Category: Notifications & Regulations

By virtue of the Administrative Instruction No. 988/S2 dated 02/12/2020 issued by the director of the Revenue Branch of the Ministry of Finance, the public officers are required to reinforce the inspection of the identity of the beneficial owners in compliance with the laws and regulations in force, as a prelude to the follow-up report which will be submitted by Lebanon to the Global Forum on Transparency in June 2021.

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By virtue of the MoF Decision No. 691/1 dated 19/11/2020, the new forms No. S1/J and S4/J (here below) related to the declaration and payment of the tax on movable capital assets have replaced the forms using the same numbering which were subject of the MoF Decision No. 1432/1 dated 17/09/2018.

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The Ministry of Finance (MoF) has issued the here below Decision No. 255/1 dated 07/06/2020 published in the Official Gazette No. 44 dated 12/11/2020 relating to the determination of the implementing provisions of articles 1 and 2 of the Law No. 160 relating to the legal deadlines for tax rights and obligations which fall within the competence of the Public Finance Directorate.

The deadlines provided for by the Law No. 160 dated 05/08/2020 relating to the exercise of taxpayers, including diplomatic and consular institutions and international organizations, their rights and the fulfillment of their fiscal obligations, in particular those stipulated in the Law on fiscal procedures as well as in other laws, and the provisions contained in the Law No. 6 dated 05/03/2020 (Budget Law and annexed budgets of 2020) relating to taxes and fees, and in particular:

A) Concerning the deadlines relating to taxpayer’s obligations:

· The declaration relating to the start of activity;

· The application for registration of an employee.

· The application for registration for the value added tax.

· The submission of periodic and annual declarations related to all types of taxes and fees;

· The request for modification of the information.

· Cessation of activity.

· The submission of the declaration relating to the beneficial owner.

· The forced settlement of taxes and fees.

· The request relating to the installment of inheritance tax.

· Registration of documents and records.

B) Concerning the rights granted by virtue of the Law on Tax Procedures as well as by other tax laws:

· The response to the preliminary results assessment;

· The objection to the tax adjustment before the Tax Administration;

· The objection before the Objection (Appeal) Committee;

· The filing of an appeal of the Objection Committee’s decision before the State Council.

C) Concerning the rights and obligations provided for in Law No. 6 of 5/3/2020 (Finance Law and related Budgets 2020):

· Article 20 relating to the imposition of an additional tax payable by banks, financial institutions and financial intermediation institutions according to its turnover for the year 2019.

· Article 22 relating to certain articles provided for by the Law No. 144 dated 07/31/2019 (General budget and annexed budgets for 2019).

The suspension of the deadlines provided for by the Law No. 160 of 05/08/2020 includes moreover the deadlines relating to the exercise by the tax administration of its rights and obligations and in particular:

– The deadlines relating to the completion of the adjustment and the notification to taxpayers of the preliminary results.

– The deadlines relating to the issuance of final adjustments in response to the preliminary adjustment results;

– The deadlines relating to the recovery of main and additional taxes and fees.

– The deadlines to decide the restitution requests submitted before the Tax Administration;

– The deadlines to decide on the objections submitted before the Tax Administration; The deadlines to appeal the decisions of the Objection Committee before the State Council and to prepare a reply

This Decision also specifies the suspended deadlines relating to the exercise by the tax administration and by the taxpayers of their rights and obligations.

The period between 10/18/2019 and 7/30/2020 shall not be counted within the deadlines granted to taxpayers to fulfill their tax obligations related to all types of taxes and fees which are collected by the Public Finance Directorate.

The period between 10/18/2019 and 7/30/2020 shall not be counted within the deadlines granted to the tax administration to recover all kinds of taxes and fees which are collected by the Public Finance Directorate.

The deadlines set by the tax administration for the taxpayer to undertake a specific procedure the law did not provide for a legal deadline in compliance with the provisions of Clause 1 of Article 9 of the Tax Procedures Law do not benefit from the provisions of the suspension

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The Ministry of Finance (MoF) has issued the here below Decision No. 245/1 dated 07/06/2020 published in the Official Gazette No. 44 dated 12/11/2020 determining the elements constituting the turnover of banks, financial institutions and financial intermediation institutions to be adopted in order to settle the flat-rate tax provided for in article 20 of Law No.6/2020. Indeed, constitutes the turnover:

a) Concerning banks, financial institutions and financial intermediaries which adopt form (B1) for the annual declaration of the activity’s results: in the aggregate the sum of the accounts of the seventh category contained in form B13 (declaration of profit and loss) of the aforementioned declaration and consequently of the declaration attached to the Decision.

b) Concerning financial intermediation institutions which adopt form (S1) for the annual declaration of the activity’s results: in the aggregate the sum of the accounts of the seventh category contained in form s16 (declaration of profits and losses) of the aforementioned declaration and consequently the declaration attached to this Decision.

The tax shall be paid by virtue of tax rolls attached to the decision (S 13), a copy of which shall be given to the Ministry of Finance, similar to the invoice relating to article 51 of the Law No. 497/2003 and its modifications, in order for the competent authority before the Ministry of Finance to register it in the tax system provided for this purpose.

The tax paid by each bank, financial institution and financial intermediation company is considered to be a deductible charge from the income of the fiscal year 2020, and the penalty paid due to late payment (if any) of the tax within the deadline provided for in article 20 of the Law No. 6/2020, or the due penalty which must be paid and the amount of which is less than what is due, is considered to be a deductible charge.

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The Ministry of Finance (MoF) has issued the here below Decision No. 244/1 dated 07/06/2020 published in the Official Gazette No. 44 dated 12/11/2020 relating to the tax treatment of profits made by insured in the form of investment returns as regard to the premiums paid to insurers and underwriters, by adding a new paragraph to article 2 of the MoF Decision No 393/1 dated 22/4/2017.

Thus, the net profits referred to in the first paragraph of the said article are determined by the difference between the paid amounts by the insurance company to the insured or to the contracting party and the value of the premiums relating to the investment and allotted to the constitution of the funds. Shall not be included however in the calculation of these premiums:

– Life insurance premiums.

– Commissions paid to brokers and intermediairies.

– All expenses collected by the insurance company.

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The Ministry of Finance (MoF) has issued the here below Decision No. 243/1 dated 07/06/2020 published in the Official Gazette No. 44 dated 12/11/2020 relating to the determination of the implementing provisions of the Law No. 160 dated 05/08/2020 concerning the exemption of donations granted for the benefit of public administrations, institutions and municipalities funded by sources in Lebanon due to the spread of the Coronavirus.

In fact, are exempt from all taxes and fees, import operations related to donations received by the administrations of the State, public institutions and municipalities granted by internal sources in order to fight against the spread of the Coronavirus, provided that the donations are accepted in accordance with the laws and rules in force.

In order to benefit from the said exemption, the following conditions must be met:

– The donation must be used exclusively to fight against the spread of the Coronavirus;

– A draft form of putting in local consumption IM4 should be organized, and the legal documents necessary for customs clearance of the goods should be attached, in particular the text relating to the acceptance of the donation, in accordance with legal principles, provided however to obtain the authorization allowing to include the code 200 to the list of cases which benefit of the exemption or reduction of fees provided for in cell No. 37 of the customs declaration.

– The party benefiting from the exemption must mark the draft import declaration indicating that the goods that shall be exempted are intended to be used exclusively to fight against the spread of the Coronavirus. In the event that the imports are part of the financial donation, the form should also be marked by indicating that the goods that shall be exempted are purchased from the granted donation.

– Following the completion of the form’s several steps, the donations shall be registered in a special exemption register before the Beirut Customs Presidency, in return of a commitment from the concerned parties to present a receipt certificate within three months as of the date of exit of the goods from the customs.

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The National Social Security Fund (NSSF) has issued and published the here below Memo No.646 dated 22/09/2020, extending till the 27^th February 2021 the discount on penalties mentioned in the articles 22 and 23 of the Budget Law 2020 (Law No.6/2020); as well as the suspension of legal, judicial and contractual deadlines until the 31/12/2020 in compliance with the Law No.185 dated 19/09/2020.

The Ministry of Finance (MoF) issued and published the here below Decision N.530/1 dated 14/10/2020 relating to the extension of tax penalties rebated. In fact, the MoF extended the tax penalties rebates set in the previous MoF decision No. 236/1 dated 29/06/2020 (here below) until the 31^th December 2020 on any tax infringement incurred from 01/08/2019 till 17/10/2019 (inclusive).

In fact, according to this Decision, the Minister of Finance is granting the taxpayers subject to tax adjustments tax penalties rebates covering all the tax infringements related to income tax, VAT, built property tax, inheritance tax and the indirect taxes and fees that occurred from 01/09/2019 till the 17/10/2019.

The delay tax declaration penalties are reduced for all tax infringements incurred from 01/08/2019 2019 till the 17/10/2019 as follows:

• Variable penalties are reduced by 85%;
• Lump sum penalties are reduced by 60%.

 

The delay tax payment penalties are reduced for all tax infringements (including those related to the fiscal stamp duty) incurred from the 01/08/2019 till 17/10/2019 (inclusive) by 75%.

It should be noted in this regard that the variable or the lump sum tax penalties for delay declaration or payment cannot be less than LBP 50,000 in any case after reduction.

Thus, according to the new said Decision, the tax penalties rebates are applicable to all tax adjustments settled before the 31/12/2020.

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Shall be exempted from taxes, especially from the fiscal stamp duty and customs fees, including the minimum customs, financial and port fees, and from the fee imposed by virtue of Article 59 of Law No. 144 dated 31/07/2019 (General Budget Law and annexed Budgets for 2019) as well as from the VAT (Value Added Tax), the donations and foreign aid provided to public administrations and institutions, municipalities, the federation of municipalities and other persons of public law, associations, organizations and religious communities, by external organizations, to overcome the damages resulting from the Beirut Port and thus, by virtue of a letter issued by the High Relief Commission.
The aforementioned exemption includes the following operations:

• Import transactions and operations related to these donations and aids;
• Money delivery operations and services related to the reconstruction of destroyed facilities and infrastructure of the Lebanese State as well as damaged and destroyed buildings of natural and legal persons;
• Money delivery operations and humanitarian services which are distributed free of charge;
• Money delivery operations and services for emergency purposes in order to overcome the damage and losses resulting from the explosion of the port of Beirut.

n order to benefit from such exemption, the organizations and parties granting these donations and aid must prove this aid by virtue of a letter issued by the High Relief Commission and thus, by virtue of a request submitted to the latter including the following information :

 

• Name of the sender, address, telephone number and email address;
• Name of the recipient, address, telephone number and email address;
• Description of the goods (quantity, nature, number, weight, value)/description of the services provided;
• Storage location with the complete address;
• Name of the entity or person responsible for the distribution of the aids/ the implementation of the services

In the event of misuse of these donations and aids, all fees and taxes will be due and the offending party will be subject to legal proceedings.

 

 

 

These operations carried out by persons subject to tax are exempted from the Value Added Tax (VAT) and these persons benefit from the provisions of article 28 of the Law No. 379/2001 (value added tax) and its modifications. In other words, when these people carry out money delivery operations and services for the benefit of administrations and public institutions, municipalities, federation of municipalities, associations, organizations and religious communities, a tax of 0% shall be due (in order to allow the deduction or the retrieve of the borne tax on purchases and charges), provided that the invoice or the similar document relating to these operations includes the information provided for in article 38 of the Law No. 379/2001 and its modifications as well as those mentioned in the Decree No. 1373/1 dated 31/2/2014 (taxpayers required to issue invoices and determine documents similar to invoices) in addition to other requested information (such as the number and date of the letter issued by the High Relief Commission certifying the acceptance of the donation…).

 

The declaration of donations and aid is carried out according to the implemented customs procedures in order to benefit from the said exemption.

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The Ministry of Finance (MoF) has issued the here below Decision No. 307/1 dated 28/07/2020 published in the Official Gazette No. 39 dated 08/10/2020 which determines the transfer mechanism of bearer shares and promissory shares in the name of the Lebanese State. This Decision specifies indeed that the ownership of bearer shares and promissory shares that have not been replaced by nominative shares as required, within two years from the entry into force of Law No. 75 dated 27/10/2016 related to the cancellation of bearer shares and promissory shares, are henceforth automatically transferred in favor and in the name of the Lebanese State (Lebanese Treasury) and their administration is entrusted to the administration of the Treasury of the Ministry of Finance.

The Revenue Department establishes a list containing the names of the companies which have not replaced bearer shares and promissory shares by nominative shares in compliance with the foregoing, including the number of shares and their value, a copy of which is deposited by the Treasury Department.

Each company whose shares still contain bearer shares and promissory shares should:

• Issue registered nominatives shares in the name of the Lebanese treasury, instead of bearer shares and promissory shares, and to submit them to the treasury department of the Ministry of Finance;

 

• Record the minutes of the general meeting which decided to issue new registered (nominative) shares in the name of the Lebanese State before the commercial register;

 

• Modify the information before the tax administration in accordance with the Law on tax procedures;

 

• Inform the Finance Department of any decision regarding the distribution of dividends within 15 days from the date of said decision, while specifying the dividends’ value due to the Lebanese State, and submit to the Department of the General Directorate of Finance a check in the name of the Central Treasury equivalent to this value.

 

The Treasury Department remits thereafter the original shares to Midclear by virtue of a written letter issued by the Treasury Department and signed by the Minister of Finance provided that a copy of said letter is notified to the Treasury Department (Department of Accounting and funds) as well as to the General Accounting Department (Financial Accounting Department). The Treasury Department shall attach to the annual mission account a statement showing the status of these shares, their number, their nominal value and the collected dividends. The Ministry of Finance notifies in fine the Council of Ministers of the companies’ names and the number of shares which have been transferred in the name of the Lebanese State in order to take the appropriate decision in this regard.

 

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