Category: Notifications & Regulations

Decision No. 2034/1 issued by the Ministry of Finance on 31/12/2018 (hereinafter), has defined the implementing provisions of article 41 of the Budget Law No. 79 dated 18/04/2018 (exemption of the work contracts from the fiscal stamp duties). This Decision recalls that this exemption is limited to Lebanese employees and is conditioned by their regular registration at the National Social Security Fund (NSSF) on 19/04/2018 (and the preceding period). Moreover, this Decision subjects the work contract of employees registered after that date for the preceding period of employment, to the fiscal stamp duty in addition to the applicable penalties in the event of default or delay. It should be noted however, concerning the latter point, that the Decision has interpreted implicitly the intention of the legislator which had not provide a clear taxation in Article 41 for the period prior to 19/04/2018 concerning non-registered employees at the NSSF.

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Decision No. 2013/1 issued by the Ministry of Finance on 28/12/2018 (hereinafter), defines the implementation conditions of article 59 of the Law No. 379/2001 (Value Added Tax) regarding the VAT recovery for exempted transaction.

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Decision No. 2010/1 issued by the Ministry of Finance on 27/12/2018 (hereinafter), defines the implementation conditions of article 52 of the Law on built property tax (the Law of 17/09/1962) as amended by article 28 of the law No. 79 dated 18/04/2018 (Budget Law for 2018) that governs the allowances (deductions) that shall apply to residential properties. It states indeed that the annual deduction of /6.000.000/LP for each residential unit, up to two units throughout the Lebanese territory, shall apply till the end of the year 2017, whereas the annual deduction of /20.000.000/LP shall apply starting 01/01/2018. The implementation details are defined in the said Decision.

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Decision No. 1857/1 issued by the Ministry of Finance on 30/11/2018 (hereinafter), has amended the provisions of Article 53 of Decision No. 453/1 of 22/04/2009. Indeed, the taxpayer who submits to the tax authorities a declaration of permanent cessation of activity, is additionally compelled to deposit to the said administration, within 15 days of its notification of the preliminary result of the fiscal control, its records and accounting documents relating to the years during which he is required to keep them (ten-year prescription), thus, on papers or on compact discs. It should be noted however that in the event of cessation of activity due to the declaration of bankruptcy, this obligation lies with the trustee in bankruptcy. The records and accounting documents thereby submitted to the tax authorities must be kept by the latter with a view to consult them when necessary or to respond to any request for information transmitted to the administration in compliance with international agreements authorizing the exchange of information.

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The Ministry of Finance (MoF), has issued and published the here below the Decision No. 1583/1 dated 30 October 2018 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 until 30 October 2018.

The delay tax declaration penalties are reduced for all tax infringements incurred prior to 30 October 2018 (inclusive) 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 prior to 30 October 2018 (inclusive) by 75%. This being précised, it should be noted however 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 this new MoF Decision No 1583/1 dated 30 October 2018, the tax penalties rebates are applicable to all tax adjustments settled before the 31st December 2018.

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The Ministry of Finance (MoF), has issued and published the here below the Decision No. 3361 dated  October 9^th, 2018 specifying that the VAT on the electricity and water invoices is deductible from the taxable income only if these invoices are issued in the name of the company. However, knowing that many electricity and water invoices are still in the name of the previous owners as the subscriptions have not been changed to the new owners, the MoF will accept the deductibility of such invoices till the 31st December 2018 but will refuse their deductibility starting from the following fiscal year (i.e. FY 2019) should they stay in the name of the former owner of the electricity and water subscriptions.

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The Decision No. 789/1 dated May 10, 2018 has updated the list of jurisdictions to which Lebanon is committed to automatically report financial account information of their taxpayers for the year 2017.

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The Ministry of Finance (MoF), has issued and published the here below Decision No 1479/1 dated 01/10/2018 on the application of the provisions of article 41 of the Budget Law No66/2017 (kindly refer to the folder Budget in Your Rights) related to changing the legal form of the Lebanese entities (notably from SARL to SAL). This MoF decision clarifies the practical application of a change in the legal form of a company such as increasing its capital to reach the minimum legal amount of LBP 30 million for a SAL or how to benefit from the exemption of taxes of various types. Regretfully, the judicial and attorney dues and taxes have not been sated clearly in article 41 the law and therefore not concerned by the exemption.

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The Ministry of Finance (MoF), has issued and published the here below the Decision No. 1472/1 dated September 27, 2018 with respect to the mechanism of defining the “Beneficial Owner” in accordance with the provisions of the Law No 74 dated 27/10/2016 (kindly refer to the folder Taxes in Your Rights). This MoF decision clarifies on the one hand the mechanism of defining the “Beneficial Owner” as regard to entities (20% of the shareholding or decision maker) and trusts (Settlor/Trustee/Protector/Beneficiary); and, on the other hand, reminds the taxpayers that they should keep accounting records and relevant papers showing all information related to the “beneficial owner” they are dealing with preserve these records and documents for a period of ten years; as well as to report to the concerned authorities the requested information in accordance with the above mentioned law No 74 and the anti-money laundering Law No 44 dated 24/11/2015.

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The Ministry of Finance (MoF), by virtue of the enclosed Decision No 1476/1 dated 28/09/2018, has postponed the term of payment of the lump sum tax of the year 2018 from September 30, 2018 till 31/10/2018. Kindly find hereinafter the aforesaid Decision.

Needless to precise however that this Decision may be qualified and considered as an action ultra vires (عمل تنظيمي ضار يتجاوز حدّ السلطة) and a violation of the principle of “formal parallelism” parallelism of powers; since a law may only be amended by a law.

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