MoF Decision No. 293/1 dated 20/07/2020 relating to the mechanism for applying the provisions of the Double Tax Treaties (DTT) related to dividends, interests, royalties and services or works paid to a foreign resident of a country that has signed a DTT with Lebanon.

The Minister of Finance (MoF) has issued and published on July 20, 2020 the here below Decision No. 293/1 determining the mechanism for applying the provisions of the Double Tax Treaties (DTT) related to dividends, interests, royalties and services or works paid to a foreign resident of a country that has signed a DTT with Lebanon.

According to this MoF Decision, the Lebanese taxpayer should obtain from the foreign resident it/he/she is dealing with, a certificate of tax residence from its local tax authorities and an undertaking proving that it/he/she doesn’t have a permanent establishment in Lebanon according to the definition set in the DTT. Moreover, the Lebanese taxpayer should address to the Lebanese Tax Authorities a letter within one month from the date of this decision (for those who had a business relation ongoing before the issuance of this decision) or within a month from the beginning of the business relation, mentioning the names of the foreign companies or persons, their country of residence, the nature of the business relation and the tax treatment adopted by the Lebanese taxpayer with regards to the payment of the dividends, interests and royalties together with the supporting documents mentioned above. The Lebanese Tax Authorities will then verify the proper tax treatment applied by the Lebanese taxpayer to the amounts paid to a foreign company or person resident in a country having a DTT with Lebanon and notify the Lebanese taxpayer of any wrong tax treatment to be adjusted.

It should be noted in this regard that this information should be updated on an annual basis in case of any change by notifying the Ministry of Finance, before the 31st January of the following year, knowing that the non-compliance with these notification procedures will entitle that the Lebanese taxpayer is not applying the provisions of the DTT and should therefore apply the Lebanese tax rules and regulation by withholding the non-resident from any payment made to a foreign company. However, the Lebanese taxpayer has the right at his initiative or at the request of the foreign resident to claim back these taxes from the Lebanese Tax Authorities according to the provisions of the DTT.

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