Notification of the Ministry of Finance No. 3045/1 dated October 4th, 2019 relating to the statement 18 regarding the Beneficial Owner

The Ministry of Finance (MoF), has issued and published (Official Gazette N47-101019) the here below notification No. 3045/1 dated October 4th, 2019 relating to the statement 18 regarding the Beneficial Owner and thus, in accordance with the Decision of the Ministry of Finance No. 1472/1 dated 27/09/2018 (kindly refer to the folder Notifications & Regulations, MoF Decision NO. 1472/1 dated 27/09/2018 with respect to the mechanism of defining the “Beneficial Owner” (Law No. 74/2016)).

This Notification recalls the mechanism of defining the “Beneficial Owner” and specifies that the Beneficial Owner who exercises an activity within a moral entity, should be determined in accordance with the following three criteria:

  • Direct or indirect ownership of a natural person of 20% and above of the equity capital of said moral entity.
  • Ownership of a natural person of the majority of the voting rights or the majority of the basic decisions-making rights of said moral entity.
  • Occupation by a natural person of a senior management position in said moral entity.

 

Whereas taxpayers must submit the statement M18 (statement concerning the beneficial owner) within the legal deadlines for the annual declaration of their activities’ results, and whereas the statement M18 included instructions which have raised confusion regarding taxpayers’ requirements, the aforementioned decision has clarified the following matters:

First, taxpayers with an electronic account before the Ministry of Finance must submit the statement 18 concerning the Beneficial Owner, except for those exempted from the income tax and who must declare it through Liban Post offices; provided however that in the event of any modification regarding the submitted Form 18, the latter should be submitted once again either electronically or through Liban Post offices, according to the mechanism of the primary declaration method of the first statement. Besides, taxpayers should keep a special register regarding the beneficial owner electronically or in paper form, in which shall be recorded all relevant information related to the beneficial owners along with a table showing the percentage of direct or indirect ownership as well as the means of calculating the percentage of indirect ownership; provided that all relevant documents shall be kept therewith.

 

 

 

 

 

 

 

 

 

Furthermore, this notification clarifies the following:

 

I- Concerning moral entities:

  • According to the criterion of direct or indirect ownership of 20% of the moral entity’s capital, regardless of its legal form:

The statement M18 should be filled by the moral entity according to the following:

  • In the first column, should be filled the name of the natural person or legal entity owning 20% and above of the moral entity’s capital; whereas the second, third and fourth columns should be filled according to their headings (in addition of the percentage of direct ownership in the fourth column).
  • Any natural person or moral entity who owns less than 20% of the capital shall not be mentioned in the first column, unless said natural person has any of the above criteria 2 and 3.
  • Any moral entity which doesn’t have indirectly a beneficial owner in the statement provider’s capital should not be mentioned in the first column, even if the ownership of said moral entity constitutes 20% and above of the statement provider’s capital.
  • In order to calculate the percentage of ownership of shares or parts, the percentage of ownership of the husband, wife and minor children should be added as if they were a single person. In such case, the names of said persons should be mentioned in the first column and the names of the husband and wife should be recorded in the fifth column on a separate line.

The name of children without legal capacity should be listed in the first column, each name on a line, and the name of their guardian in the fifth column.

  • In the fifth column entitled “Name of the Beneficial Owner”, should be mentioned:
  • The beneficial owner’s name, direct owner, towards the name of the natural person listed in the first column as the owner, which can be either the same person whose name is mentioned in the first column, or another natural person; provided however that in the latter case his TIN (taxpayer identification number) shall be recorded in the last column.
  • In the event that the beneficial right is owned by several natural persons or moral entities, the full name of each of the owners of such right should be recorded on a separate line with all details mentioned on a separate line.
  • The name of the natural person who owns a percentage of the moral entity’s capital recorded in the first column, makes him indirectly the owner of 20% and above of the capital of the moral entity providing the aforementioned statement.

The percentage of indirect ownership in the capital shall be determined by multiplying the percentage of ownership of the natural person by the moral entity’s ownership in the moral entity providing the statement. Such method shall also be used in the case of multiple shareholdings or participations.

 

 

 

In the event that the bare ownership of the shares belongs to a natural person and the usufruct of such shares to another natural person, and that the bare owner holds a percentage of 20%, the name of the latter should be mentioned in the first column and the name(s) of the usufructuary(ies) in the fifth column along with the fiscal number of each of said persons. Hence, the name of each of the usufructuary(ies) shall be recorded on a separate line even if the contribution of each one of them is less than 20%.

  • In the event that the natural person owns 20% or more of the capital of the moral entity providing the statement, and is at the same time a director or a board member or the chairman of the board of said moral entity, said person should be determined in the category “capacity” as a “partner and manager” or “shareholder and manager”.

 

  • In the event that the natural person owns directly 20% or more in the capital of the moral entity providing the statement and owns, at the same time indirectly 20% or more in the capital of the same moral (legal) entity, the name of said person shall be mentioned on two consecutive lines, a line for the direct ownership and a second line for the indirect ownership. Moreover, the name of the natural person who owns, at the same time directly and indirectly 20% and more of the moral entity’s capital providing the statement, should be mentioned on two consecutive lines as well.

 

  • Concerning branches of foreign companies operating in Lebanon:

Whenever the entity providing the statement is a branch of a foreign company in Lebanon, the said foreign’ s company name (Mother Company) should be recorded in the first column, whereas the name and fiscal number of each natural person owning directly or indirectly 20% and more of the foreign’ s company capital in the fifth column.  The name of the branch’s director and his fiscal number should be mentioned thereto as well.

  • Regarding the criterion of ownership of the voting rights’ majority or basic decisions-making rights’ majority:
  • The name of each of the Chairman and the Board of Directors’ members should be listed in the first column and the capacity of each of said persons should be specified in the second column regardless of whether they own or not shares or parts in the capital of the moral entity providing the statement; provided that the same name should be mentioned in the fifth column along with the fiscal number of each of the aforementioned persons.
  • The percentage of shareholding or participation should be recorded whatever its value is. However, in the event of absence of any shareholding or participation, the mention of “0%” should be recorded.
  • In the event that the moral (legal) entity is a member of the Board of Directors and its ownership’s percentage of the moral entity’s capital providing the statement is less than 20%, its name should be mentioned in the first column, whereas the name of the Chairman of the Board of such entity or its authorized signatory should me mentioned in the fifth column.

 

  • Regarding the criterion of occupation of a senior management position:
  • This criterion includes the General Director of the company, the Deputy General Managers and the authorized signatories.
  • The full name, the TIN (taxpayer identification number) and the capacity of each of the aforementioned persons should be listed in the first, second and third columns, regardless of whether they own or not shares or parts in the moral entity’s capital providing the statement. The same names should be recorded in the fifth column along with the fiscal number.
  • The percentage of shareholding or participation should be recorded whatever its value is. However, in the event of absence of any shareholding or participation, the mention of “0%” should be recorded.

II- Concerning moral entities other than companies and individuals:

 

  • The name of each of the Chairman and the members of the board of the NGO shall be listed in the first column, and in the fourth column, it should be mentioned that there are no contributions and thus, by mentioning 0% percentage. The second and the third columns shall be filled according to their headings.
  • The name of the natural person owner of such right shall be recorded in the fifth column, provided that the latter could be either the same person whose name is recorded in the first column or another person; in the latter case, his full name and TIN (taxpayer identification number) should be mentioned in the last column. In the event that the said person does not have a fiscal number, he shall be identified and obtain a fiscal number.
  • In the event that the Lebanese NGO is affiliated to a foreign NGO, the name of the representative appointed by the foreign institution for the management of the Lebanese NGO shall be mentioned in the category “beneficial owner”.

 

III- Concerning Investment Schemes according to the Laws 705/2005 and 706/2005:

  • The certificate holders’ names owning a percentage of more than 20% of the fund’s assets (issuances) as provided for in the form S21 should be listed in the first column. The second, third and fourth columns should be filled according to their headings.
  • The name of the natural person owner of such right should be mentioned in the fifth column; provided that said person could be either the same person whose name is recorded in the first column or another person. In the latter case, his full name and his TIN (taxpayer identification number) should be recorded in the last column.
  • The name of the person assigned by the director of the fund (the bank or the financial institution) to manage the operations of the fund should be recorded in the first column, his capacity in the second column, and his name should be also recorded in the fifth number (as mentioned in the first column) along with his fiscal number.

 

VI- Concerning the Trust:

The names of the below mentioned persons shall be listed in the first column according to the following:

– The settlor

– The trustee

– The protector

-The beneficiary.  In the event that the beneficiary is not identified, the categories of persons for   whom the legal arrangement was established shall be recorded.

-Each natural person controlling effectively the trust through a direct or indirect ownership or through other means.

The second and the third columns should be filled according to their headings and in the fourth column (percentage of shares or parts), it should be mentioned that there are no other shareholding or participation (as the case may be) with the mention of “0%”.

The name of the natural person owner of such right should be mentioned in the fifth column; provided that the latter could be either the one whose name is mentioned in the first column or another person; and in the latter case, the full name and the TIN of said person should be filled in the last column.

VI- Concerning individual and professional institutions:

  • The name of the owner of the institution or the profession should be mentioned in the first column, and in the fourth column the participation of 100%. The second and the third columns should be filled according to their headings.
  • In the fifth column, should be mentioned the full name of the natural person owner of such right, who could be the same person whose name is mentioned in the first column or another person; and in the latter case, his full name and his TIN should be recorded in the last column.

The aforementioned taxpayers -regardless of their legal form- that are bound to submit the form M7 relative to the non-exercise of activity, have the obligation to submit the statement M18 related to the beneficial owner annually, unless said persons are exempted from submitting said statement.

Besides, taxpayers under liquidation are required to submit the statement M18 as long as the obligation to submit the periodic declarations is still required.

Concerning persons who are exempted from submitting the statement M18:

  • Public administrations and institutions, municipalities, associations of municipalities and other public law persons.
  • Any company of which more than 80% of its capital belongs to a person from the foreign public law.
  • Any company of which more than 80% of its capital belongs to a person from the Lebanese public law.
  • Any company which distributes more than 80% of its capital to a person from the foreign or Lebanese public law.
  • Any company of which more than 80% of its capital belongs to a religious authority.
  • Representation offices, diplomatic missions, mutual funds, endowments, religious authorities, syndicates, international organizations, chambers of commerce, industry and agriculture and their federations.
  • Associations of property owners.
  • Owner of liberal professions that are bound to join a syndicate in order to practice such profession, and that are not obliged to register an establishment to practice said profession, unless they have a second individual activity.
  • Taxpayers that are based on the estimated profit.
  • Taxpayers who declared their bankruptcy.

 

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