Further to the Ministry of Finance (MoF) Decision No. 1432/1 dated September 17, 2018 issuing new forms to be adopted for the tax on moveable capital and movable assets under title III of the Income tax Law (published in the same folder), and the confusion left by the reference in the tax boxes of the aforesaid forms to the interest of bonds and dividend distributions for the shares, thus, leaving confusion and doubt on the capital gains and the interest on the deposit accounts, the Lebanese Association of Taxpayers’ Right (ALDIC) has submitted a written request on October 1st, 2018 to the Ministry of Finance to clarify its position on the aforementioned issues. The Ministry responded by considering that:
- Interests generated by bank deposits abroad are subject to tax on movable capital income at the normal rate of 10% and subject to annual declaration according to the rules in force and the new forms mentioned above. More practically, concerning the collection methods of said tax, if the payment of proceeds deriving from movable properties is made by any resident person entitled to and acting as an intermediary (mainly banks and alike) to resident individuals as beneficiaries, the said intermediary will be bound to withhold the applicable tax of 10% at source and remit it to the Treasury at the end of each semester in accordance with the provisions of Article 81 of the Income Tax Law. However, when individuals directly collect abroad the proceeds deriving from foreign shares and movable properties, they will be compelled to file a declaration of the said before March 1st of the year following that of the receipt of income and pay it to the Treasury before April 1st; according to Article 82 of the same Law.
- Capital gains from the transfer of shares in foreign limited companies generated by resident individuals were exempt from tax and any declaration; contrary to the disposals made by the professionals (purchase and sale of shares) which remain subject to tax. The confusion remains nevertheless for the disposals generated by non-professional entities (legal persons).
You will find below scanned copies of the request and the answer thereto.