Tax Assessment and Declaration

General Information

Taxpayers subject to fixed profit, if they are small taxpayers, whether small traders or professionals, may submit a request to be transferred to the estimated profit method before the first of February of the year following the tax year.

• Taxpayers subject to estimated profit are not required to file a declaration.
• They are required to pay taxes issued according to basic schedules announced in the Official Gazette and local newspapers.

Estimation of Profits

• Special committees estimate the annual profit subject to tax, based on the proposal of the Income Tax Department. In each governorate, the committee is composed of:
  • The Head of the Income Tax Department, the Head of the Governorate Finance Office, or a Senior Tax Controller as Chairperson.
  • A representative of the Ministry of Economy and Trade selected by the Minister of Economy and Trade as Member.
  • A representative of the Chamber of Commerce and Industry in the governorate proposed by the chamber’s president, or a member of the governorate council where there is no chamber of commerce, selected by the governor as Member.
  • An employee of the Ministry of Finance, Income Tax Department, or the competent financial unit or department in the governorate as Member.
  • The competent Income Tax Controller as Rapporteur.
    These committees are appointed by a decision of the Minister of Finance based on the proposal of the Director General of Finance. They meet upon invitation by their chairperson and take decisions by majority. In case of a tie, the chairperson’s vote prevails.
• To estimate net profit, the committee relies on all information obtained about the taxpayer. It may also rely on external indicators of the taxpayer’s lifestyle and may hear the taxpayer if it deems necessary. The committee prepares certified nominal lists of estimated profits, which serve as the basis for tax assessment.
• The estimate remains valid for three consecutive years.
• Based on a decision issued by the Minister of Finance, the committee’s estimates may be reviewed if justified economic reasons arise.

Family Deduction

Tax is imposed on taxpayers subject to estimated profit after an annual deduction equivalent to the deduction granted to a married taxpayer without children, i.e. LBP 10,000,000, regardless of the taxpayer’s family status, whether single or married with children.

Tax Calculation

The tax rate on net taxable profit is determined as follows:

• 4% on the taxable portion that does not exceed LBP 9,000,000.
• 7% on the taxable portion exceeding LBP 9,000,000 and not exceeding LBP 24,000,000.
• 12% on the taxable portion exceeding LBP 24,000,000 and not exceeding LBP 54,000,000.
• 16% on the taxable portion exceeding LBP 54,000,000 and not exceeding LBP 104,000,000.
• 21% on the taxable portion exceeding LBP 104,000,000.

Penalties

If the taxpayer does not pay the tax within two months from the date of publication, a collection penalty of 1% is imposed for each month of delay.

Determination of Taxable Profit

Revenues that must be declared for assessment on the basis of fixed profit mean the taxpayer’s receipts from all operations carried out, of all types, actually and definitively during the year preceding the tax year. In particular, this includes the total amounts received by the taxpayer as the price of goods, products, tools, or supplies sold, rental income from such items, and commissions, brokerage fees, returns, interest directly resulting from commercial transactions, exchange differences, professional fees, etc.

Revenues that are originally subject to another specific income tax, such as bank interest, loan interest, income from built properties, etc., remain subject to their specific tax and are fully deducted from revenues subject to Chapter One tax, together with the corresponding expenses directly related to those revenues.

The total revenues to be used as the basis for determining fixed net profit are extracted from the journal provided for in the Commercial Law.

Taxable profit is determined by applying the fixed profit rate to the revenues mentioned above.

Decision of the Minister of Finance determining fixed profit rates

Family Deduction

The taxpayer’s family deduction is the tax-exempt amount, which is as follows per year, Article 31 of the Income Tax Law:

• LBP 7,500,000 for the taxpayer.
• LBP 2,500,000 for the taxpayer’s wife if she does not work.
• LBP 500,000 for each child, up to a maximum of 5 children.
• For males, if they have not exceeded the age of eighteen, or up to a maximum age of twenty-five if they are pursuing university studies.
• For females, before marriage, or if they are widowed or divorced, during the period in which they are dependent on the male taxpayer and do not earn any income.
• The taxpayer benefits for a disabled child without age condition, provided that a medical certificate is obtained from the health committee affiliated with the Ministry of Public Health showing that the disability prevents the child from working.

Tax Calculation

Tax is calculated on the remaining net profit after the family deduction as follows, Article 32 of the Income Tax Law:

• 4% on the taxable portion that does not exceed LBP 9,000,000.
• 7% on the taxable portion exceeding LBP 9,000,000 and not exceeding LBP 24,000,000.
• 12% on the taxable portion exceeding LBP 24,000,000 and not exceeding LBP 54,000,000.
• 16% on the taxable portion exceeding LBP 54,000,000 and not exceeding LBP 104,000,000.
• 21% on the taxable portion exceeding LBP 104,000,000.

1. Deadlines: Taxpayers subject to assessment on the basis of fixed profit must submit, before the first of February of each year, a declaration of their total revenues earned during the previous year.
2. Penalties: A taxpayer who does not submit the legal declaration within the specified deadline is subject to a penalty of 5% of the tax due according to the declaration or the profit determined by the tax administration for each month of delay, or fraction of a month, provided that the penalty does not exceed 100% of the tax due for each declaration and is not less than LBP 100,000 for individuals.
3. Forms: Personal declaration – Income Tax F1-F3.

Net taxable profit is the total revenues of the taxpayer after deducting all expenses and burdens required for carrying out trade, industry, or the profession.

• Allowed deductible expenses and burdens
• Non-deductible expenses and burdens
• Statement of transition from accounting result to tax result

Family Deduction

The taxpayer’s family deduction is the tax-exempt amount, which is as follows per year, Article 31 of the Income Tax Law:

• LBP 7,500,000 for the taxpayer.
• LBP 2,500,000 for the taxpayer’s wife if she does not work.
• LBP 500,000 for each child, up to a maximum of 5 children.
• For males, if they have not exceeded the age of eighteen, or up to a maximum age of twenty-five if they are pursuing university studies.
• For females, before marriage, or if they are widowed or divorced, during the period in which they are dependent on the male taxpayer and do not earn any income.
• The taxpayer benefits for a disabled child without age condition, provided that a medical certificate is obtained from the health committee affiliated with the Ministry of Public Health showing that the disability prevents the child from working.

Tax Calculation

Tax is calculated on the remaining net profit after the family deduction as follows, Article 32 of the Income Tax Law:

• 4% on the taxable portion that does not exceed LBP 9,000,000.
• 7% on the taxable portion exceeding LBP 9,000,000 and not exceeding LBP 24,000,000.
• 12% on the taxable portion exceeding LBP 24,000,000 and not exceeding LBP 54,000,000.
• 16% on the taxable portion exceeding LBP 54,000,000 and not exceeding LBP 104,000,000.
• 21% on the taxable portion exceeding LBP 104,000,000.

Deadlines: Individual taxpayers subject to assessment on the basis of actual profit, except capital companies, must submit to the financial departments before the first of April of each year a declaration of their activities carried out during the previous year.

Penalties: A taxpayer who does not submit the legal declaration within the specified deadline is subject to a penalty of 5% of the tax due according to the declaration or the profit determined by the tax administration for each month of delay, or fraction of a month, provided that the penalty does not exceed 100% of the tax due for each declaration and is not less than LBP 100,000 for individuals.

Forms:

F1: Personal Income Tax Declaration: This declaration is addressed to taxpayers in the following categories:

• Individual taxpayers assessed on the basis of fixed profit, namely liberal professionals and individual commercial establishments.
• Individual taxpayers who are mandatorily assessed on the basis of actual profit according to Article 11 of the Income Tax Law, or those who request assessment on the basis of actual profit according to Article 12 of the same law.
• Taxpayers who are partners in partnerships, where each partner declares separately their share of profits and losses from the concerned company and their total profits from partnerships or other establishments.

F2: Income Tax Declaration for Individual Establishments Based on Actual Profit:

The income tax declaration form is used by all individual establishments subject to actual profit, even if they are exempt from tax, whether the exemption is temporary or permanent.