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MoF reply on conditions for 75% tax exemption on export profits

Financial Laws

Posted on Thursday July 12th, 2018Friday October 12th, 2018 by citylog

MoF Decision #838/1 dated 21 May 2018 on the application of article 32 of the Law #79 dated 19 April 2018 (Budget Law 2018) related to the partial amnesty of the amount of taxes objected

Posted on Friday June 15th, 2018 by citylog

The Ministry of Finance (MoF) has issued the decision #838/1 dated 21 May 2018 on the application of article 32 of the Law No 79 dated 19 April 2018 (Budget Law 2018) related to the amnesty of the amount of taxes objected.

According to the aforesaid article 32 of the Law No 79, an amnesty equal to 50% of the amount of taxes (to the exclusion of any late/false declaration and late payment penalties due) is applicable for Income Tax and Value Added Tax (VAT) assessments which were objected at the level of the Appeal Committee but were not yet concluded by the latter as of the publication date of this Law 79. To benefit from such Amnesty tax payers have to file a written request to the relevant tax department and to settle the amount due as per the Amnesty within 4 months from the publication date of the Budget Law No 79/2018. Obviously, in this article, to the contrary of other articles applicable to similar exemptions such as articles No 40 of the Budget Law 66 and No 23 of the Budget law No 79, the condition precedent aiming to ensure that no tax has been fully paid yet, does not exist in the original text. The result of this is that the taxpayer was likely to retrieve 50% of the paid tax. The MoF noticed this loophole that was left by an oversight and settled the ambiguity through the issuance of the Decision No 838/1 dated 21/05/2018 (here below) and published in the Official Gazette (No26). This Decision denies to taxpayers that have already settled and paid the full amount of the challenged taxes, the right to benefit from the provisions of article 32 above mentioned.

Needless to precise in this regard that such decision may be qualified and considered as an action ultra vires (عمل تنظيمي ضار يتجاوز حدّ السلطة) in accordance with articles 65 and 105 of the State Council’s regulations (Legislative-decree No 10434 dated 14/6/1975 and its amendments) and may be challenged as such.

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Executive Summary of the Law #79 (Budget 2018) – Tax amendments and exemptions

Posted on Monday June 4th, 2018 by citylog

The Law #79 (Budget 2018) was published in the Official Gazette appendix #18 dated 19^th April 2018 (here below) and includes some major tax amendments and discounts on penalties as well as a tax amnesty (article 26) that was invalidated afterwards along with 6 other articles (14, 35, 43, 49, 51 and 52) by virtue of the decision #2/2018 of the Constitutional Council dated 14th May 2018.

The main provisions encompassed in Chapter 3 of this Budget Law 2018 are summarized hereinafter:

Article 17: DISCOUNT ON PENALTIES: 100% discount on penalties on (i) failure to maintain accounting records for taxpayers taxed on estimated profit basis and (ii) issuance of invoices not compliant with the tax law and regulations on past due tax adjustments made by the Ministry of Finance. Besides, 90% discount on all other tax violations provided that the taxes and the discounted penalties are paid within 6 months from the publication of this law (i.e. before the 19th October 2018).

Articles 18 to 22: ADDITIONAL DISCOUNTS & EXEMPTIONS: 90% discount on late payment penalties due to government entities, including Municipality fees, Mechanic fees and National Social Security Fund (NSSF) provided that the late payment duties and fees as well as the discounted penalties are paid within 6 months from the publication of this law (i.e. before the 19th October 2018). However, the unpaid NSSF contributions and their related discounted penalties can be paid by installments to the NSSF over 5 years with an interest rate of 5% per year provided that 20% of the late payment and the discounted penalties are paid within 6 months from the publication of this law. In case of a failure to pay an installment, all the taxes will be due in addition to 12% interest.

Article 24: ADDITIONAL DISCOUNTS & EXEMPTIONS: Total exemption on penalties due by taxpayers concerned by the application of the Article 53 of the Income Tax Law (i.e. taxpayers who work in several places or are self-employed at the same time that should fill and declare the R8 tax form) for violations occurred till the year 2016 provided that the taxes are paid within 6 months from the publication of this law. This exemption doesn’t cover the penalties already paid before the publication of this law.

Article 23: EXTENSION OF THE TAX OBJECTION DEADLINE: on The taxpayers who have been notified of a tax adjustment after the 1st January 2009 and who did object this tax adjustment within the deadline set by the Tax Procedures Law (Law #44/2008) or whose objection were rejected in form at the level of the tax administration or the objection committee while they didn’t fully pay the adjusted taxes as of the publication of this Law, will be granted 6 months from the publication of this Law (i.e. before the 19th October 2018) to file their objection towards the tax administration or the objection committee provided that 10% of the adjusted taxes and duties are paid prior to submitting such objection. The tax administration will have one year from the publication of this law to conclude on these tax objections.

Article 25: INSTALLMENT FOR PAYMENT OF TAXES WITHHELD AT SOURCE AND VALUE ADDED TAX (VAT): on Unpaid taxes withheld at source (i.e. tax on interest, tax on dividends, etc.) and Value Added Tax (VAT) related to the fiscal periods up to 31 December 2016 can be installed based on a written request submitted to the tax administration within 6 months form from the publication of this law provided that 15% of the taxes due is settled within this period of 6 months. In case of a failure to pay an installment, all the taxes will be due in addition to 12% interest.

Article 32: AMNESTY ON INCOME TAX AND VALUE ADDED TAX (VAT) ADJUSTMENTS HELD AT THE OBJECTION COMMITTEES is An amnesty equal to 50% of the amounts of the objected tax adjustments (excluding late declaration and payment penalties) held at the objection committees but not yet concluded by the latter as of the publication of this Law for income tax adjustments covering years up to 2012 (inclusive) and Value Added Tax adjustments covering years up to 2016 (inclusive). To benefit from such amnesty, the taxpayers should submit a written request to the relevant tax department and pay the discounted amount due as per this amnesty within 4 months from the publication of this Law. The taxpayer has also the option to pay 25% of the discounted amount due within the 4 months period mentioned above and settle the remaining balance over 3 consecutive yearly installments subject to the interest rate set in the Tax Procedure Law. In case of a failure to pay an installment, the remaining balance will be subject to 12% interest. The taxpayer is not allowed to benefit from such amnesty on part of the objected tax adjustment. This amnesty covers all points of the objected tax adjustment. The objection committees will stop deliberating on any tax objection covered by this amnesty.

Article 28: BUILT PROPERTY TAX: The residential tax allowance has been increased from LBP 6 million to LBP 20 million starting from the fiscal year 2018 for each residential apartment occupied and owned by a natural person or partner in the ownership based on his percentage of ownership and up to a maximum of two apartments only for those that have the higher rental values (amendment of the article 52 of the Built Property Law dated 17/9/1962.

Article 29: Amendment of the scales and brackets on the BUILT PROPERTY TAX: Starting from the fiscal year 2018, the annual net income per property will be subject to the following built property tax brackets (amendment of the article 54 of the Built Property Law dated 17/9/1962):

4 % from LBP 0 to LBP 40 million
6% from LBP 40 million to LBP 80 million
8% from LBP 80 million to LBP 120 million
11% from LBP 120 million to LBP 200 million
14% for more than LBP 200 million

OTHER AMENDMENTS & INCENTIVES: this Law also includes some important other amendments and incentives summarized as follows:

Article 27: The Lebanese Government shall bear the Social Security contributions in all its schemes and for a period of 2 years for all the employees hired during the period extended from the publication date of this law until 31st December 2019, if the employee was hired for the first time, was previously unemployed of left his previous work six months prior to the publication date of this law, provided that his annual salary does not exceed LBP 18 million (i.e. USD 1,000 per month).

Article 30: Decrease of the registration fees on residential properties owned by Lebanese individuals from 5% to 3% on the part that does not exceed LBP 375 million while the amount exceeding this threshold remains subject to the 5% rate.

Article 31: Exemption from fees on pledge and pledge cancellation on residential loans up to the ceiling defined by “Banque de l’habitat” and the amount exceeding this ceiling would be subject to 1% upon certain considerations.

Article 37: VAT on built properties rent activities for non-residential purposes for which not VAT was not collected from its lessees will not be due (i) if one of the parties of the contract belongs to a sect (i.e. religious entity or any of related entity), or public administration or institutions, or municipalities until the end of the second quarter of the year 2018 (ii) in all other cases and until the end of the second quarter of the year 2014.

Article 38: Lebanese passports can be delivered with a validity of 10 years.

Articles 39 & 40: Work and residency permits for foreign labors can be delivered for a validity of 2 years for twice the amount of the permit fees.

MoF Decision #836/1 dated May 21, 2018 with respect to definition of “ tax resident” based on the Law No. 44 dated November 11, 2008 (Code of Tax Procedures)

Posted on Saturday June 2nd, 2018 by citylog

The Ministry of Finance (MoF) has issued the decision #836/1 dated May 21, 2018 with respect to definition of “tax resident” based on the Law No. 44 dated November 11, 2008 (Code of Tax Procedures). It mainly clarify the definition and reiterate the criterion of the Decree N° 3692 dated 22/6/2016 which determines the mode of application of tax on nonresidents as regards to what is meant by “Location for undertaking the activity”. It means a place that allows the taxpayer to perform his business for more than 6 months within a period of 12 months for public and private works and for a period exceeding 3 months within a period of 12 months for the other activities.

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MoF Circular No. 1657-S1 dated May 21, 2018 with respect to the exemption of the entities that did not perform any activity from the annual flat fee (lump sum tax)

Posted on Saturday June 2nd, 2018 by citylog

The Ministry of Finance (MoF) has recently issued a notification #1657/S1 dated 21^st May 2018 (attached a scanned copy) related to the Article 29 of the Law #173 dated 14/2/2000 (Budget Law of the year 2000) amended by the Law #20/2017 (attached a scanned copy) that has set an annual lump sum fee (lump sum tax) on all taxpayers to be paid before the 30^th September of each year starting from the year 2018 (as confirmed by the MoF decision #993/1 dated 31^st October 2016).

According to this MoF notification, the taxpayers (individuals and corporations) who haven’t perform any professional activity during the fiscal year 2017 and are still not performing any effective activity related to their business in 2018 (“non-active taxpayers”) are exempted from this annual lump sum fee provided that they submit a written commitment to the MoF before the 30^th September 2018 (commitment forms attached to this MoF notification) that they didn’t perform any professional activity in 2017, are still not performing any professional activity in 2018 and will notify the MoF as soon as they resume their professional activity. The tax authority will verify the accuracy of these commitments and will do its best effort to implement an electronic declaration for non-active taxpayers starting from the fiscal year 2018.

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MoF decision #837-1 dated 21 May 2018 providing Tax forms for the Capital gain tax of individuals and tax exempted entities

Posted on Saturday June 2nd, 2018 by citylog

The Ministry of Finance (MoF) has issued the decision #837/1 dated 21st May 2018 (here below) whereby it provides the special tax forms for the capital gain tax on the disposal of real estate properties made by the individuals not subject to income tax or individuals subject to income tax but selling real estate properties that are not part of their professional business (tax form T1) or entities not subject to income tax or permanently or exceptionally exempted from the income tax (tax form T2) according to the Article 13 – paragraph 3 of the Law #64 starting from the 27th October 2017.

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Corruption : Les règles existent…il faut les appliquer !

Posted on Saturday June 2nd, 2018 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.

Une fois retombée l’euphorie, positive ou négative, qui a prévalu lors de la tenue, début avril, de la Conférence économique pour le développement par les réformes et avec les entreprises (CEDRE), les principales interrogations portent sur la capacité du Liban à tenir ses promesses en matière de modernisation de l’économie et des infrastructures et de mise en œuvre de vraies réformes structurelles pour pouvoir à terme bénéficier de tout ou partie de l’enveloppe de 11 milliards de dollars de prêts bonifiés (et de très peu de dons) promis par ses partenaires.

De l’administration et des finances publiques au traitements des déchets, en passant par l’eau, l’énergie, ou les transports, les reformes structurelles « exigées » dans le cadre d’un mécanisme de suivi très strict constituent autant de défis laissés trop longtemps en souffrance par une classe politique indéboulonnable et que le Liban se doit de relever au risque de voir sa situation passer de très grave à pratiquement compromise. Tel est aussi le cas d’autres arlésiennes libanaises, notamment essentielles à l’attrait aux investissements étrangers et l’exécution des contrats de partenariat public-privés : la mise en place d’une meilleure gouvernance fiscale ; la modernisation des procédures d’adjudication et de marchés publics ; et la lutte contre la corruption.

Tolérance zéro

A cet égard, il ne faudrait ni occulter ni négliger la nouvelle donne que constituent les normes internationales de lutte contre la corruption qui mettent à la charge des entreprises, l’obligation d’appliquer – et de faire respecter en aval par leur partenaires locaux – leurs propres programmes de conformité pour prévenir les risques de corruptions et les sanctionner. Des textes tels que la loi française dite « Sapin II » du 9 décembre 2016 instituent ainsi un dispositif de répression de la corruption même lorsqu’il s’agit d’un délit commis à l’étranger, particulièrement en matière d’obtention de marché public.

La mise en œuvre de projets de partenariat et/ou d’investissements nécessitant un rapport direct avec les administrations et les collectivités publiques libanaises, cette perspective soulève d’emblée des interrogations majeures. Comment pourrait-on objectivement concilier ces normes très strictes et la pratique locale des pots-de-vin, gratifications et autres paiements de facilitation ? Sachant que la coutume semble désormais avoir ancré ces pratiques illégales comme autant de moyens difficilement contournables pour permettre de fluidifier un processus bureaucratique lourd et clientéliste ? Comment les entreprises locales pourraient-elles s’engager contractuellement en acceptant des clauses types les obligeant à se conformer aux codes de conduite et autres mesures anticorruption imposées en amont aux/par leurs partenaires étrangers, sans prendre le risque de compromettre la mise en œuvre et la réalisation dudit projet ? Ou au contraire celui de leur mise en cause directe, contractuelle et pénale, du fait de l’inexécution de leurs engagements ?

La réponse à ces interrogations se trouve bien évidement dans une approche de tolérance zéro et l’application stricte et préalable des dispositions légales déjà édictées à ce jour au Liban en matière de lutte contre la corruption. Nombreux sont en effet les textes qui, de par les domaines couverts et les sanctions prévues, sont à même de dissuader bien des corrupteurs et corrompus.

La convention des Nations-Unis pour la lutte contre la corruption à laquelle le Liban a adhéré en 2008 (loi N° 33) prévoit ainsi l’inclusion dans les lois nationales de mesures législatives et administratives compatibles qui favorisent la transparence et préviennent la corruption et les conflits d’intérêt ainsi que la mise en place de systèmes appropriés de passation des marchés publics.

De même, la nouvelle loi anti-blanchiment N°44 de 2015 contient une obligation de déclaration de soupçon qui pourrait s’apparenter à une forme de reconnaissance des lanceurs d’alerte. Elle définit en outre la corruption comme étant une infraction menant aux actes de blanchiment en y intégrant notamment les pots-de-vin, le trafic d’influence, et l’enrichissement illicite. Les infractions sont sanctionnées par des peines financières lourdes et des peines de prison allant de deux mois à sept ans.

Figure aussi parmi les textes que l’on peut citer la loi sur l’enrichissement illicite N° 154 de 1999 qui définit l’enrichissement illicite comme le montant perçu par acte de corruption ou de trafic d’influence et le sanctionne de peines de prison prévues au Code pénal (articles 451 et suivants) qui vont jusqu’à trois ans de réclusion ou de travaux forcés.

Sans prétendre à l’exhaustivité en la matière, il convient enfin de mentionner les articles 112 et 173 de la loi sur la comptabilité publique qui engagent la responsabilité personnelle et pécuniaire (sur leurs deniers propres) des ministres et des comptables publics en cas d’infraction aux lois et/ou de dépassement des dotations entrainant pertes financières pour l’État.

Protéger les lanceurs d’alerte

Mais tout ceci n’aurait aucun sens ni de chance réelle de succès si n’étaient couplées à cette initiative, des mesures législatives et règlementaires tendant à reconnaitre le véritable rôle des lanceurs d’alerte (c’est-à-dire non seulement leur obligation légale mais aussi leurs droits) et à les protéger à l’instar de ce qui a été adopté en France dans la loi Sapin II précitée. Ces lanceurs d’alerte sont essentiels pour briser les verrous et avoir accès aux informations et aux secrets. Les dénigrer ou les rendre vulnérables par des mesures disciplinaires et discriminatoires, reviendrait tout simplement à rendre vains tous les efforts législatifs. Cela a d’ailleurs été récemment le cas avec un haut fonctionnaire démis de ses fonctions par un ministre au « pedigree » très douteux, en raison d’une dénonciation et du blocage d’une affaire de corruption touchant une coopérative agricole. Appelé à trancher sur fond, le Conseil d’État a là l’occasion de prendre une décision qui pourrait faire jurisprudence en matière d’abus d’autorité.

D’ailleurs, la décision inédite (n°265) du tribunal des référés de Beyrouth en date du 18 Avril 2018 dans l’affaire Sakker el-Dekkéné v/s Conseil du Sud peut servir de point de départ à la création d’un droit de protection de ces lanceurs d’alerte au Liban. En se basant sur la défense de l’intérêt public et du droit à l’information, l’instance judiciaire a débouté dans son délibéré l’organe étatique dans sa tentative d’interdire la publication, sur le site de l’association, d’un rapport dénonçant les mécanismes de corruption et procédures de surfacturation entachant la concession d’un marché public. N’est-ce pas le début d’un commencement?

Il est dit que « la corruption est le cancer de la démocratie et un impôt que le contribuable paie deux fois ». Il est grand temps de mettre tout en œuvre afin de l’extraire définitivement du corps libanais et de l’en immuniser à jamais.

Karim Daher

Decision of the Constitutional Council No 2/2018 dated 14/5/2018 which annulled controversial articles of the 2018 budget Law #79 dated 178h April 2018

Posted on Wednesday May 16th, 2018Thursday August 9th, 2018 by citylog

ALDIC publish hereafter the Constitutional Council Decision No 2/2018 which annulled seven controversial articles of the 2018 budget on the basis of non-financial legislative provision included in finance act (cavaliers budgétaires) as well as violation of principles of fairness and equity notably as regards to the Tax amnesty granted to tax evaders, offenders and defrauder. The said Decision recall to the public authorities, government and parliament, the basic rules of elaborating and implementing a Budget Law.

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Conférence de la Chambre de Commerce Franco-Libanaise à Paris au Cercle de l’Union Interalliée le Mardi 29 Mai 2018

Posted on Friday May 11th, 2018Saturday June 2nd, 2018 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.

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