Imposition of Tax

General Information

Value Added Tax is a tax on the consumption of manufactured goods, commodities, and services within Lebanese territory, whether locally produced or imported.

Taxable Transactions

Taxable transactions are transactions involving the supply of goods, production and commodities, and other movable and immovable assets, fixed assets, and the provision of services within Lebanese territory by natural or legal persons subject to tax. They also include import transactions involving goods, commodities, or services, whether the importer is subject to tax or not.

Reference: Article 2 of Law No. 379 dated 14/12/2001, Value Added Tax Law.

Exempt Transactions with Deduction Right

Exempt transactions with deduction right are taxable transactions subject to a zero percent rate. They consist of the supply of goods and the provision of services without charging Value Added Tax by the taxable person, while allowing that taxable person to benefit from the right to deduct the tax previously incurred in manufacturing, purchasing, or importing those goods, commodities, assets, and services necessary for carrying out the activity.

Examples include export operations and international transport of persons and goods.

Exempt Transactions without Deduction Right

Exempt transactions without deduction right are transactions involving the supply of goods, commodities, and other assets, and the provision of services without charging Value Added Tax by the taxable person, and without allowing that person to deduct the tax previously incurred in manufacturing, purchasing, or importing those goods, commodities, assets, or services.

Persons carrying out transactions exempt from tax without deduction right may not request a full or partial refund of the tax paid on certain purchases, in accordance with Article 59 of the law.

The following transactions carried out within Lebanese territory are exempt from tax:

1. Services provided by doctors or by professionals whose work is closely related to medical services and hospitalization.
2. Education.
3. Insurance, reinsurance, and health benefits provided by mutual funds and employers, and related services.
4. Banking and financial services.
5. Activities of non-profit bodies and associations carried out for the purpose for which they were established, except for activities performed repeatedly and which create unfair competition with taxpayers providing taxable services.
6. Public transport of persons, including transport by taxis.
7. Delivery of gold to the Central Bank.
8. Betting, lotteries, and other games of chance.
9. Sale of built real estate.
10. Rental of built real estate for residential purposes.
11. Farmers’ activities relating to the supply of their agricultural crops.

Reference: Article 16 of Law No. 379 dated 14/12/2001, Value Added Tax Law.

Goods and Items Exempt from Tax

1. Live cattle, poultry, fish, and agricultural food products sold in their natural state.
2. Wheat, flour, meat, live fish, milk and dairy products, rice, bulgur, sugar, table salt, refined vegetable oils of all kinds, and food preparations intended for children.
3. Books, scientific publications, newspapers and periodicals, and other items used for writing or printing, including newsprint in rolls or sheets and printing ink.
4. Postal and fiscal stamps and banknotes.
5. Bread intended for household consumption, including Lebanese bread.
6. Medicines, serums, and human vaccines.
7. Agricultural machinery.
8. Pharmaceutical medicines, serums, vaccines, and related health and pharmaceutical items, including contraceptive devices, condoms, sanitary pads, children’s diapers, and similar health products.
9. Medical instruments, devices, and equipment.
10. Precious and semi-precious stones, synthetic or reconstructed precious and semi-precious stones, pearls, diamonds, gold, silver, and other precious metals.
11. Paper and metal currency in circulation.
12. Yachts, other boats, and pleasure or sport vessels exceeding 15 meters in length and intended only for leisure transport.
13. Aircraft used for the transport of persons and goods.

For more details on goods exempt from and subject to tax, please refer to the Harmonized Customs System.

Reference: Article 17 of Law No. 379 dated 14/12/2001, Value Added Tax Law.

Exemption upon Import

1. Import of goods whose supply within Lebanese territory is exempt from tax under Articles 16 and 17 of this law.
2. Import operations provided for in customs legislation and relating to exemptions granted to the Presidency of the Republic, Parliament, the Presidency of the Council of Ministers, the United Nations, diplomatic and consular exemptions, and donations received by state administrations, public institutions, and municipalities.
3. Import of personal effects, household items, and donations with no commercial value, as defined in customs legislation.
4. Import of military vehicles, weapons, and ammunition.

Reference: Article 18 of Law No. 379 dated 14/12/2001, Value Added Tax Law.