LAW – SUMMARY SHEET
OF THE VALUE ADDED TAX
VAT draft law was approved by the Council of Ministers on the 7th
of June. It will be imminently submitted to the Parliament for ratification.
The law should be enforced on the 1st of January 2002.
implementation of the VAT in Lebanon is a major element of the fiscal reform the
government is currently undertaking. On one hand, it will contribute in redressing
the economy by enhancing revenue, reducing the deficit and containing the
debt. On the other hand, it will allow Lebanon to better integrate into the
global market place by getting prepared to trade agreements such as WTO, EU
and Arab Trade Union.
is currently implemented in more than 120 countries and constitutes the major
source of revenue for governments.
VAT will be levied on all goods and services imported or domestically
produced at a single rate of 10%. There are some exemptions that
aim to lessen the regressive effect of the tax on the lower income households.
They cover basic foods and agricultural raw products, medical and educational
services, public transportation of individuals and some other activities. The
exemptions represent 55% of the lower income households’ consumption.
a first stage, only businesses with a turnover above 500 millions LBP
will be liable to register starting October 2001. Businesses with
a turnover between 250 and 500 million LBP can choose to register. Thus, they
will charge VAT to customers on their sales and benefit from a tax credit for
the VAT paid on their business purchases.