The Ministry of Finance (MoF) has issued on the 24th October 2024 the decision # 1098/1 that clarifies the taxation of mortgage loans and related interests.
Author: citylog
MoF decision #323/1 dated 15 May 2023 – Application of article 39 of Budget Law 2022: Capital gain tax on transfer of shares in real estate SAL
The Ministry of Finance (MoF) has issued on the 15th May 2023 the decision #323/1 (attached a scanned copy) in application of the article 39 of the Budget Law 2022 (Law #10). According to this article of the Budget Law 2022, the capital gain (i.e. difference between the acquisition cost and the effective selling price) generated by individuals from the transfer of their shares in the following joint-stock companies (SAL) are subject to a tax equal to the transfer and registration fees on real estate properties (i.e. 3% for Lebanese nationals and 5% for foreigners):
1) Companies whose sole or main object is to own lands or built properties.
2) Companies whose main activity is trading real estate properties or real estate development.
3) Companies with real estate properties (net value after depreciation) exceeding 50% of their total fixed assets.
A 50% discount on the tax due is applied if the transfer of shares is concluded between shareholders (including legal entities) or with their direct relatives (lineal ancestors or descendants) but excluding spouses.
The capital gain generated by individuals in other joint-stock companies (SAL) is exempted from this tax while capital gain generated by partners (including non-residents) in limited liability companies (SARL) is subject to capital gain tax according to the article 45 of the Income Tax Law with the obligation to declare this capital gain and pay the related tax within 2 months from the notarized transaction date.
Shareholders are allowed to do an exceptional revaluation of their shares for one time only before the 30 June 2023 to be performed by a certified public accountant member of the LACPA. The revaluation of the shares has to be done in Lebanese Pounds at their effective value at the publication date of the Budget Law 2022 (i.e. 15th November 2022).The revaluation variance is subject to 1% tax.
The seller has the obligation to declare the transfer of shares transaction and pay the related taxes within a period of two months from the transfer date according to new declaration forms to be prepared by the MoF, knowing that both the seller and the buyer are jointly liable to pay the taxes resulting from this transaction. The effective selling price of the shares has to be based on the company’s financial statements of the year preceding the transfer and the tax authorities have the right to challenge and modify the selling price according to the article 10 of the tax procedures law (Law #44).
The holding and offshore companies are exempted from capital gain tax on the transfer of shares in foreign companies while the holding company is also exempted from capital gain tax on the transfer of shares in Lebanese affiliated companies if these shares where held for more than two years.
The share transfer agreements are subject to the 4‰ fiscal stamp duty.
MoF Memos #590 & 591 New procedure to settle fiscal stamp duties
The Ministry of Finance (MoF) has issued on the 22nd March 2024 two Memos setting in place the mechanism to declare and settle fiscal stamp duties till the 31st December 2024 due to the shortage of sticker stamps in the market. Taxpayers should declare these fiscal stamps on paper forms (attached to these Memos) within 15 days following the month where these fiscal stamps were due through LibanPost and pay the related dues through commercial banks, money transfer companies or LibanPost.
MoF decision # 644/1
The Ministry of Finance (MoF) has issued on the 3rd June 2024 the decision # 644/1 in application of the article 86 of the 2024 Budget Law # 324, that amended the article 45 of the income tax law and its amendments. Exceptionally, the capital gain tax on the disposal of real estate properties is reduced to 1% [instead of 15%] for individuals, NGOs and entities exempted from tax as well as professionals not involved in the trading of real estate properties, until the 31st December 2024 (inclusive).
NSSF Memo #754
The NSSF Memo #754 dated 24th April 2024 in application of the Decree #13164 dated 5th April 2024, published in the Official Gazette #16 on the 18th April 2024, has defined the 1st April 2024 as the starting date for calculating the NSSF contributions on the following basis:
1) The minimum monthly salary is set at LBP 18,000,000 and the minimum daily workers’ wage at LBP 820,000.
2) The NSSF ceiling for the Sickness & Maternity contributions is set at LBP 90,000,000 (i.e. 5 times the minimum wage).
MoF decision # 303/1
The Ministry of Finance (MoF) has issued on the 4th April 2024 the decision # 303/1 amending the article 4 of the MoF decision # 824/1 dated 18/11/2023. According to this amendment, the interest paid by Lebanese tax payers to non-resident (foreign) lenders are subject to the non-resident tax of 8.5% (i.e. 50% x corporate income tax 17%) starting from the 1st April 2024. The Lebanese taxpayers who are paying such interest to non-resident lenders have to submit a tax declaration on quarterly basis and pay the related tax within 15 days form the end of the quarter.
It is worth noting that the 10% interest tax (Chapter 3) is only applicable on interest paid to local lenders. On the other hand, the interest income resulting from a lending activity (e.g. Lebanese banks) are subject to 17% corporate income tax while the Lebanese borrower doesn’t have to account for any withholding interest tax on these interest tax deductible charges.
NSSF Memo #770
According to NSSF Memo #770 dated 15th October 2024, employers should settle the end of service indemnity (EOSI) adjustment amounts of their employees in cash or by Fresh bank check starting from the 1st November 2024.
MoF decision #1063/1
MoF decision #1063/1 dated 21 October 2024:
Extension of the deadline for the VAT declaration of the 3rd quarter of the year 2024 and the payment of the related tax until the 5th November 2024 (inclusive).
MoF decision #1062/1
MoF decision #1062/1 dated 21 October 2024:
Extension of the deadline for the Non-resident tax declaration of the 3rd quarter of the year 2024 and the payment of the related tax until the 5th November 2024 (inclusive).
MoF notification # 2494/1
The Ministry of Finance (MoF) notification # 2494/1 dated 10th October 2024 (attached a scanned copy) has extended the deadline for the corporate income tax filling of the year 2023 for companies having a special fiscal year closing (i.e. different from the calendar year closing) till the 31st October 2024 (inclusive) similar as for the companies having a calendar year closing.