Flat fees imposed on all taxpayers

Revenues generated are estimated at around $50 million annually year

The Ministry of Finance (MoF) will impose an annual fee on taxpayers, starting this fiscal year and to be henceforth due before the end of September of every year. The MoF referred this decision to a law issued in 2000. “The implementation of this law has been postponed many times,” said Alain Bifani, Director General of the Ministry of Finance. “The purpose of the fee is to generate more revenues for the Treasury,” he said.

TARGETED TAXPAYERS
The fee will apply to individuals and companies. “It is flat for all taxpayers and may not affect companies negatively,” said Jacques Saade, Managing Partner at Mazars, an international, integrated and independent organization, specializing in audit, accountancy, tax, legal and advisory services. “However, it should not be imposed alone, but within a package of general tax reforms,” he said. Saade estimated the taxpayers’ base of more than 300,000 business entities. Revenues generated to the State Treasury are estimated at around $50 million, annually, according to Sarkis Sakr, Former Head of Income Tax Department at the MoF and Partner at Sarkis Sakr and Partners. He estimated the average number of taxpayers is 10,000 for SAL, 15,000 for SARL, while individual taxpayers related to different syndicates are 150,000 and the remaining taxpayers, mainly the self-employed or small establishments, are 125,000.

FEE IMPACT
About 70,000 companies are officially registered in Lebanon, according to the Ministry of Economy and Trade. Each corporation or general partnership has to pay the annual fee for its headquarters and branches. This fee should also be paid for each center that practices the activity of individual establishments, industrial and commercial companies and the self-employed. The fee also applies to industrial, commercial or professional activities subject to income tax and regardless of the financial results of these activities. “The fee cannot be evaluated as heavy or low on companies, but in principle, there is no taxation without representation, such as social services,” said Joe Sarrouh, Advisor to the Chairman at Fransabank. “We should see what kind of returns taxpayers should have, if this fee is implemented,” he said.

FOREIGN BUSINESSES
In the case of foreign companies operating in Lebanon, the fee will be applicable according to the legal specification of the mother company. Holding companies and offshore companies are excluded from paying this annual fee.

ECONOMIC REACTION
Regarding the impact of the fee on the economy, Saade said that “taxes should be imposed during growth stages. That’s why this fee is subject for review now.” “Taxes cannot be used to reduce deficit. If the implementation of taxes is not followed by reforms, you would be fueling the deficit,” said Sarrouh. “We need to know if all taxpayers are duly paying their taxes or if the fee is covering a new segment of taxpayers,” he said.

ADMINISTRATIVE PROCEDURES
The annual fee should be paid, by virtue of a notification set by the MOF at any bank or its related branches locally, any Liban Post desks, OMT, or any other company in contract with the MoF. The fee may also be paid through electronic payment tools. Taxpayers should show clear proof of fee payment to the MoF. Taxpayers who do not show this proof of payment are subject to a penalty set by the MoF, the Ministry of Economy and Trade, or the Ministry of Labor.

Taxpayer	Fee Value
Joint Stock Companies (SAL), Limited Partnership by Shares	LL2 million
Limited Liability Companies (SARL)	LL750,000
Partnerships, individual establishments on real taxation regime	LL 550,000
Individual establishments on lump sum taxation regime	LL 250,000
Individual establishments on estimated taxation regime	LL 50,000