The Law No.194 dated 16/10/2020 (here below), relating to the protection of the damaged and affected areas and their reconstruction following the explosion of the port of Beirut was published in the Official Gazette Journal No. 41 dated 22/10/2020.
In fact, it should be highlighted herein that the Draft Bill proposed by the Aldic (ref: Your Rights/Draft Bills) has been fully incorporated into article 6 of this Law which is related to exemptions from taxes and fees. This Draft Bill was presented in order to mitigate the serious consequences that could result if the provisions contained in the Decree-Law No. 146/1959 were applied, in particular articles 16 and 44 of this Decree-Law on aid and donations provided for the benefit of the victims of the explosion and thus prevent a return of the tax authorities a posteriori against the taxpayers benefiting from any aid in cash or kind (repair of windows, woodwork, renovation of facades …) which would exceed 1,600,000 LBP for natural persons and 100,000,000 LBP for charities. It should be noted in this regard that in accordance with aforesaid articles 16 and 44 of the Decree-Law No. 146/1959, are only exempted from taxation, donation not exceeding 1,600,000 LBP (the surplus being taxed) as well as donation granted to a charitable or sport or cultural or religious or artistic association, not exceeding 100,000,000 LBP (the surplus being taxable).
This being said, the main objective of this Law is to protect the affected areas, to encourage donations and aid, to avoid any intention aiming to profit from the damaged properties or to carry out a posteriori blackmail against the beneficiaries of this aid.
According to this Law, are subject to deduction from the taxable income, all aids and donations made by companies subject to the income tax on the basis of actual profit (article 7-9 of the Income Tax Law) as well as sums paid by these companies aiming to overcome the damages suffered by taxpayers and citizens owing to the explosion of the port of Beirut, as of 05/08/2020 and until 31/12/2021, whether the donations have been provided directly to the concerned persons or indirectly through institutions, organizations and associations and thus, up to an amount equivalent to their annual net profit during the year in which the aid was granted, provided that these aids are supported by supporting documents.
All the donations and local or foreign aids provided to public administrations and institutions, municipalities, the federation of municipalities and other persons of public law, by virtue of a letter issued by the High Relief Commission are exempt from taxes. In order to benefit from the exemption provided for by this Law, the names of local and foreign associations, religious organizations and communities, and persons of public law which contribute in any way to the reconstruction, restoration and repair of damaged areas, shall be registered before the High Relief Commission and/or before a committee chaired by the Lebanese Army.
In order to ensure that the assistance is distributed in full transparency and to help the greatest number of people affected by the explosion, the aforementioned associations are required to draw up a detailed list of aid and donations in cash and in kind before the High Relief Commission and/or a committee chaired by the Lebanese army.
Donations and foreign aid in cash and in kind as well as all the transactions aimed at their execution are exempt from:
· All fees, especially the fiscal stamp duty and customs fees, including the minimum customs, financial and port fees, and the fee imposed by virtue of Article 59 of Law No. 144 dated 31/07/2019 (General Budget Law and annexed Budgets for 2019)
· VAT (Value Added Tax) on import transactions and operations related to these donations and aids.
Besides, the said Law exempts, with the right to deduct, money delivery operations and services which are subject, by nature, to the value added tax, provided by natural or legal persons, to the benefit of these administrations, public institutions, municipalities, federations of municipalities and other persons of public law, associations, organizations and religious communities, in execution of these donations and aid.
Likewise, this Law also exempts, with the right to deduct, money delivery operations and services which are subject, by their nature, to value added tax, and which are supplied by individuals or legal entities, for the benefit of these administrations, public institutions, municipalities, federations of municipalities and other persons of public law, associations, organizations and religious communities, in execution of these donations and aid.
Those who lost their vehicles in the explosion will also be exempt from taxation in connection with the said vehicles.
Contrary to the provisions of articles 16 and 44 of Decree-Law No. 146 dated 06/12/1959 and its amendments (Law on inheritance tax), all aid and donations in cash and in kind provided to associations, organizations, religious communities, persons of public law and natural persons affected by the port explosion are exempt from inheritance tax, regardless of the extent of the damage suffered, thus escaping the application of the brackets and limits provided for by the aforementioned articles 16 and 44.
Likewise, and contrary to the provisions of article 15 of the Decree-Law No. 146/1959, the amounts provided for in life insurance policies are exempt from inheritance tax insofar as the beneficiaries of this life insurance are the legal heirs of a Lebanese person who died following the explosion of the port of Beirut.