Notifications & Regulations – Aldic

MoF notification #121-1 dated 15 Jan. 2025-Deadlines to send a request letter for inventory revaluation and clarifications

MoF notification #121/1 dated 15 Jan. 2025 – Deadlines to send a request letter for inventory revaluation & clarifications

Posted on Monday January 20th, 2025 by citylog

The Ministry of Finance (MoF) issued on the 15^th January 2025 the notification # 121/1 (attached a scanned copy) clarifying the previous notification # 3381/1 dated 31^st December 2024 related to the deadlines set for taxpayers to send a request letter to inform the MoF of their will to reevaluate their inventory according to the article 2 of the Law # 330 dated 5^th December 2024 (Reevaluation Law with no tax impact). The deadlines are set as follows:

– Before the 5^th February 2025 for the reevaluation of the inventory of the fiscal year 2023.

– Before the 31^st January 2025 for the reevaluation of the inventory of the fiscal year 2024.

This new MoF notification requires from the taxpayers willing to reevaluate their inventory to send the following documents to the MoF before the above mentioned deadlines:

– Request letter to inform the MoF of their will to reevaluate their inventory.

– This request letter should include a commitment from the taxpayer to keep all the supporting documents required by the Law #330 for this inventory reevaluation (or in a separate commitment letter).

Important clarification: This notification also specified that for those taxpayers who doesn’t want to reevaluate their inventory as at end of 2022 and have chosen to reevaluate their inventory starting from the year 2024, they will only be able to reevaluate the inventory purchased in 2023. Therefore, it is recommended to reevaluate the inventory in 2023 based on their value as at end of 2022 to be able to reevaluate the old inventory purchased before 31 December 2022 at their market value with no tax impact. This reevaluation is mainly recommended for companies with long life cycle inventory such as real estate properties available for sale or jewelry who should send a request and commitment letter to the MoF before the 5^th February 2025.

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MoF decision #65/1 dated 15 Jan. 2025-Extension of 2024 quarterly tax on salaries and NRT declarations till 31 Jan. 2025

Posted on Monday January 20th, 2025 by citylog

The Ministry of Finance (MoF) has issued on the 15^th January 2025 the decision #65/1 (attached a scanned copy) extending the following tax filing deadlines till the 31^st January 2025:

1) Tax on salaries declarations of the 1^st, 2^nd, 3^rd and 4^th quarters of the year 2024 and the payment of the related tax.

2) Non-resident tax declaration of the 2^nd, 3^rd and 4^th quarter of the year 2024 and the payment of the related tax.

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NSSF Memo #1 dated 9 January 2025-Annual ceilings for the year 2024

Posted on Monday January 20th, 2025 by citylog

NSSF Memo #1 dated 9^th January 2025 that defines the 2024 annual ceilings for the Sickness & Maternity and the Family allowances contributions as follows:

– Sickness & Maternity annual ceiling for the year 2024 = LBP 891,000,000.

– Family allowances annual ceiling for the year 2024 = LBP 144,000,000.

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MoF notification #3381/1 dated 31 Dec. 2024 – Deadlines to send a request letter for inventory revaluation

Posted on Monday January 20th, 2025 by citylog

The Ministry of Finance (MoF) issued on the 31^st December 2024 the notification # 3381/1 (attached a scanned copy) related to the deadlines set for taxpayers to send a request letter to inform the MoF of their will to reevaluate their inventory according to the article 2 of the Law # 330 dated 5^th December 2024 (Reevaluation Law with no tax impact). The deadlines are set as follows:

– Before the 5^th February 2025 for the reevaluation of the inventory of the fiscal year 2023.

– Before the 31^st January 2025 for the reevaluation of the inventory of the fiscal year 2024.

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

Posted on Friday January 10th, 2025 by citylog

The Ministry of Finance (MoF) issued on the 3^rd January 2025 the decision # 5/1 (attached a scanned copy) requiring from the individual taxpayers to register online and submit their personal income tax declaration (F1 form) online through the MoF electronic tax portal starting from the fiscal year 2023.

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MoF decision #1311/1 dated 31 Dec 2024-Application of article 90 of Budget Law 2024-Severance pay exempted from tax till 31 Dec. 2025

Posted on Wednesday January 8th, 2025 by citylog

The Ministry of Finance (MoF) issued on the 31^st December 2024 the decision # 1311/1 in application of the article 90 of the 2024 Budget Law # 324, that extended the deadline set in the article 36 of the Budget Law of the year 2022. Accordingly, the Severance pay or Termination compensations paid to dismissed or resigned employees during the period from 15^th February 2024 until 31^st December 2025 are exempted from tax on salaries and are considered as tax deductible expenses to the employer subject to income tax on the basis of actual profits, even if they exceed the ceiling defined by the applicable laws.

Knowing that the article 36 of the Budget Law of the year 2022 exempted from tax on salaries the termination compensations paid to dismissed or resigned employees during the period from 1^st July 2019 till 30^th September 2022, the period between the 1^st October 2022 and the 14^th February 2024 as well as any payment of severance pay from the 1^st January 2026 are not covered by this tax exemption.

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MoF decision #1177/1 dated 19 Dec 2024-Application of article 83 of Budget Law 2022 – Income tax exemption for victims of Beirut port explosion

Posted on Monday December 30th, 2024 by citylog

The Ministry of Finance (MoF) has issued on the 19^th December 2024 the decision # 1177/1 in application of the article 83 of the 2022 Budget Law # 10. According to this article of the 2022 Budget Law, commercial entities and individuals who ceased their activity following the Beirut port explosion can benefit from a full exemption on their income tax for the years 2021, 2022 and 2023 in case they resumed their activity, under certain conditions.

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MoF decisions #1294/1 dated 24 Dec 2024 for extension of several tax filling deadlines till January 2025

Posted on Monday December 30th, 2024Monday December 30th, 2024 by citylog

The Ministry of Finance (MoF) has issued on the 24^th December 2024 the decision #1294/1 (attached a scanned copy) extending the following tax filing deadlines (previously extended till end of November 2024 by the MoF decisions #1122/1).

1) Further extension of the deadline till 15^th January 2025 for the filing and the payment of the related due tax for:

a. The Tax on salaries declarations of the 1^st, 2^nd and 3^rd quarters of the year 2024.

b. The Non-resident tax declaration of the 2^nd and 3^rd quarters of the year 2024.

2) Further extension of the deadline for the Value Added Tax (VAT) declaration of the 3^rd quarter of the year 2024 and the payment of the related tax till 20^th January 2025.

3) Further extension of the deadline till 31^st January 2025 for the filing and the payment of the related due tax for:

a. The Corporate Income Tax and the related Ultimate Beneficiary Owner (UBO) declaration of the fiscal year 2023.

b. The annual declaration forms (including the UBO M18 form) for the year 2023 for taxpayers subject to income tax based on the lump sum regime (deemed profit basis) and institutions who are exempt from income tax (including associations and NGOs) and adopting the cash basis of accounting and the payment of the related tax as well as for submitting the annual non-resident tax (G5 form) due as per article 41 and 42 of the income tax law.

c. The annual declaration forms (including the UBO M18 form) for the year 2023 for taxpayers subject to tax on a real profit basis (sole proprietorships, partnerships and institutions who are exempted from income tax and adopting the accrual basis of accounting) and the payment of the related tax as well as for submitting the annual non-resident tax (G5 form) due as per article 41 and 42 of the income tax law.

d. The tax declaration of multiplace taxpayers (R8) of the year 2023.

e. The annual tax on salaries declarations (R5,R6,R7) of the year 2023.

f. The deadline for the Tax on Sayrafa profits (article 93 of the 2024 budget law).

g. The Corporate Income Tax and the related Ultimate Beneficiary Owner (UBO) declaration for the companies that adopted a special fiscal year ending on the 30^th September 2024, on the 31^st October 2024 and the 30^th November 2024.

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Law #328 on Suspension of legal deadlines & Law #330 on Exceptional Revaluation of Assets

Posted on Tuesday December 10th, 2024 by citylog

The parliament has passed on Thursday 28^th November 2024 the Law #330 on the Exceptional Revaluation of Fixed Assets, Inventory and Foreign Exchange adjustment of the LBP Devaluation effect on receivables, payables and cash & bank accounts till the 31^st December 2026, along with the Law #328 that Suspended the legal obligations and deadlines (copy attached), including tax deadlines, from the 8^th October 2023 till the 31^st March 2025 (similar to the Law enacted during the Covid and Beirut Port explosion period). The latter will further add one year and a half on the tax prescription period.

These two Laws have been published in the Official Gazette #49 (Appendix 2) on Thursday 5^th December 2024 and should be effective from the date of the application decrees that are under preparation. In the meantime, we will give you a summary on the main components of this exceptional revaluation law.

The Law #330 on the Exceptional Revaluation of Fixed Assets, Inventory and Foreign Exchange adjustment of the LBP Devaluation effect on receivables, payables and cash & bank accounts (copy attached) has two main sections:

– First section amending the article 45 of the Decree #144/59 (Income Tax Law) related to the Revaluation of Fixed Assets. According to the amendments of this Law, taxpayers are exceptionally allowed to revalue their fixed assets every year (instead of every 5 years) starting from the end of the year 2023 till the 31^st December 2026. If the revaluation of the fixed assets exceeds the acquisition cost in the currency it was initially purchased or its net book value after depreciation, the revaluation variance is subject to 15% capital gain tax, unless it is kept in an independent account in both the assets and liabilities (i.e. not affected to the related revalued assets and depreciated) or used to cover accumulated losses. Individuals of not for profit organizations undertaking such revaluation are exceptionally subject to only 1% capital gain tax until 31^st December 2026 [according to the article 86 of the Budget Law #324 of the year 2024].

– Second section covering the Foreign Exchange adjustment of the LBP Devaluation effect on Fixed Assets, Inventory and other balance sheet items:

o Fixed Assets: Companies and taxpayers subject to real profit (including those who have already undertaken previous revaluations) have the option to revalue their fixed assets (Properties, Plants and Equipment as well as Financial assets such as equity participations in subsidiaries and affiliates) every year starting from the end of the year 2022 till the 31^st December 2026 to adjust the effect of the devaluation of the Lebanese Pound (LBP) on the value of these assets, provided that the revalued amount doesn’t exceed the market fair value of this asset [i.e. contrary to the first section of this law, the revalued asset should not exceed its acquisition cost in the currency it was initially purchased). The revaluation of real estate properties should be done through a sworn real estate expert while the remaining fixed assets can be revalued by an auditor member of the LACPA. The revaluation should be submitted to the Ministry of Finance (MoF) for approval, partial amendment or refusal. The MoF has one year to reply, otherwise the revaluation will be considered tacitly accepted. The revaluation variances resulting from this Exceptional Revaluation are not subject to tax and they can be used either to cover accumulated losses, increase the capital of the company or distributed as dividends. The distribution as dividends of these revaluation variances is subject to 10% distribution tax if done within 5 years from the revaluation process and is exempted from this distribution tax if done after the period of 5 years. The totally depreciated fixed assets subject to revaluation cannot be further depreciated while the revalued amount of assets with a residual net book value can be depreciated over the residual useful life of this asset.

o Inventory: Companies and taxpayers subject to real profit (including those who have already undertaken previous revaluations) have the option to revalue their inventory every year starting from the year 2022 till the 31^st December 2026 to adjust the effect of the devaluation of the Lebanese Pound (LBP) on the value of the inventory. The request for revaluating the inventory of the year 2023 should be submitted to the MoF within 2 months from the application date of this Law and one month after the closing date for the following years. The revaluation of inventory should be done through an auditor member of the LACPA. The MoF has one year to reply, otherwise, the revaluation will be considered tacitly accepted. The inventory should be revalued based on its cost in the currency it was initially purchased and the Effective Exchange rate at the end of the related year. The revaluation variance [in LBP] is added to the inventory from one side and is recorded in a separate equity account from the other side. The taxpayer should make available to the MoF a list of supporting documents mentioned in the Law together with a statement showing the initial cost of the inventory items and the revaluated value accepted by the MoF. The revaluation variances resulting from this Exceptional Revaluation are not subject to tax and they can be used either to cover accumulated losses, increase the capital of the company or distributed as dividends. The distribution as dividends of these revaluation variances is subject to 10% distribution tax if done within 5 years from the revaluation process and is exempted from this distribution tax if done after the period of 5 years. The taxpayers who didn’t file for their income tax returns for the years 2020, 2021 and 2022 are not allowed to benefit from this exceptional revaluation. The taxpayers, who recorded their transactions related to inventory at an exchange rate different from the Effective Exchange rate and recorded the related differences of exchange in their P&L account, have the obligation to adjust their accounting records at the Effective Exchange rate and adjust their income tax declarations for the related years before submitting a request for an exceptional revaluation of their inventory.

o Adjustment of the LBP devaluation effect on receivables, payables and cash & bank accounts: Companies and taxpayers holding accounting books have the obligation to adjust their accounting books to correct the effect of the LBP devaluation starting from the end of the year 2022 till the 31^st December 2026 by applying the Exchange rate adopted by the Central Bank (BDL) at the end of each year on the class 4 and 5 accounts (i.e. receivables, payables and cash & bank accounts). Positive and negative differences of exchange resulting from this adjustment [i.e. the difference between the BDL-adopted exchange rate and the rate previously used by the taxpayer] should be excluded from the taxable income, excluding the differences of exchange related to salaries.

We are waiting for the application Decree of this Exceptional Revaluation Law to give you more details on its application.

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MoF clarification on the conditions to benefit from 75% tax discount on export profits

Posted on Saturday November 23rd, 2024 by citylog

The Ministry of Finance (MoF) has recently replied to a request from the LACPA (Lebanese Association of Certified Public Accountants) for clarifications on the conditions for a Lebanese industrial company to benefit from 75% tax discount on the profit of its export sales according to the article 23 of the Budget Law of the year 2022.

According to the article 23 of the Budget Law of the year 2022 (Law #10), profits generated from the export of Lebanese manufactured products by industrial companies will benefit from 75% discount on the related income tax if the proceeds of such export are transferred back to banks operating in Lebanon and reinvested in Lebanon or used in total for the purpose of its industrial activity in Lebanon. Industrial companies that meet these conditions can benefit from this increased tax discount rate (from 50% to 75%) for five years starting from the year of the publication of this Law (i.e. until the fiscal year 2026).

In its recent reply to the LACPA dated 12^th November 2024 (attached a scanned copy of this letter with the reference #622/S2), the MoF has clarified the condition related to the transfer of the export proceeds to “banks operating in Lebanon” whereby it allows the industrial companies to use bank accounts opened in foreign countries to satisfy the other condition of using the proceeds of their export sales in total to purchase goods or equipment for the purpose of their industrial activity in Lebanon, within a short period of time that does not exceed a year.

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