Category: Notifications & Regulations

The Minister of Finance, has issued the here below Decision No. 236/1 dated 29/06/2020 published in the Official Gazette No. 28 dated 02/06/2020, relating to the implementing provisions of the Law No. 662 dated 04/02/2005 allowing the Minister of Finance to carry out the adjustment of penalties for tax infringements incurred between 01/08/2019 and 17/10/2020 (inclusive).

This Decision grants taxpayers that are subject to penalties of collection rebates covering all tax infringements related to income tax, VAT, built property tax, inheritance tax and indirect taxes and fees that occurred until 30/09/2020 (inclusive).

The said penalties are reduced from the date of publication of this Decision till 30/09/2020 as follows:

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

 

It should be mentioned in this regard that the variable or the lump sum tax penalties of collection cannot be less than /50.000/LBP in any case after reduction.

The adjustment of any penalty with a value exceeding One billion Lebanese Pounds after reduction is subject to the prior approval of the Council of Ministers.

Besides, this Decision also grants taxpayers that are subject to penalties for delay in payment rebates covering all tax infringements related to either direct and indirect taxes and fees, including fiscal stamp duty and VAT, that are due or that shall be due within the implementation period of this decision, whether the delay in payment occurred before or after the entry into force of this decision or related to fiscal periods that the declaration deadline expired before 17/10/2020 (inclusive).

The delay in payment penalties are reduced for all tax infringements incurred during the above mentioned period by 75%.

The recovery services in charge of rebates of penalties of recovery and collection rebates shall proceed with the reduction upon the payment of the due amounts by the taxpayers and thus, according to recovery programs; provided however that said services shall organize monthly declarations related to the reduced penalties and submit them before the regional financial service.

Thus, according to this decision, the tax penalties rebates are applicable to all tax adjustments settled before 30/09/2020.

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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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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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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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The Ministry of Finance (MoF), has issued and published the here below Decision No. 125/1 dated 22/03/2020 relating to the suspension of tax obligations. Indeed, according to this Decision, the deadlines related to the taxpayers’ obligations and to taxes and fees collected and recovered by the Public Finance Departments, which have not been extended by virtue of decisions and whose deadlines expire between 03/03/2020 and the date of issue of a decision taken by the Ministry of Finance ending the general mobilization and thus, are suspended until the issuance of said decision.
The abovementioned suspension relates to the deadlines in connection with the following:

Concerning the deadlines related to taxpayers’ obligations:
The start of activity;
The modification of information;
The cessation of activity;
The submission of periodic and annual declarations related to all types of taxes and fees;
The payment of taxes and fees;
The recovery penalties charged to taxpayers who are not subject to a self-adjustment and self-reporting.

Concerning the deadlines related to the rights granted to taxpayers:
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.

Besides, the deadlines related to the obligations of the Tax Administration concerning their provided for by the Law on Tax Procedures and by other laws are also suspended, in particular the following:
The deadlines to address final adjustments in response to preliminary results assessment;
The deadlines to decide on 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.

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The Ministry of Finance (MoF), has issued and published in the official gazette the here below Decision No. 158/1 dated 08/05/2019 which has updated the list of Partner States to which Lebanon is committed to automatically exchange financial account information of their resident taxpayers for the year 2020 and the following years (CRS/AEOI). Reminding that Lebanon will be entitled to receive same information about its residents once it reaches level 3 of the peer review of the Global Forum. This list includes till this date the following Partner States:

 

Argentina	Faroe Islands	Japan	Pakistan	Turkey
Australia	Finland	Jersey	Panama	United Kingdom
Austria	France	Korea	Poland	Uruguay
Azerbaïjan	Germany	Latvia	Portugal
Belgium	Gibraltar	Liechtenstein	Russia
Brasil	Greece	Lithuania	Saint Lucia
Canada	Greenland	Luxembourg	San Marino
Chile	Guernesey	Malaysia	Saudi Arabia
China	Honk Kong, China	Malta	Seychelles
Colombia	Iceland	Mauritus	Singapore
Croatia	India	Mexico	Slovak Republic
Cyprus	Indonesia	Monaco	Slovenia
Czech Republic	Ireland	Netherlands	South Africa
Denmark	Isle of Man	New Zealand	Spain
Estonia	Italy	Norway	Sweden

 

The Ministry of Finance (MoF), has issued and published the here below Instructions No. 920/s1 dated 16 May 2020 concerning the penalties for infringements relating to the auditor’s report and thus, in compliance with the provisions of the Law No. 126 dated 29/03/2019 amending several provisions of the Code of Commerce. Thus, according to these Instructions, the competent tax departments are required to impose the penalty provided for by article 109 of the Law on Tax Procedures No. 44 dated 11/11/2008 and its amendments for all infringements incurred until 01/04/2019, date of publication of the Law No. 126, and  relating to:

• The submission of the auditor’s report signed only by the principal auditor.
• The submission of the two independent reports of the main and additional auditors, the first being submitted within the deadlines and the second submitted outside the legal deadlines.
• The submission of the report outside the deadlines modifying the report submitted within the legal deadlines.

Thus, insofar as the first or the second above-mentioned infringement is committed after 01/04/2019 for companies adopting an additional auditor despite the modifications made by virtue of the aforementioned Law No. 126, the competent tax departments are required to consider the auditor’s report as not submitted within the legal deadlines and therefore to impose the penalty provided for by the provisions of article 109 of the aforementioned Law No. 44/2008 and thus, at the rate of 5% of the due tax in accordance with the declarations or the gain fixed by the tax authorities for each month of delay, knowing that the penalties may in no case be less than/750.000/LBP for joint stock companies and not less than /500.000/LBP for limited liability companies as well as for partnerships.

The tax departments are also required to apply the provisions of article 40 of the Law on Tax Procedures and its modifications relating to the modifications of the tax declarations concerning the modification of the auditor’s report, and thus, in accordance with the following:

• Non-imposition of any penalty in the event that the modification occurred within three months of the expiration date of the deadline provided for the submission of the report and if the modification didn’t have any impact on the declaration entailing the liability of an additional tax exceeding 10% of the amount of the due tax.
• Imposition of the penalty provided for by the provisions of article 110 of the Law on Tax Procedures at the rate of 20% of the tax difference regardless of the value of this difference, in the event that the modification occurred three months following the expiration date of the initial deadline.

 

 

• Imposition of the penalty provided for by the provisions of article 110 of the Law on Tax Procedures in the event that the modification resulted in the imposition of an additional tax exceeding 10% of the amount of the due tax, even if the modification occurred within three months of the expiry date of the initial deadline.

Companies that modify the auditor’s report resulting in a tax difference are required to modify their declarations in accordance with the undertaken modification and the penalty provided for by the provisions of article 110 of the Law on Tax Procedures shall be applied.

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The Ministry of Finance (MoF), has issued and published the here below Decision No. 134/1 dated 31/03/2020 relating to the extension, until the 30th April 2020 (inclusive), of the deadlines related to the submission of the taxpayers’ tax declarations electronically and the payment of the tax on the income deriving from movable foreign assets earned by physical and legal persons resident in Lebanon when this income is paid to or collected abroad.

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