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.