individual for the calculation of the succession tax from LBP 40 million to LBP 120 million (Article 55), limitation to the year 1994 for any succession tax control or adjustment on the previous years (Article 53) among other amendments on the tax Law and procedures.