The National Social Security Fund (NSSF) has issued a Memo #710 on the 11th May 2023 (attached a scanned copy) related to the application of the Decree #11226 dated 18 April 2023 published in the Official Gazette #17 dated 26th April 2023 that granted all the employees subject to the labor law an allowance of LBP 4,500,000 for the cost of living and increased the minimum salary from LBP 4,500,000 to LBP 9,000,000 starting from the publication date of the Decree (i.e. 26th April 2023). The daily workers’ wages have also been increased by LBP 173,000 to reach a minimum of LBP 410,000 per day.
Category: Laws & Decrees
Decree #11230
The Council of Ministers approved on the 18th April 2023 the Decree #11230 published in the Official Gazette #17 on the 26th April 2023 (attached a scanned copy) defining the exchange rate that should be applied for the Value Added Tax (VAT) on invoices issued in foreign currencies.
According to this Decree that has modified the article 18 of the Decree #7308 dated 26/01/2002, the VAT on invoices in foreign currencies should be calculated at the following exchange rates:
– The exchange rate defined by the Ministry of Finance and the Governor of the Central Bank (BDL) for the imported products (the “Custom Dollar”).
– The Sayrafa exchange rate should be applied on the invoices between companies (B to B) for goods and services.
– The effective exchange rate on the sale of goods and services to the end consumers (i.e. the parallel market rate).
Decree # 11228
The Decree # 11228 raised the schooling allowances for students in public schools and universities to LBP 3,000,000 (with a maximum of LBP 9,000,000) and for the students in private schools and universities to LBP 6,000,000 (with a maximum of LBP 18,000,000 i.e. for 3 children).
Decree # 11226
The Decree # 11226 raised the minimum wage for employees and workers in the private sector, due to the increase in the cost of living to LBP 9,000,000 starting from the publishing date of this decree. All employees of the private sector are granted an additional allowance of LBP 4,500,000 for the cost of living.
Decree # 11224
The Decree # 11224 raised the daily transportation allowance of the employees of the private sector from LBP 95,000 to LBP 250,000.
Law No. 214 of 08/04/2021 relating to the recovery of assets resulting from corruption crimes
The Law No. 214 of 08/04/2021 (here below), published in the Official Gazette No 15 dated 15/04/2021, concerns operations to recover assets resulting from corruption crimes (Ill-gotten assets), regardless of the nature of the asset, whether located on Lebanese territory or abroad, and whether they are still in the property of the perpetrator or transmitted to a third party. This law is applied in accordance with the United Nations Convention Against Corruption (UNCAC) to which Lebanon has adhered by virtue of the Law No 33/2008, as well as the Law No 44/2015 for Fighting Money Laundering and Terrorist Financing; in addition to the recent laws No. 189 dated 16/10/2020 relating to the declaration of assets and other interests and the repression of illicit enrichment and No. 175 of 08/05/2020 in connection with the Anti-Corruption in the public sector and the creation of a National Commission to combat corruption.
The function of the Fund Recovery Department of the National Commission to combat corruption is to coordinate with all relevant bodies, as well as with the Special Investigation Committee (SIC) regarding the related prosecutions. In addition, it organizes strategies to recover said funds. It pursues the recovery operations with the competent administrative and judicial bodies. It specifies the obstacles facing this recovery. If necessary, it can rely on any Lebanese or foreign expert, natural person or legal entity. The deliberations are secret and anyone who attends is bound by professional secrecy. The Department has the right to ask the administration for any information which it finds necessary. Every three months, a public hearing is held with the information providers. This department presents a detailed report each year, including its operations.
However, it should be underlined that this Law has provided three achievements. The first one is the creation of a National Fund to which the returned ill-gotten assets will be diverted rather than to the Public Treasury where it won’t be possible to assign them to a specific use in compliance with the golden rules of the Budget (unity, universality and non-allocation of resources); taking into consideration that the current worldwide trend is not to return ill-gotten assets and funds unless they are used to compensate victims of corruption or for sustainable development goals. The National Fund will be entrusted with the management and investment of funds being recovered or already recovered and has legal personality, as well as financial and administrative independence. Following the fund recovery stage, by virtue of specific mechanisms developed for this purpose, funds will be used to cover the expenses of the Department recovery of funds as well as of the National Commission to combat corruption and to compensate and protect whistleblowers or as donations to state projects aiming to fight poverty and achieving sustainable development. The Fund is vested with all the powers of signing contracts and taking the necessary measures to carry out the mission entrusted to it. It can also receive any donation from internal or foreign parties which constitutes other achievements since it may allow a quick entering into force of the law by finding quick and appropriate financing to trace and recover illegal financial flows, assists and funds. The Fund presents its annual report to the parliament. The third achievement pertains to the fact that the principle of Settlement and Plea Agreement whereby corrupted officials would voluntarily repatriate and return a substantial portion of the funds and would resign, in exchange in exchange for a reduced sanction.
Finally, the Ministry of Justice implements regulations allowing the reception and execution of requests for international legal assistance as quickly as possible, on the widest possible scale.
Law No. 212 of 16/01/2021 relating to the extension of some deadlines.
The Law No. 212 of 16/01/2021 (here below), published in the Official Gazette No 3 dated 21/01/2021, has extended the deadlines for the presentation of declarations provided for in Law No. 189 dated 16/10/2020 (The law on the disclosure of financial information and interests and the suppression of illicit enrichment) until 31/03/2021. This law also provides for the automatic suspension of all legal, judicial and contractual deadlines granted to persons governed by public and private law.
Law No. 199 of 29/12/2020 relating to the prorogation of the suspension of legal, judicial and contractual deadlines.
the Law No 199 dated 29th December 2020 (here below) published in the Official Gazette No 51 on the 31st December 2020 has further extended the suspension of the legal and tax obligations and deadlines set by Law No 160/2020 and prorogated by the Law No 185 by six (6) additional months as of the publication date of the Law (i.e till the 30th of June 2021) or of the expiry date of the suspended delays by virtue of the aforesaid Law No 185/2020, as the case may be. This extension also covers the deadlines set in the Article 22 of the Budget Law 2020 that extended the deadlines of the articles 21, 22, 28, 29, 30 and 32 till 40 (tax and NSSF discounts in addition to the article 38 on the tax objection deadline), 49 (exceptional revaluation of fixed assets at the tax rate of 3%), 51, 58, 68 and 70 of the Budget Law 2019 for further 6 months as aforesaid. The Ministry of Finance should issue shortly an application decisions regarding the provisions of this Law.
Law No. 182 dated 12/06/2020 amending the Law No. 83 dated 10/10/2018 relating to the protection of whistleblowers
The here below Law No. 182 dated 12/06/2020, published in the Official Gazette No. 25 dated 12/06/2020, added to article 9 of the Law No. 83 dated 10/10/2018 relating to the protection of whistleblowers, the following paragraph:
Whistleblowers benefit from all the provisions of this Law if they present their disclosure to the competent prosecutor’s office in addition to the Commission. Corruption detectors, witnesses, experts and victims also benefit from the guarantees provided for in the provisions of all paragraphs of chapter seven-bis (articles 370-2 to 370-6) of the Code of Criminal Procedures by virtue of the Law No. 164/2011 on the suppression of human trafficking.
Law No. 194 dated 16/10/2020 relating to the protection of the damaged and affected areas and their reconstruction following the explosion of the port of Beirut.
The Law No.194 dated 16/10/2020 (here below), relating to the protection of the damaged and affected areas and their reconstruction following the explosion of the port of Beirut was published in the Official Gazette Journal No. 41 dated 22/10/2020.
In fact, it should be highlighted herein that the Draft Bill proposed by the Aldic (ref: Your Rights/Draft Bills) has been fully incorporated into article 6 of this Law which is related to exemptions from taxes and fees. This Draft Bill was presented in order to mitigate the serious consequences that could result if the provisions contained in the Decree-Law No. 146/1959 were applied, in particular articles 16 and 44 of this Decree-Law on aid and donations provided for the benefit of the victims of the explosion and thus prevent a return of the tax authorities a posteriori against the taxpayers benefiting from any aid in cash or kind (repair of windows, woodwork, renovation of facades …) which would exceed 1,600,000 LBP for natural persons and 100,000,000 LBP for charities. It should be noted in this regard that in accordance with aforesaid articles 16 and 44 of the Decree-Law No. 146/1959, are only exempted from taxation, donation not exceeding 1,600,000 LBP (the surplus being taxed) as well as donation granted to a charitable or sport or cultural or religious or artistic association, not exceeding 100,000,000 LBP (the surplus being taxable).
This being said, the main objective of this Law is to protect the affected areas, to encourage donations and aid, to avoid any intention aiming to profit from the damaged properties or to carry out a posteriori blackmail against the beneficiaries of this aid.
According to this Law, are subject to deduction from the taxable income, all aids and donations made by companies subject to the income tax on the basis of actual profit (article 7-9 of the Income Tax Law) as well as sums paid by these companies aiming to overcome the damages suffered by taxpayers and citizens owing to the explosion of the port of Beirut, as of 05/08/2020 and until 31/12/2021, whether the donations have been provided directly to the concerned persons or indirectly through institutions, organizations and associations and thus, up to an amount equivalent to their annual net profit during the year in which the aid was granted, provided that these aids are supported by supporting documents.
All the donations and local or foreign aids provided to public administrations and institutions, municipalities, the federation of municipalities and other persons of public law, by virtue of a letter issued by the High Relief Commission are exempt from taxes. In order to benefit from the exemption provided for by this Law, the names of local and foreign associations, religious organizations and communities, and persons of public law which contribute in any way to the reconstruction, restoration and repair of damaged areas, shall be registered before the High Relief Commission and/or before a committee chaired by the Lebanese Army.
In order to ensure that the assistance is distributed in full transparency and to help the greatest number of people affected by the explosion, the aforementioned associations are required to draw up a detailed list of aid and donations in cash and in kind before the High Relief Commission and/or a committee chaired by the Lebanese army.
Donations and foreign aid in cash and in kind as well as all the transactions aimed at their execution are exempt from:
· All fees, especially the fiscal stamp duty and customs fees, including the minimum customs, financial and port fees, and the fee imposed by virtue of Article 59 of Law No. 144 dated 31/07/2019 (General Budget Law and annexed Budgets for 2019)
· VAT (Value Added Tax) on import transactions and operations related to these donations and aids.
Besides, the said Law exempts, with the right to deduct, money delivery operations and services which are subject, by nature, to the value added tax, provided by natural or legal persons, to the benefit of these administrations, public institutions, municipalities, federations of municipalities and other persons of public law, associations, organizations and religious communities, in execution of these donations and aid.
Likewise, this Law also exempts, with the right to deduct, money delivery operations and services which are subject, by their nature, to value added tax, and which are supplied by individuals or legal entities, for the benefit of these administrations, public institutions, municipalities, federations of municipalities and other persons of public law, associations, organizations and religious communities, in execution of these donations and aid.
Those who lost their vehicles in the explosion will also be exempt from taxation in connection with the said vehicles.
Contrary to the provisions of articles 16 and 44 of Decree-Law No. 146 dated 06/12/1959 and its amendments (Law on inheritance tax), all aid and donations in cash and in kind provided to associations, organizations, religious communities, persons of public law and natural persons affected by the port explosion are exempt from inheritance tax, regardless of the extent of the damage suffered, thus escaping the application of the brackets and limits provided for by the aforementioned articles 16 and 44.
Likewise, and contrary to the provisions of article 15 of the Decree-Law No. 146/1959, the amounts provided for in life insurance policies are exempt from inheritance tax insofar as the beneficiaries of this life insurance are the legal heirs of a Lebanese person who died following the explosion of the port of Beirut.