- 15
- June
- 2024
Benefits Reaped from Sayrafa Will Be Taxed
modified on 19 June 2024 à 14:28 Read : 3 minute(s) A A A
A 17% tax will be applied on profits from transactions carried out by individuals and companies on Sayrafa, the exchange platform of Lebanon’s Central Bank (BDL). The taxable profits are those derived from operations exceeding $15,000 in 2022 and 2023.
The decision by Caretaker Minister of Finance Youssef Khalil comes as part of the implementation of Article 93 of the 2024 Finance Act.
It was also based on a proposal from the Acting Director General of the Ministry of Finance, Georges Maarawi, and after consultation with the State Council.
Circular 161
The decision requires commercial banks and licensed exchange agents, who acted as intermediaries in operations on Sayrafa, to electronically provide the tax administration with information about their clients who benefited from this exchange tool.
The required information includes the name of the beneficiary, their tax identification number, the number of transactions carried out, and their execution dates. This information should be sent to the Ministry of Finance within one month from the date of publication of the decision.
The targeted exchange operations are those carried out under BDL Circular 161 dated December 16, 2021, regarding exceptional cash dollar withdrawals to Lebanese pounds at Sayrafa exchange rate.
Taxable profits
The decision emphasizes that the profit subject to the "additional and exceptional tax" corresponds to the difference between the value in Lebanese pounds paid by the person for the dollars received on the exchange platform and their real value in Lebanese pounds at the transaction date.
Any late submission of the taxable profit declaration exposes the taxpayer to late penalties in accordance with the provisions of Articles 109 and 55 of the amended tax procedures law.
An exceptional tax
Some observers have criticized the decision of Minister Youssef Khalil, arguing that it violates banking secrecy law in force in Lebanon. They also claim it contradicts the principles of legal security and predictability in tax legislation. These principles imply that taxpayers should be able to foresee the tax consequences of their actions and not be penalized by retroactive changes in tax legislation.
Other observers defended the decision, arguing that exceptional situations dictate the adoption of exceptional measures.
Thus, the decision of the Minister of Finance would be justified by compelling reasons of public interest, which are the imperatives of financial recovery, as Lebanon has been shaken by a multidimensional crisis for nearly five years.
Sayrafa, no longer relevant
Since August 2023, the Sayrafa platform has only been used to pay public sector salaries in cash dollars. It was created by the BDL in 2021 to help curb inflation and the depreciation of the Lebanese pound to foreign currencies, particularly the US dollar.
Sayrafa has become unnecessary since the monetary authorities decided on February 12, 2024, to unify the exchange rate of the pound to the dollar, setting it at 89,500 pounds per dollar. Moreover, the difference between the BDL's exchange rate (89,500 LL/$) and the parallel market rate (89,700 LL/$) is negligible. However, this stability is not set in solid grounds but rather supported by the BDL's cautious and restrictive monetary policies.
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