Records and Books
Persons subject to income tax on the basis of real profit are required to keep a journal, inventory book, ledger, and salaries and wages register. For the purposes of imposing taxes and fees, these records may be kept without stamping or authentication. Joint-stock companies and partnerships limited by shares are also required to keep a registered shares book.
Accounting records and supporting documents must be kept for a period of 10 years from the end of the year to which these records and documents relate, either at the taxpayer’s place of business or at the taxpayer’s residence.
- Legal journal: All business transactions related in any way to the taxpayer’s commercial enterprise must be recorded daily. When the nature of the activity makes daily recording impractical, monthly results may be recorded instead, provided that all supporting documents allowing the verification of the accuracy of daily operations are kept throughout the legal retention period.
- General ledger: The general accounting system allows the institution to use subsidiary ledgers and auxiliary journals according to its requirements and needs, provided that the transactions recorded in the auxiliary books are periodically summarized in the central journal and general ledger at least once per month.
- American journal: The taxpayer may freely classify and group the elements of the business accounts, provided that all accounts required for preparing the balance sheet and the profit and loss account are maintained. Where detailed inventory elements are not recorded directly in the inventory book, the related supporting documents must be prepared and kept throughout the legal retention period.
Penalties
Any person who fails to keep accounting records and documents is subject to a penalty equal to 50% of the undeclared tax, provided that the penalty is not less than:
- LBP 750,000 seven hundred and fifty thousand Lebanese pounds for joint-stock companies, including companies benefiting from exemptions.
- LBP 500,000 five hundred thousand Lebanese pounds for partnerships and limited liability companies, including companies benefiting from exemptions, and institutions exempt from tax.
- LBP 100,000 one hundred thousand Lebanese pounds for individuals and other taxpayers.
Any person who refuses to present records or documents proving the accuracy of the declaration, or who fails to record certain transactions properly, is subject to a penalty equal to 50% of the unpaid tax due, provided that the penalty is not less than:
- LBP 750,000 seven hundred and fifty thousand Lebanese pounds for joint-stock companies, including companies benefiting from exemptions.
- LBP 500,000 five hundred thousand Lebanese pounds for partnerships and limited liability companies, including companies benefiting from exemptions, and institutions exempt from tax.
- LBP 100,000 one hundred thousand Lebanese pounds for individuals and other taxpayers.
In addition, a late payment penalty of 1% per month is applied on the total of the unpaid tax due and the assessment penalty.