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The Ministry of Finance extended a final deadline (May 15, 2023) for taxpayers to settle unpaid taxes and duties for them to be able to benefit from a remission of penalties, which may amount to a total exemption from fines.

To this end, the Ministry of Finance has been sending mass text messages to citizens’ mobile phones since April 30 to initiate taxpayers’ legalization of their tax status.

Under Article 22 of the Finance Law, a deferment granted to taxpayers to normalize their tax situation expires on May 15, 2023, six months from the day of publication in the official journal of the 2022 Budget. Once this period has passed, taxpayers will have to pay all the direct and indirect taxes and duties they are subject to, without any remission of penalties.

However, This Is Beirut learned that the tax authorities might extend this deadline and push it until the end of the current month, for the last time, since the provisions of the budget won’t allow it further. That being said, observers believe that any decision for tax exemption for the last three years should be ruled out.

Throughout this period, several decisions to extend the deadlines for tax declarations were taken, given the exceptional circumstances that the country was going through since October 17, 2019, to which the COVID-19 pandemic was added.

For the war years 1975-1989, it is recalled that tax authorities considered that the taxes and duties due over this period by taxpayers were prescribed against the payment of a lump sum.

Remission of Penalties

The remission of penalties enacted by Article 22 of the 2022 Budget Law relates to all taxes and duties levied by the Ministry of Finance, including income tax, corporation tax, value-added tax (VAT), tax on built property, stamp duty, etc.

The Ministry of Finance announced Thursday that its websites will be operational on May 13 and 14, 2023, to allow taxpayers wishing to benefit from the suspension periods to make the necessary payments by transfer, especially regarding the personal declaration on built properties whose income exceeds 40 million Lebanese pounds.

The remission of penalties is as follows:

-100% of late penalties resulting from infringements occurring between October 18, 2019, and November 15, 2022.

The Adverse Opinion

In the context of the implemented tax laws, auditors interviewed by This Is Beirut raised the issue of the multiplicity of exchange rates, as this makes the relevance of the information provided in financial statements vulnerable and could therefore distort the accounting estimates for the calculation of corporation tax. Hence, the mention of “adverse opinion” is frequently affixed to the reports of said companies.

Furthermore, the non-unification of the exchange rate of the dollar against the pound also poses the problem of the provisions to be made by the companies to ensure compensation for the end-of-service indemnities of their employees with the National Social Security Fund.