Taxation

Tax Registration

Conditions for Mandatory VAT Registration

Carrying out an economic activity subject to VAT.
Turnover exceeding the mandatory registration threshold, stated in the original content as LBP 150 million.
Carrying out the activity over four consecutive quarters.

Reference: Article 3 of Law No. 379/2001 (Value Added Tax Law), as amended by Law No. 379/2003 and Law No. 583/2004 concerning the 2004 General Budget and annexed budgets.

Minimum Turnover Threshold for Mandatory Registration

Period	Minimum Turnover Threshold
From the introduction of VAT through 31 March 2003	LBP 500 million (approximately USD 330,000)
From 1 April 2003 through 31 December 2003	LBP 300 million (approximately USD 200,000)
From 1 January 2004 through 31 December 2004	LBP 225 million (approximately USD 150,000)
From 1 January 2005 through the date of the original content	LBP 150 million (approximately USD 100,000)

Reference: Article 3 of Law No. 379/2001 (Value Added Tax Law), as amended by Law No. 379/2003 and Law No. 583/2004 concerning the 2004 General Budget and annexed budgets.

Calculation of Turnover

Turnover is the total of:

Revenue from taxable transactions.
Revenue from exempt transactions without the right to deduct input VAT.
Revenue from the export of taxable or exempt goods where the right to deduct input VAT applies.

The sale of fixed assets is excluded from turnover.

Reference: Article 4 of Law No. 379/2001 (Value Added Tax Law).

Legal Deadline for Submitting a Registration Application

The registration application must be submitted using the designated form (Form Q1-1) within two months from the date on which the registration conditions are met.

Reference: Article 35 of Law No. 379/2001 (Value Added Tax Law) .

Documents Required for Registration

Sole Proprietorships

Registration application (Form No. Q1-1).
Commercial registry statement.
A statement indicating whether an activity similar or related to the activity of the establishment being registered exists, in accordance with Minister of Finance Decision No. 368/2002.
A detailed turnover statement for the quarters preceding the registration application, covering no more than the previous five years.
A copy of the identity document of the concerned person or the legal power of attorney of the representative.
An undertaking concerning the first taxable revenue and a copy of the first invoice covering the supply of taxable goods or services, where the taxpayer begins carrying out taxable activities or exempt activities with the right to deduct after previously carrying out only exempt activities without the right to deduct.

Note: Copies of official documents are accepted after the originals are presented.

Partnerships and Capital Companies

Registration application (Form No. Q1-1).
Commercial registry statement.
The company's articles of association showing the final distribution of ownership interests.
A statement indicating whether an activity similar or related to the activity of the company being registered exists, in accordance with Minister of Finance Decision No. 368/2002.
A detailed turnover statement for the quarters preceding the registration application, covering no more than the previous five years.
A copy of the identity document of the concerned person, an individual civil-status extract for an unmarried partner or a family civil-status extract for a married partner, for each partner, or the legal power of attorney of the representative.
An undertaking concerning the first taxable revenue and a copy of the first invoice covering the supply of taxable goods or services, where the taxpayer begins carrying out taxable activities or exempt activities with the right to deduct after previously carrying out only exempt activities without the right to deduct.

Note: Copies of official documents are accepted after the originals are presented.

Individual Real Estate Establishments

Registration application (Form No. Q1-1).
Commercial registry statement.
A statement indicating whether an activity similar or related to the activity of the establishment being registered exists, in accordance with Minister of Finance Decision No. 368/2002.
A detailed turnover statement for the quarters preceding the registration application, covering no more than the previous five years.
A copy of the identity document of the concerned person, an individual civil-status extract for an unmarried partner or a family civil-status extract for a married partner, for each partner, or the legal power of attorney of the representative.
A copy of the first commercial lease agreement where the taxpayer carries out the taxable business of trading in constructed real estate.

Note: Copies of official documents are accepted after the originals are presented.

Establishments Leased Under a Free-Management or Investment Agreement

Registration application (Form No. Q1-1).
Commercial registry statement.
The company's articles of association showing the final distribution of ownership interests.
A statement indicating whether an activity similar or related to the activity of the company being registered exists, in accordance with Minister of Finance Decision No. 368/2002.
A detailed turnover statement for the quarters preceding the registration application, covering no more than the previous five years.
The free-management or investment agreement.
The agreement terminating the free-management or investment arrangement.
A copy of the identity document of the concerned person, an individual civil-status extract for an unmarried partner or a family civil-status extract for a married partner, for each partner, or the legal power of attorney of the representative.

Note: Copies of official documents are accepted after the originals are presented.

Expected Administrative Processing Time

The day following the submission of all required documents.

Optional Registration

Any person carrying out a taxable economic activity may register for VAT voluntarily, regardless of their turnover.

From the effective date of registration, a voluntarily registered person becomes subject to the same obligations as a person required to register.

Reference: Article 3 of Law No. 379/2001 (Value Added Tax Law), as amended by Law No. 379/2003 and Law No. 583/2004 concerning the 2004 General Budget and annexed budgets.

Important Registration Note

The VAT registration certificate must be displayed in a prominent place.

Special VAT Registration Cases

Similar or Related Activities

Meaning of similar or related activities: Activities where one activity is necessary for or complementary to another, either vertically or horizontally, within a group of establishments or companies subject to the supervision and direction of one person.
Where similar or related activities exist, the following are considered when determining whether the registration conditions are met:
- Carrying out a taxable economic activity.
- The distribution of ownership interests.
- Family relationships between the partners.
- Whether the four-consecutive-quarter condition is met by one taxpayer within the group.
- Whether the group's turnover exceeds the registration threshold.

Reference: Minister of Finance Decision No. 368/1, dated 4 April 2002, concerning similar businesses and activities.

Free Management

Meaning of free management: A management and lease agreement, or free-management agreement, is an agreement under which the manager leases an establishment to operate it for their own account and bears the operating obligations alone, while the owner leasing the establishment is not bound by the manager's commitments.
Where a free-management agreement exists, four cases must be distinguished:
1. The establishment owner is subject to VAT, the operator is not subject to VAT, and the establishment's activity is inherently taxable.
2. The establishment owner is subject to VAT, the operator is already subject to VAT for other activities independently of the free-management arrangement, and the establishment's activity is inherently taxable.
3. Neither the establishment owner nor the operator is subject to VAT, while the establishment's activity is inherently taxable.
4. The establishment owner is not subject to VAT, the operator is already subject to VAT, and the establishment's activity is inherently taxable.

Date on Which the Registration Conditions Are Met

Case	Date on Which the Registration Conditions Are Met
Case One	The operator automatically becomes subject to VAT from the date of the investment agreement.
Case Two	The operator has two options: register the establishment under a separate VAT number or operate it as a branch of another taxable establishment owned by the operator.
Case Three	The operated establishment remains outside the scope of VAT until its registration conditions are met, subject to the rules governing similar and related activities.
Case Four	The establishment automatically becomes subject to VAT where its activity is similar or related to the operator's principal activity. Where the operator converts the establishment covered by the free-management agreement into a branch of an establishment they own, the operator must notify the VAT Directorate of the change within two months from the date of the investment agreement and report the establishment's transactions in the periodic return of the principal establishment. Where the operated establishment's activity is neither similar nor related to the operator's principal activity and the establishment has not been converted into a branch, it becomes independently subject to VAT when its own registration conditions are met.

Reference: Minister of Finance Instructions No. 705, dated 23 April 2003, concerning free-management agreements.

Income Taxpayers Subject to the Deemed-Profit Regime

The following are considered when determining the date on which their VAT registration conditions are met:

Carrying out a taxable economic activity.
Carrying out the activity over four consecutive quarters.
Total receipts exceeding the mandatory registration threshold.

Offshore Companies

Offshore companies become subject to VAT when all three conditions are met:

The company carries out a taxable economic activity or an exempt activity with the right to deduct input VAT, such as exporting goods or services from Lebanon to another country, or exporting goods from one foreign country to another through a free zone.
Its turnover exceeds the mandatory registration threshold.
It carries out its activity for at least four consecutive quarters; part of a quarter is treated as a full quarter.

Reference: Article 3 of Law No. 379/2001 (Value Added Tax Law), as amended by Law No. 379/2003 and Law No. 583/2004 concerning the 2004 General Budget and annexed budgets.

Non-Resident Persons

Meaning of a non-resident person: Any natural or legal person who carries out taxable activities within Lebanese territory in accordance with the law and does not have a place of residence in Lebanon.
When are the registration conditions met? All statutory VAT registration conditions apply to a non-resident person, except the minimum-turnover condition. For further information, refer to the Non-Residents Guide.