Category: Notifications & Regulations

The Ministry of Finance (MoF) has issued and published the here below Decision No.54 dated 31/01/2019 (published in the Official Gazette on February 7, 2019), defining the tax treatment of the amendments made by the financial units concerned with the income tax on the declarations and activities of the limited companies. This Decision mainly focuses on the tax treatment of the amendments resulting from tax inspections of limited companies’ accounts and activities and the related amounts that are returned to the tax result of those companies and subject to the tax of Title I of the Income Tax Act (Law).

Thus, will be liable to the tax of Title I (corporate tax) only and restrictively, those amounts that are returned to the profit as nondeductible charges and expenses in accordance with the provisions of article 7 of the Income Tax Law and which did not benefit, directly or indirectly, to the shareholders in a way or another. On the other hand will be liable to both taxes of Title I (corporate tax of 17%) and Title III (movable capital/dividends 10%) of the same Law, the amounts that are returned to the tax result as a result of tax evasion or described as disguised, alleged or hidden irregular distributions (i.e. artificial increase or decrease purchase price; fictive transactions; personal loans to shareholders without interests, relinquishment of debts, excessive remunerations or attendance fees of directors, etc.). Besides, article 7 of this Decision states that in the event of liquidation/dissolution of the Company, the assets devolved on the shareholders would be doubly taxed as if they were transferred to the shareholders (capital gains tax and dividend tax). It should be highlighted as well that the provision contained in the last paragraph of section 2 of article 3 of said Decision gives discretionary power to the revenue director in order to determine the cases to which these measures should be applicable as well as the modifications in connection therewith.

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The Ministry of Finance (MoF) has issued, by virtue of the Decision No. 53/1 dated January 31st, 2019 (published in the Official Gazette on February 7, 2019), new forms (declaration form K21 and payment form K22) to be adopted for the tax on built properties (real estate tax) that are published to your kind attention here below:

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The Ministry of Finance (MoF) has issued the here below Decision No. 52/1 dated January 31st, 2019 (published in the Official Gazette on February 7, 2019), determining the mechanism for receiving the annual declaration (R5), the individual annual statements (R6) and the overall statement (R7), pertaining to the tax on wages and salaries, through the electronic tax system in order to facilitate the procedures for taxpayers and save them penalties. Those new forms should be adopted as from the beginning of 2018 activities with a view to prevent the taxpayers’ to be exposed to a late submission of the declaration or to an imbalance or discrepancy with the numbers of declarations and statements submitted.

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The Directorate of General Customs has issued the here below Memorandum dated 31/12/2018 (published in the Official Gazette on 31/01/2019), which exempts individual and collective means of transport for disabled persons from customs duties in compliance with the provisions of the law No 220/2000. This memorandum enumerates on the one hand the conditions for benefiting from such exemption; and on the other hand, abolishes all previous decisions and memorandums related to the means of transport of disabled persons. It is to be noted however that, for the first time a government service linked to the Ministry of Finance arises clearly and without ambiguity the issue of combatting smuggling and corruption as well as the issue of preventing public money waste in its decisions. Besides, it points out in its motivations to the need for reducing bureaucracy, improving services and fighting corruption and waste of time after a precise description of the said.

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Decision No. 2048/1 issued by the Ministry of Finance on 31/12/2018 (hereinafter), has defined the implementing provisions of articles 4 and 12 of the Law No. 57 dated 05/10/2018 (the Law on the Offshore Petroleum Fiscal Regime) as regards to the costs and expenses which may be deducted from the gross revenues paid by employers covered by the said Law No. 57 to their employees and which are subject to the tax on wages and salaries of Title II of the Income Tax Act. This concerns in particular, expenses and charges incurred under the performance of their duties as well as certain allowances, within the framework of predefined ceilings.

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Decision No. 2047/1 issued by the Ministry of Finance on 31/12/2018 (hereinafter), has defined the implementing of the fiscal stamp duties that applies on authorizations to occupy the public domain granted by the State and municipalities (item 4 of Annex 1 of Legislative Decree No. 67/1967 and its amendments) and as specified in the said Decision.

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Decision No. 2046/1 issued by the Ministry of Finance on 31/12/2018 (hereinafter), has defined the implementing provisions of article 6 of the Law No. 57 dated 05/10/2018 (the Law on the Offshore Petroleum Fiscal Regime) as regards to the investments undertaken by companies under the said Law in financial securities (particularly Hedging and Derivatives). This Decision subjects these operations and their results to the provisions of the Income Tax Law (Legislative-Decree No. 144 of 12/06/1959 and its amendments). Taxpayers must integrate all direct and indirect income and expenses resulting from these transactions and process them during the transition from the accounting result to the taxable result.

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The Ministry of Finance (MoF) has issued, by virtue of the enclosed Decision No. 2045/1 dated 31/12/2018 new forms to be adopted for the “beneficial owners”.

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Decision No. 2044/1 issued by the Ministry of Finance on 31/12/2018 (hereinafter), has defined the implementing provisions of sections (3) and (4) of article 13 of the Law No. 57 dated 05/10/2018 (the Law on the Offshore Petroleum Fiscal Regime) as regards to the procedures of declaration and payment of taxes on salaries and wages of resident employees working on behalf of non-resident employers. The said decision provides, on the one hand, for resident employees (as defined by the Code of Tax Procedures and the said Law No. 57), the obligations of registration near the tax authorities, tax calculation and quarterly payments which are in principle, in the responsibility of their non-residents employers (Title II of the Income Tax Act). This situation may be useful indeed to apply the same procedure for all similar cases in commercial, industrial and other activities. On the other hand, this Decision also requires resident employers who deal with non-resident parties performing work and services on the Lebanese territory through employees, to notify the Lebanese Tax Administration, within three months of the commencement of the activity, the name of said non-resident employees, to register them and to withhold at source the due tax in respect of the payments made to the latter and to pay it quarterly, until the concerned employee becomes a resident and is responsible himself for doing so under the provisions of the aforementioned section 3.

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Decision No. 2043/1 issued by the Ministry of Finance on 31/12/2018 (hereinafter), has defined the implementing provisions of article 10(2) of the Law No. 57 dated 05/10/2018 (the Law on the Offshore Petroleum Fiscal Regime) as regards to the withholding tax on payments due to non-residents. This Decision recalls that all companies and persons involved in the petroleum business are required to withhold the tax due in respect of payments made to non-residents in return of their services and to pay it on a quarterly basis unless the said company or person has a permanent establishment in Lebanon or has a tax residence thereof. Moreover, this Decision introduces a novelty which aims to expand the basis of resident and non-resident taxpayers by compelling local companies to obtain a fiscal number from the Lebanese Authorities for any non-resident natural person or legal entity with wish it deals and trades. It is to be noted that in accordance with the tax conventions aiming to avoid double taxation, duly ratified by Lebanon, contracting parties resident in the countries bound to Lebanon by these conventions will be entitled to recover taxes withheld at source through a request submitted within the non-prescribed deadlines.

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