19 taxes
legislated

Value Added Tax

raised to 11 percent

Parliament ratified on Wednesday additional tax laws to those voted in March, bringing them to 19. Minor amendments were introduced to the articles. The tax law will be used to finance the increases and changes in the salary scale of public employees.

The Value Added Tax (VAT) was increased to 11 percent.

A law on the illegal occupation of public maritime property was also ratified. Prime Minister Saad Hariri said: “This issue should have been resolved 20 years ago but because today there was unanimous agreement, the issuing of fines has now been ratified.”

These fines range from $3,300 to $331,000. They are expected to generate revenues of $100 million yearly. A one percent levy will be deducted from revenues of these fines in order to develop, maintain, and operate public beaches.

Temporary illegal occupation of public maritime property will only be allowed in the following cases: The occupation happened prior to January 1, 1994, fails to contradict the targeted use, does not damage historic sites or impose safety threats, does not distort the beach or environment, does not fall on ports and other public facilities, and opens passage for public right of way to the beach.

Various fines will be imposed on illegal occupation of maritime property post 1994, according to the type of violation. Paying the fine does not legalize their status.

A fee of LL5,000 ($3.3) has been imposed on non-Lebanese travelers upon leaving the country. Fees on economy travel tickets were kept at their current value of LL60,000 ($40), but were raised to LL110,000 ($73) for business, LL150,000 ($100) for first class, and LL400,000 ($265) for private jet passengers for those leaving the country.

A fixed fee was added on imported containers entering ports. The fee ranges between LL80,000 ($53) for twenty-foot equivalent containers and LL120,000 ($80) for forty-foot equivalent containers.

The fee on lottery awards that exceed $6.6 has been doubled, to reach 20 percent of the value of the award.

Parliament also raised corporate income tax from 15 to 17 percent. Tax on the interest of bank deposits rose from five to seven percent. This tax includes interest derived from Treasury bills.

Two percent of the five percent property registration tax will now have to be paid at the Notary Public, according to Sarkis Sakr, the tax advisor of the Real Estate Developers Association in Lebanon (REDAL). “Individuals or companies will have one year to register a property or else they will be liable to pay the two percent tax again the following year,” he said.

Companies whose shares are traded on the stock exchange will have to pay a ten percent tax dividends and distribution.

Mohamed Choucair, Chairman of the Chamber of Commerce, Industry, and Agriculture in Beirut and Mount Lebanon expressed rejection to taxes. “Companies and citizens cannot handle additional tax burdens.”

“We are waiting for a comprehensive economic plan that takes into consideration the required incentives to stimulate the economy and provide the required ingredients to develop the economic cycle in the regions,” he said.

Choucair said: “Increasing Treasury revenues should not be through raising taxes but rather through implementing policies and measures that increase the size of the economy. This way everyone will receive their rights without all this trouble and suffering.”

Parliament ratified ten taxes last March, including fiscal stamp fees, which were increased from three per thousand to four per thousand. A tax will now be levied on imported alcohol as a percentage of the price of each bottle: Beer 15 percent, whisky 25 percent, and wine 35 percent. A lump sum tax was imposed on both imported and manufactured tobacco products, which is LL200 ($0.13) on cigarettes and tombac tobacco, and LL500 ($0.33) on cigars. A 1.5 percent fee was imposed on the value of construction permits per square meter. A fee on cement production of LL6,000 will be levied.

According to Parliament, the salary scale is expected to cost $895 million the first year, rising to $1.3 billion in the third year. Revenues from these taxes are supposed to cover the cost.

Economist and Chairman of Kataeb social and economic council Jean Tawileh said: “We need a stringent economic policy in which random employment is terminated and a conclusive solution for the electricity crisis is found.”

Tawileh said that these taxes will cause more tax evasion and a stronger grey market.