Under pressure from the International Monetary Fund (IMF) and reformist voices that have been raised for years, Caretaker Prime Minister Najib Mikati, in agreement with the "Shiite duo" through Caretaker Finance Minister Youssef Khalil, was compelled to launch the application of taxing the foreign movable capital income, as stipulated in an article included in the 2023 budget.
However, the implementation is tainted by an exemption for the years 2021 and before! These taxable incomes are obtained from the assets, funds, and accounts of Lebanese residents abroad, while the owners are in Lebanon for more than 181 days, and thus they are required to declare these incomes to the Ministry of Finance, by an international agreement signed by Lebanon that was supposed to be locally effective since 2016/2017.
This article is originally published in, translated from Lebanese newspaper Nidaa al-Watan
However, the Ministry of Finance, led by the "duo," has ignored requests for this information from the concerned countries for years, as well as ignoring the concerned parties from declaring their incomes automatically, which the application relies on for the exchange of tax information (CRS) with 187 countries.
Lebanon has been providing information about its taxpayers to those countries for years and has not requested information about its citizens to protect the wealth of a certain segment associated with the ruling system, bankers, and the wealthy who are allied with the authorities, those who have the upper hand in how tax laws are approved or not!
If this application is approved, it carries the scandal of massive tax evasion that deprives the treasury of billions of dollars.
The mentioned article in the 2023 budget exempts this tax for the years 2021 and before, provided that the new application is committed to individuals and entities residing in Lebanon who have been subject to the provisions of Article 82 of the Income Tax Law.
The exemption is also conditional on declaring these incomes and paying the due tax within 6 months from the date of the budget law's publication, without the taxpayers incurring any fines if they declare and pay within the specified period.
During the discussion of last year's budget in September 2022, Member of Parliament Michel Daher pointed out with great clarity and a loud voice this glaring tax evasion, saying to Mikati, "Why aren't you applying the CRS system? Then, Parliament Speaker Nabih Berri and Mikati at that time asked, "What does CRS mean?" Daher replied, "It is a system that would bring 1.5 billion dollars into the treasury, and by implementing it, you (Mikati) will pay 50 million dollars annually." Berri quickly closed the discussion, saying, "Later... later!" in front of hundreds of thousands of Lebanese who were watching that televised session.
To emphasize the seriousness of what they want to pass, Lawyer Karim Daher, the President of the "Lebanese Association for Taxpayers' Rights," stated that this exemption "constitutes a dangerous cover-up for the crime of tax evasion, legally punishable as money laundering, and it is an amnesty for crimes." He added, "They know the seriousness of the correct application on them, otherwise, they will be accused not only of tax evasion in Lebanon but also of money laundering abroad." Daher accused the Council of Ministers (collectively) of "exceeding the limit of authority, misuse of office, and abuse of power, which the law punishes," calling on MPs and public opinion "to resist what some want to pass for their benefit and against the public interest."
Financial, banking, and former Ministry of Finance advisor Dr. Henry Chaoul confirms that he was one of the first to focus on the importance of this application in 2020 when he worked with the "Lazare" company on developing a reform and recovery plan at that time. Since then, he has consistently emphasized the utmost importance of the application for its highly positive impact on the general budget's revenues. It can collect many billions that Lebanon desperately needs now. Moreover, the proper implementation puts an end to the provocative neglect of the public interest and establishes a fair tax system that does not burden only the poor and the middle class.
It should be noted that documented information indicates that the years of waiting to start the implementation were accompanied by arrangements abroad, making it difficult to trace tax-evaded wealth.
However, if the Ministry of Finance wants to apply it rigorously, it can obtain all the information it desires with the help of many countries that are now more than ever ready to assist Lebanon in overcoming its catastrophic financial, economic, and social crisis.
Meanwhile, some are enjoying wealth that evaded taxes, as well as fortunes that were accumulated during the crisis and billions that left the country with the assistance of bankers, not to mention the former Governor of the Central Bank of Lebanon Riad Salameh and the Head of the Banking Control Commission Maya Dabbagh, who turned a blind eye to the situation.