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MoF decision #5-1 dated 3 Jan 2025-Obligation of online tax declaration for individual taxpayers

MoF Decision No. 228/1 dated 22/06/2020 relating to the installment for payment of taxes withheld at source and value added tax (VAT).

Posted on Monday July 13th, 2020 by citylog

The Minister of Finance, has issued the here below Decision No. 228/1 dated 22/06/2020 published in the Official Gazette No. 28 dated 02/07/2020 (here below), relating to the installment for payment of taxes withheld at source and value added tax (VAT) due to taxpayers until 31/12/2018 in addition to the due fines and penalties. According to the said Decision, the first installment should represent at least 15% of the due taxes and the installment period should not exceed three (3) years.

Thus, the taxpayer is entitled to submit a tax installment request to the tax authorities, provided however that the value of the amount to be installed shall be greater than /1.000.000/LBP (One Million Lebanese Pounds) for individuals and individual enterprises and /3.000.000/LBP (Three Million Lebanese Pounds) for companies and thus, until 05/09/2020. In case of a failure to pay an installment, all the installments with their interest will be due in addition to a fine (late interest) of 12%.

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MoF Decision No. 208/1 dated 15/06/2020 relating to the implementing provisions of article 42 of the Law No. 144 dated 31/07/2019 (Budget Law 2019) relating to the cancellation of commercial companies and enterprise from the trade register as well as civil companies from the special register of civil companies

Posted on Monday July 13th, 2020 by citylog

The Minister of Finance, has issued the here below Decision No. 208/1 dated 15/06/2020 published in the Official Gazette No. 26 dated 18/06/2020 defining the implementing provisions of article 42 of the Law No. 144 dated 31/07/2019 (Budget Law 2019) relating to the cancellation of commercial companies and enterprise from the trade register as well as the cancellation of civil companies from the special register of civil companies.

According to this Decision, the following commercial companies and enterprises shall be cancelled from the trade register and special register relating to civil companies:

Commercial companies and enterprises which have not effectively carried out their activities since their incorporation and until the year preceding their statute of limitation.
Commercial companies and enterprises which have ceased their activities and did not have assets until the year preceding their statute of limitation and have no employees.
Commercial companies and enterprises which ceased their activities and liquidated their assets during the year preceding the year of their statute of limitation and have no employees.

The competent department before the Ministry of Finance shall verify if the aforementioned conditions are met by all available means.

In order to proceed with the cancellation of these companies and enterprises, these companies should not have debts towards third parties and should have paid all due taxes and penalties to the Ministry of Finance and the National Social Security Fund (NSSF) and to other public administrations and institutions for the periods during which they have carried out activities and prior to the year preceding their statute of limitation.

The Ministry of Finance establishes a list of companies and enterprises fulfilling the above conditions and transmits it to the NSSF as well as to the competent persons before the commercial register and thus, within three months following the date of publication of the Law No. 144/2019, who must submit their observations in this regard to the Ministry of Finance.

The Ministry of Finance publishes, within a maximum period of one month as of the notification of the response of the NSSF and the competent authorities before the commercial register, on its website and in the Official Gazette as well as in two local newspapers, a detailed declaration of the companies and enterprise which will be cancelled, and which will be republished again after the expiration of a period of fifteen days as of the date of the last publication.

Companies, owners of enterprises, public administrations and institutions as well as creditors may object the decision of cancellation before the Ministry of Finance and thus, within three months as of the date of the last publication.

The objection request must be submitted before the competent tax department of the Ministry of Finance, directly or by email and signed by the concerned person or by his legal representative, including the name and address of the concerned person, his registration number registration before the Ministry of Finance, the objection’s motives and the opponent’s requests. Documents justifying the objection must also be attached to the request, under penalty of rejection of the request in its form.

The objection is considered to be duly submitted:

On the date of its delivery to the competent department in the event that the request was filed by hand.
On the date as attested by postmark in the event that the request was sent by courier.
On the date of submission of the courier in the event that the request was sent by postal mail (recommended letter).

The cancellation procedure shall be suspended until the tax administration decides with respect to the Objection.

The concerned person may request the cancellation of the decision of the administration which rejected the objection, before the Council of State, within two months as of the date of notification of the decision, under penalty of rejecting the request in its form.

The Ministry of Finance undertakes to establish, notify and publish the list of companies and enterprises which should be canceled, within three months as of the beginning of each year, starting in 2020.

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INITIATIVE POUR UNE ADMINISTRATION PUBLIQUE SOUPLE

Posted on Monday June 15th, 2020 by citylog

Sorry, this entry is only available in French. For the sake of viewer convenience, the content is shown below in the alternative language. You may click the link to switch the active language.

L’objectif d’une telle initiative est de transformer l’Administration Publique libanaise (“AP”) d’une administration pléthorique, inefficace et coûteuse en une administration publique souple, performante et financièrement saine, au sein de laquelle chaque Fonctionnaire est évalué, et placé dans le poste le plus adéquat de manière à ce que sa contribution soit la plus efficace et utile possible aux usagers de l’AP, à savoir, les citoyens.

Dans le cadre de cette Initiative, des propositions sont soumises visant à alléger la bureaucratie, réduire les coûts et investir dans une réforme des ressources humaines, l’objectif final étant de “Mieux Servir les Citoyens”. L’enjeu par la suite sera de faire de ces propositions une réalité durable, et que l’AP et les Fonctionnaires soient tenus de rendre compte de la qualité des services rendus aux citoyens. Le Rapport McKinsey, émis il y a trois ans et intitulé “Une Vision Economique pour le Liban”, avait identifié à ce propos, plusieurs piliers essentiels pour assurer une AP efficace et rentable, au nombre desquels: la productivité, la numérisation, la transparence et la confiance. Le rapport avait conclu que le Liban ne remplit aucun de ces critères. Des quatre piliers principaux précités, cette Initiative ne porte que sur le premier, à savoir la Productivité de l’AP, ou plus précisément le souci de favoriser une fourniture plus efficace de biens et services publics. Elle aspire ainsi à mettre en place une stratégie de réforme de l’AP à moyen/long terme pour déterminer les priorités et l’ordre de mise en œuvre des actions prévues et propose à titre préliminaire les principales étapes suivantes:

a) Evaluer l’organigramme, les descriptions de poste, les profils de postes et le calendrier de recrutement de chaque AP; établir un organigramme optimal, modifier les descriptions et profiles de postes si nécessaire, et mettre en place un nouveau calendrier de recrutement.

b) Evaluer la structure actuelle de l’AP et faire passer à chaque Fonctionnaire un test de compétence afin de lui proposer une formation pour acquérir de nouvelles compétences adaptées au poste ou à un poste différent en fonction des besoins de l’organisation et des compétences du Fonctionnaire. Dans le cas où l’AP à laquelle le Fonctionnaire est affecté n’a pas besoin des compétences de ce dernier ou est déjà en sureffectif, ledit Fonctionnaire sera alors transféré à un “Pool Central de Compétences”, géré par le Ministère de la Réforme Administrative (OMSAR) ou tout autre ministère qui serait affecté à cette tâche ; du Pool, le Fonctionnaire sera réaffectera à une AP en sous-effectif ou à une AP qui a besoin des compétences spécifiques de ce Fonctionnaire. Le Pool Central de Compétences fera office de

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réservoir stratégique à la disposition de l’Administration Publique, et sera également capable de fournir au besoin des ressources humaines qualifiées au secteur privé.

c) Evaluer la nature et l’étendue des défaillances en matière de gouvernance, y compris la corruption et l’incompétence, ainsi que les conséquences macroéconomiques de ces défaillances.

d) Mettre en place et améliorer la transparence, et les processus de signalisation et de responsabilisation, ainsi que le respect des lois et des contrôles internes et ce, par la mise en place d’un système de sanctions efficace et une distribution des responsabilités. Il est utile d’ailleurs de relever à ce propos, que les pratiques et institutions des AP inefficaces sont souvent liées à la corruption.

ARRETER TOUT RECRUTEMENT EXTERNE DE FONCTIONNAIRES

Depuis l’adoption par le Parlement de la Loi No. 46/2017, dont l’article 21 dispose que toute forme de recrutement est strictement interdit, les ministres des gouvernements en place à l’époque ont recruté au total, en violation de la loi, entre 5 000 et 10 000 Fonctionnaires supplémentaires à des fins purement électorales. La Commission parlementaire des Finances et du Budget a demandé par la suite une enquête et s’est engagée à poursuivre en justice les ministres qui ont enfreint la loi et les Fonctionnaires qui ont été recrutés en violation de ladite loi, toutefois rien de palpable n’a été encore été fait à ce jour, mis à part un rapport de l’Inspection Centrale jeté aux oubliettes. Il convient de mentionner à ce titre qu’en vertu de l’article 112 de la Loi de la Comptabilité Publique (Décret No. 14969 daté du 30 décembre 1963), les ministres sont responsables sur leur biens personnels de tout dépassement des crédits alloués à leur ministère. La loi ne peut être considérée comme un point de vue, et l’article 21 de la Loi No.46/2017 doit être strictement appliqué sous peine d’entrainer la responsabilité directe des contrevenants. Aucun recrutement en vertu d’un contrat de quelque nature que ce soit de tout Fonctionnaire dans une quelconque AP ne doit être effectué. Dans le cas où une AP a besoin de recruter des Fonctionnaires supplémentaires pour améliorer sa performance ou ses prestations de services, celle-ci doit recruter en interne auprès du Pool Central de Compétences et uniquement selon les mérites, indépendamment de toute affiliation politique.

EFFECTUER UN AUDIT DE TOUS LES SECTEURS ET NIVEAUX DE L’ADMINISTRATION PUBLIQUE

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Dans une deuxième étape, un groupe de travail conjoint, composé du Ministère de la Réforme Administrative et d’experts en ressources humaines ainsi que d’experts techniques indépendants, sera mis en place et chargé d’effectuer un audit de tous les secteurs de l’AP et de tous les Fonctionnaires simultanément. Les mesures suivantes devront être prises:

 Evaluer l’organigramme, les effectifs et les profils d’emploi et description de postes de chaque AP, par rapport à la mission, au volume de services et à la performance qui sont requis de chaque AP.
 Formuler des recommandations et créer de nouveaux profils de postes, sur base des compétences.
 Evaluer chaque Fonctionnaire dans chaque AP en fonction des nouvelles compétences qui figurent dans les nouveaux profils et description de postes.
L’audit permettra d’établir une cartographie précise des besoins en ressources humaines et des ressources humaines existantes, ce qui permettra au gouvernement de développer et de mettre en œuvre une réforme moderne et équitable de l’AP. Au terme de cet audit, les Fonctionnaires seront regroupés en quatre catégories:

a) Les Fonctionnaires qui, pris individuellement, sont performants et qui sont nécessaires à l’AP à laquelle ils sont affiliés : ils sont maintenus à leur poste sans aucun changement de statut ou fonction.

b) Les Fonctionnaires qui, pris individuellement, sont performants et qui ont la capacité d’être formés, d’évoluer et d’acquérir les compétences nécessaires à leur fonction, mais dont l’AP à laquelle ils sont affiliés n’a pas besoin : ils gardent leur emploi et sont transférés au Pool Central de Compétences.

c) Les Fonctionnaires qui, pris individuellement, ne sont pas performants et qui n’ont pas la capacité d’être formés et d’évoluer pour acquérir les compétences nécessaires à leur fonction : ils gardent leur emploi, mais sont affectés à des postes de niveau (inférieur), qui correspondent leurs compétences.

d) Les Fonctionnaires “fantômes” : ils sont immédiatement licenciés avec ou sans indemnités de fin de service et/ou pensions de retraite.

Au préalable, une étude d’impact devra être effectuée pour évaluer les conséquences des transferts des Fonctionnaires au Pool Central de Compétences et s’assurer que la réduction des

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effectifs n’aura pas un impact négatif sur les services offerts par l’AP à court et moyen terme. De plus, lors de la mise en place des mesures susmentionnées, il faudra veiller à ce que tous les Fonctionnaires soient traités de manière juste et équitable, indépendamment de leur statut personnel, religion ou affiliation.

LE POOL CENTRAL DE COMPETENCES

Le Pool Central de Compétences sera considéré comme un réservoir stratégique de compétences à la disposition de l’Administration Publique, et pourra aussi servir, au besoin, à fournir des effectifs qualifiés au secteur privé. Il sera géré par le Ministère de la Réforme Administrative et accueillera tous les Fonctionnaires visés par les mesures qui précèdent. Ceux- ci conserveront toutefois tous leurs droits acquis et seront formés en fonction des besoins des différents secteurs de l’AP. En fonction des besoins, il sera fait appel au Pool Central de Compétences pour fournir des Fonctionnaires à toute AP qui aurait besoin de ressources supplémentaires, de manière temporaire ou permanente. Le cas échéant, ce Pool pourra également aider les Fonctionnaires à trouver un emploi dans le secteur privé. Par conséquent, le Pool Central de Compétences aura un double rôle:

a) Servir d’appui à tous les secteurs de l’AP: des effectifs spécialisés seront affectés à cet effet de manière temporaire ou permanente auprès de toute AP qui aurait besoin de leurs services.

b) Servir d’agence de recrutement pour le secteur privé: il œuvrera à encourager et aider les Fonctionnaires dont les compétences ne sont pas nécessaires dans les AP mais qui sont nécessaires au secteur privé, à intégrer le secteur privé. Des mesures incitatives devront être offertes, dans ce cadre, aux entreprises du secteur privé en vue de recruter ces Fonctionnaires. Les droits acquis de ces derniers (indemnités, compensation et autres droits) devront être garantis.

COMPLEMENTARITE ENTRE CETTE INITIATIVE ET LES AUTRES MESURES DE REFORME

Cette Initiative s’inscrit dans le cadre d’un examen complet de la structure et des processus opérationnels de l’AP et devra être impérativement accompagné de mesures complémentaires nécessaires. Une attention particulière devra être d’ailleurs portée aux questions suivantes:

1- Mise en place d’une automatisation des services par le biais de l’e-gouvernement, qui est l’un des principaux moyens de réduire la bureaucratie, d’améliorer et d’accélérer les services offerts et d’assurer la transparence en luttant contre la corruption et la pratique des pots-de- vin.

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2- Améliorer la qualité des services fournis par les AP et les Fonctionnaires sur bases des critères suivants:

a) Evaluer de manière permanente les performances des individus et des départements.

b) Comparer les coûts des services offerts par les AP aux coûts des services équivalents fournis par le secteur privé.

c) Assurer la formation continue et fusionner les départements et les fonctions en tenant compte des besoins.

d) Octroyer des récompenses financières aux seuls Fonctionnaires performants (et non systématiquement des bonus à tous).

e) S’assurer de la mise en place de systèmes adéquats de contrôle de la performance, et rendre les Fonctionnaires responsables des résultats.

3- Assurer une meilleure coopération entre l’AP et le secteur privé, et effectuer des échanges croisés entre des Fonctionnaires et des employés du secteur privé, si nécessaire. Il faudra cependant prévoir pour cela une égalité de traitement entre Fonctionnaires et employés du secteur privé en matière de pensions de retraite et d’impôts. Les Fonctionnaires ne pourront pas bénéficier d’exemptions fiscales sur leurs salaires, indemnités, pensions de retraite etc. sans que cette possibilité ne soit aussi ouverte aux employés du secteur privé. Sinon l’imposition et les retenues s’appliqueront à tous.

4- Réaliser des économies en matière de marchés publics et de dépenses publiques, et effectuer un contrôle permanent des dépenses publiques. Ceci nécessite de moderniser au plus tôt les appareils étatiques et les législations relatifs aux achats publics et appels d’offres.

6- Mettre en place des mécanismes efficaces de sanctions applicables à la gestion du service public.

7- Créer et/ou renforcer des pouvoirs judiciaires indépendants et intègres chargés de se prononcer sur la légalité des dépenses publiques et leur conformité aux règlementations fiscales, ainsi que sur la constitutionalité des coupes budgétaires, en mettant l’accent sur les dépenses non budgétisées.

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8- Lutter contre la corruption au sein des AP, étant donné que la corruption endémique affecte la performance économique, en affaiblissant les fonctions de l’Etat et en nuisant aux vecteurs de croissance potentielle et inclusive.

9- Mettre en place des mesures visant à empêcher les acteurs du privé de verser des pots-de- vin ou de fournir des services, structures et mécanismes qui faciliteraient la dissimulation des produits de la corruption. Parallèlement à ces mesures, et pour garantir la bonne marche des services et encourager les investissements, un mécanisme de paiements de facilitation (Facilitating Payment/FPCA) devrait être mis en place pour légaliser les coûts plus élevés en cas de formalités gouvernementales accélérées, en prévoyant une distribution équitable, légale et transparente des coûts. (Il convient de rappeler que cette mesure a déjà été adoptée pour les passeports délivrés par la Direction de la Sûreté Générale).

10- Adopter la technologie de « Blockchain » pour réduire les possibilités de dissimulation, d’évasion et renforcer la transparence.

11- Mettre en place un code déontologique dans le secteur public pour les Fonctionnaires et les acteurs du privé, qui régirait les relations entre eux.

12- Mettre l’accent sur la gouvernance et le contrôle des entreprises d’Etat comme faisant partie intégrante de la réforme de l’AP/ Fonctionnaires. A cet effet, les mesures suivantes devront être prises:

a) Superviser et réglementer les entreprises d’Etat (SOE), comme s’il s’agissait d’entreprises privées; établir une séparation claire selon que ces entreprises agissent en tant que propriétaire, régulateur ou pouvoir décisionnel.
b) Eviter et éliminer les conflits d’intérêts.
c) Empêcher la poursuite d’ingérence politique.
d) Renforcer la responsabilisation, le reporting et la divulgation d’informations aux organes
de représentation comme le Parlement, y compris au sujet de questions liées aux

garanties de l’Etat relatives aux engagements des entreprises d’Etat.
e) S’assurer de la mise en place des systèmes adéquats de contrôle de la performance et
tenir les entreprises d’Etat responsables des résultats.

13- Adopter enfin une réforme de la nomenclature budgétaire avec l’adoption d’une Loi organique qui permettrait un meilleur suivi de l’exécution du Budget et de rendre responsable

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gouvernement et ministres de leur engagements sans possibilité de se soustraire ou de renvoyer la responsabilité au parlement. Ceci aura pour corolaire d’articuler le budget général de l’Etat en missions et programmes et non plus en chapitres comme c’est le cas actuellement. L’objectif étant de passer d’une logique de moyens à une logique de résultats. Cela aura pour conséquence certaine, l’instauration de projets de performance dans lesquels des objectifs sont donnés par ou aux ministères. Ce qui permettait un contrôle a posteriori de l’accomplissement de ces objectifs par le biais des rapports annuels de performance présentés par les différents ministères qui doivent dès lors rendre compte de leur action en mettant en évidence les résultats obtenus au regard des moyens mobilisés par le Parlement.

Pour conclure, il serait utile de rappeler à ceux qui semblent l’avoir oublié, que l’Administration Publique libanaise doit être au service des citoyens libanais et des entreprises libanaises. Les indicateurs clés de performance doivent donc être identifiés périodiquement et communiquées publiquement comme le préconise d’ailleurs la Loi No 28/2017 sur le droit d’accès à l’information, notamment en matière de satisfaction du client, du coût et des délais de chaque service offert. La “bonne gouvernance” reconnaît d’ailleurs que la qualité de la gouvernance peut affecter l’efficacité et l’efficience de l’AP dans la réalisation des résultats escomptés, et doit reposer sur des politiques et mesures équitables et inclusives.

Dr. Nasri Antoine DIAB

Avocat aux Barreaux
de Beyrouth et de Paris Professeur des Facultés de Droit

Joseph OTAYEK

Expert en Stratégie et Management de la Santé

Karim DAHER

Avocat à la Cour Maître de conférence en Droit Fiscal

Law No. 163 dated 08/05/2020 organizing Private Investment Companies (PIC)

Posted on Monday June 15th, 2020 by citylog

The Law No. 163 dated 08/05/2020 (hereinafter) organizing Private Investment Companies (PIC) was recently adopted and published in the Official Gazette No.20 dated 14thMay 2020. The main characteristics of this law are summarized in the following developments:

1- Object of the Company:  

2- Applicable rules:The provisions of the Code of Commerce relating to limited partnerships which are not in contradiction with this Law shall apply. Consequently, general partners are personally and jointly liable for the Company’s debts. However, the limited partners are liable to the extent of their contributions, provided that they do not interfere in the management of the PIC. Nevertheless, the Law No. 162/2020 provides the limited partners with the possibility to be appointed as managers of the PIC or of the portfolio management company of PIC, in which case their liability remains limited.

Invest in financial instruments issued by private companies and funds, non-

negotiable on regulated financial markets on the day of the investment.

Manage the aforementioned private companies and funds.

Grant loans to the aforementioned companies and funds in case they hold

participations in the said companies that are not less than 10%.

Acquire movable and immovable properties allocated to the exercise of its activities.

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3- Incorporation Procedure
-  Articles of Association: The articles of association may be notarized by a notary public or by private deed and must be registered near the trade register within 1 month + great flexibility as for the possible adjustments (choice regarding the determination of the fiscal year, voting rights allocated to the partners, majorities required for decision-making, etc.).
-  Subscription: Any fund, legal person or physical person authorized by virtue of the articles of association may subscribe or acquire the parts of the general partners. However, the subscription to the limited partners’ parts is reserved: (i) the professional investor; (ii) the general partners; (iii) the company responsible for the assets’ management; (iv) investors whose value of shares amount to at least 150 million LBP (refer to article 7).
4- Management of the PIC:The Articles of Association define the methods of appointment, dismissal and replacement of the manager. The manager does not require the Financial Markets Authority’s authorization.
5- The management of the PIC portfolio:The management of the PIC investment portfolios may be entrusted to one or more companies authorized by the Financial Markets Authority for the assets’ management.
6- The depositary:
-  The depositary must have the authorization from the Financial Markets Authority.
-  He/it must be independent from the manager and from the company responsible formanaging his investment portfolio.
-  The financial instruments held by the company are registered in the name of thedepositary and constitute an independent body of its assets and liabilities (off-
  balance sheet) with all the resulting legal consequences.
-  He/it executes the directives of the manager or of the investment portfoliomanagement company.
7- The status of the PIC parts:
-  The parts do not necessarily grant identical rights for all the partners (for instance the distribution of revenues may be done differently; the parts may be reserved for different investment sectors…).
-  The Company is compelled to open a bank account in Lebanon. 4

 The parts of the limited partners are deemed to be negotiable financial instruments. However, these parts are not subject to the conditions applicable to financial instruments offered for public subscription as provided for by the Law on the financial markets.
 The parts of the general partners are non-negotiable instruments. It is even possible to provide in the articles of association for restrictions on their free transferability.

8- Tax Status of the PIC:

 Although the PIC has a legal personality, the profits are deemed to be made directly in the assets of each partner just like for the limited partnerships (article 35 of the Income Tax Law).
 The realized income of the general partners and limited partners are exempted from tax (chapters 1 and 3 of the Income Tax Law) as a result of the activity of SICAP or the transfer of shares as well as the tax provided for in article 77 of the Income Tax Law (for the proceeds of foreign shares and bonds).
 Are not exempt from the distribution tax: (i) the dividends paid by Lebanese capital companies in which PIC invests; (ii) the income earned in Lebanon listed in article 51 of the Law No. 497/2003 as amended by article 31 of the Law No. 144/2019; as well as (iii) on interests generated by loans granted by PIC to Lebanese companies in which it invests, whenever the loans are granted for less than 3 years.
 Income generated by the management of the companies in which SICAP invests shall be subject to a 5% tax.
 All the activities of the PIC are not liable to VAT. However, VAT shall nonetheless be applied to income generated by the management of the companies in which it invests. However, the VAT borne by the PIC due to services provided by third parties shall not be recoverable.
 Are exempted from the fiscal stamp duty: (i) the articles of association; (ii) the subscription to shares and any commitment relating thereto; (iii) the loans granted to PIC by its partners.

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Decision No. 193/1 dated 01/06/2020 relating to the determination of the implementing provisions of article 51 of the Law No. 497/2003 (income from movable capital).

Posted on Monday June 15th, 2020 by citylog

The Ministry of Finance (MoF), has issued the here below Decision No. 193/1 dated 1/6/2020 published in the Official Gazette No. 25 dated 11/06/2020 defining the implementing provisions of article 51 of the Law No. 497/2003 modified by virtue of Laws No. 64/2017 (article 17), No.79/2018 (article 36) and No.144/2019 (article 31).

According to this Decision, are subject to the Income Tax Law and to the tax provided for by Chapter 3 of the said Law, interest and income from movable capital resulting from:

1- Creditor accounts opened with banks operating in Lebanon, including savings accounts.
2- Bank deposits and commitments regardless of their currency, including those belonging
to non-residents. Such commitments include particularly:

 Deposit certificates issued by the Banque du Liban.
 Deposit certificates and debt securities issued by banks operating in Lebanon.
 Loans granted to banks operating in Lebanon, including those held by the Banque du
Liban.
 Documentary Credit insurance and guarantees.

3- Fiduciary accounts and investment portfolio management, including those established by virtue of Law No. 520 dated 6/6/1996 (development of the financial market and fiduciary contracts) or Law No. 234 dated 10 / 6/2000 (relating to the regulation of the financial intermediation profession)
4- Bonds and Debt securities issued by Lebanese Joint-Stock Companies.
5- Treasury Bonds in Lebanese currency, including those to which the Banque du Liban has
subscribed.

Thus, interest and income of movable capital derived by fiduciary accounts and investment portfolio management provided for in either clause 3 of paragraph 1 of article 51 of Law No. 497/2003 and its modifications, Laws No.520/1996 and No. 234 dated 10/6/2000, include inter alia the amounts resulting from the operations provided for in article 1 of the Law No. 520/1996 and article 2 of the Law No.234/2000 as well as the decisions rendered by the Central Bank (Banque du Liban) in this regard which are executed and implemented by banks, financial institutions and financial intermediation institutions for the benefit of their clients.

It should be noted in this regard that the following are exempted from the tax:

 Debtor accounts opened with banks operating in Lebanon on behalf of the Lebanese Government, municipalities and public institutions.

 Debtor accounts opened with banks operating in Lebanon on behalf of foreign diplomatic and consular missions.

 Interbank deposits which constitute deposits whose term does not exceed 15 days as from the date of their deposit by the deposited bank with the depositary bank.

The adopted rates relating to the calculation of the tax of all net income subject to the tax of article 51 of Law No. 495/2003 are as follows:

  

7% until 07/31/2019 (included).
10% as from 08/01/2019 and until 07/31/2022 (included).

7% as from 08/01/2022.

However, income from movable capital which is not subject to the tax provided for in article 51 of the Law No. 497/2003 and its amendments remains subject to the general tax at the rate of 10% as provided by article 72 of the Income Tax Law. However, revenues falling within the scope of this article but derived abroad by a Lebanese resident will be assimilated to the revenues from foreign movable assets (proceeds from foreign shares and debentures) in compliance with the provisions of article 77 of the Income Tax Law and subject to the tax at the general rate of 10%. .

Interest and income from movable capital subject to the tax provided for in article 51 of the Law No. 497/2003 and its amendments belonging to taxpayers subject to the income tax on the basis of real profit, remain subject to the tax provided for in article 51. This tax is however deductible from the net profit but the revenue should be added to the profit of the company subject to corporate income tax.

Concerning interest and income from movable capital subject to the tax provided for in article 51 of the Law No. 497/2003 and its modifications belonging to taxpayers subject to the income tax on the basis of deemed profit taxation (lump sum profit) according to article 44 of the Income Tax Law, such interest and income will be subject to the tax provided for in the said article 44 (i.e. it is considered as part of the taxable income subject to deemed profit taxation) after the deduction of the paid tax.

It is to note however that in order to avoid double taxation, it has been set forth that, in the assumption that a tax has been already withheld at source on the investments of the fiduciary accounts and investment portfolio management, the revenues distributed by the said structures to the beneficiaries will not be taxed again as regards to the tax of article 51 of the Law No. 497/2003. Besides, it should be highlighted as well that no set-off or compensation may occur between the revenues subject of the aforesaid article and any realized loss on other investments and transactions of movable assets.

Before paying the interest and capital income subject to the tax provided for in article 51 of the Law No. 497/2003, all institutions are required to withhold the due tax, declare this tax and pay it to the Treasury within fifteen days following the end of the month during which the withholding tax was effected, under penalty of being held responsible for the unpaid amounts in addition to a penalty for late payment provided for by the Law on Tax Procedures.

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MoF Decision No. 171/1 dated 2705/2020 relating to the extension of deadlines provided for the exchange of information for tax purposes

Posted on Monday June 15th, 2020Monday June 15th, 2020 by citylog

The Ministry of Finance (MoF) owing to the COVID 19’ circumstances, has issued and published the here below Decision No. 171/1 dated 27/05/2020 relating to the extension of deadlines provided for the declaration and sending of the required information by virtue of the Decree No. 1022 dated 07/07/2018 and its modifications relating to the exchange of information for tax purposes. Indeed and on the one hand, the deadlines provided for the declaration and sending by the financial institutions and banks of the information provided for in clause (3) of article 5 Decree No. 1022 for the year 2019 are exceptionally extended until September 30, 2020 instead of June 30 initially.

On the other hand, the deadlines provided for the transmission by the Ministry of Finance of information to the Partner States to which Lebanon is committed to automatically exchange financial account information (for the year 2019) provided for in clause (3) of article 5 of the Decree No. 1022 are also extended exceptionally until December 31, 2020 instead of September 30.

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MoF Answerback No. 425/S2 dated 12/05/2020 relating to the implementation of certain provisions of the Decree No. 3692/2016 determining the implementing provisions of the non-residents’ tax.

Posted on Monday June 15th, 2020Monday June 15th, 2020 by citylog

With reference to the Decree No. 3692 dated 22/06/20216 adopted by the Council of Ministers determining the implementing provisions of the non-residents’ tax, and the confusion left by the taxation of non-residents dealing with residents in Lebanon, the Lebanese Association of Certified Public Accountants has submitted a written request on January 14th, 2020 to the Ministry of Finance in order to clarify its position on the aforementioned issue. The Ministry responded by considering that:

A non-resident person dealing with resident persons in Lebanon (with the exception of petroleum companies) is subject to the provisions of articles 7 and 8 of the abovementioned Decree No. 3692/2016. In other words, non-resident persons carrying out pubic or civil works’ activities in Lebanon for more than six months, or services of various types for more than three months, in a successive period of twelve months, are required to register near the Ministry of Finance and must comply with the obligations imposed on the persons at the time they proceed with the activities, in accordance with the provisions of article 32 of the Law on Tax Procedures and articles 38 to 47 of the Decision No.453/1 dated 22/4/2009.

The tax treatment of persons carrying out activities or rendering services on behalf of companies subject to the Law No. 57/2017 (tax provisions relating to petroleum activities) differs from the tax treatment of non-resident persons in Lebanon dealing with taxpayers subject to the provisions of the Income Tax Law. This distinction manifests in three points:

1- No distinction is made between works and services with regard to the duration of continuity of these works and services in order to consider the work executor or the service provider as a resident in Lebanon, whenever this duration exceeds 183 days, while according to the Decree No. 3692/2016 it is 6 months for works and three months for services.

2- The profit percentage and the tax rate at which persons subject to the provisions of the Law No. 57/2017 are as follows:

– 15% of the whole income to determine the deemed profit taxation for the work, and a tax at the rate of 20%;

– 50% of the whole income to determine the deemed profit taxation for services and a tax at the rate of 20%.

However, the tax rate according to the Income Tax Law is 15%.

3- The deadline for declaring and settling tax is quarterly, within 20 days following the end of the quarter, while the deadline for declaring and settling the tax for taxpayers dealing with non-residents is within the deadline of their annual declaration.

As for the non-occasional and repetitive expression provided for in article 2 of the aforementioned Decree No. 3692, it fits in the context of natural persons resident in Lebanon carrying out occasional work, and not in the context of non-residents; in other words, it has no incidence on the fact that the executor of the work or the service provider will be considered as a resident in Lebanon whenever its activity exceeds the two aforementioned periods.

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ALDIC has the pleasure to announce that one of its eminent members, Mr. Joseph Otayek, has just been appointed to the prestigious position of Director of the American University of Beirut Medical Center (AUBMC).

Posted on Wednesday June 3rd, 2020 by citylog

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MoF Decision No. 111/1 dated 17/03/2020 relating to the taxpayers’ obligation covered by the provisions of article 82 of the Income Tax Law to declare the income of foreign movable capital by electronic means.

Posted on Wednesday May 27th, 2020Wednesday May 27th, 2020 by citylog

The Ministry of Finance (MoF), has issued and published the here below Decision No. 111/1 dated 17/03/2020 relating to the declaration (tax return) of foreign movable capital’s income electronically. Indeed, all taxpayers (physical or legal persons) covered by the provisions of article 82 of the Income Tax Law, must exclusively declare, by electronic means and within the deadlines provided for in the aforementioned article, foreign movable capital income generated during the year 2019 and beyond (the years that follow).
Besides, taxpayers who do not have an account before the website of the Ministry of Finance (www.finance.gov.lb) can submit requests to obtain such account, by connecting to the aforementioned website, by filling the adopted registration form and submitting it electronically.
Similarly, the central department of taxpayers’ information and services, as well as the departments and branches of taxpayers’ services affiliated to the Revenues Directorate, shall provide taxpayers with electronic personal keys (username, password, code) which will entitle taxpayers to use the electronic declaration service.
Liban Post offices will stop receiving declarations on paper (form w4/c) relating to the income from foreign movable capital generated during 2019 and beyond, as of the entry into force of this Decision.

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Call for implementation of Article 95 of the constitution

Posted on Wednesday May 27th, 2020 by citylog

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