Taxation

Revaluation / Reassessment

Revaluation under Article 45 of the Income Tax Law

Only taxpayers taxed on the basis of real profit may revalue their fixed assets every 5 years, starting from the assets mentioned in the Commercial Code, provided that the revaluation report is submitted to the competent financial department.

Capital gain is the gain resulting from fixed assets, whether due to their revaluation or their disposal.

Capital gain = the new value of the asset after revaluation - the net value after depreciation.

Or:

Capital gain = sale price - net value after depreciation.

Tax rate: Capital gain is subject to tax at a rate of 10% of the gain amount.

Tax payment deadline: The tax is paid within the annual income tax declaration deadline.

Penalty: Any taxpayer who fails to submit the declaration or pay the due tax is subject to an assessment penalty equal to 5% of the due tax, starting from the last deadline for declaration or payment, for each month of delay or fraction of a month. The penalty may not exceed the tax amount and may not be less than:

LBP 750,000 for joint-stock companies.
LBP 500,000 for partnerships, limited liability companies, and institutions exempt from tax.
LBP 100,000 for individuals and other taxpayers.

In addition, a late payment penalty, collection penalty, of 1% is applied on the unpaid due tax, together with the assessment penalty, starting from the expiry date of the original payment deadline.

Forms and Required Documents

A revaluation request addressed to the competent financial unit must include:

The applicant’s name, full address, and registration number with the Ministry of Finance.
The fixed assets or intangible assets to be revalued.
The report of the expert or accounting office that carried out the revaluation.
Revaluation / Reassessment statement under Article 45 of the Income Tax Law:
- Form 25 D for partnerships.
- Form 25 C for capital companies.
- Form 25 F for individuals.

Exemption of Capital Gain

Capital gain is exempt from income tax in the following cases:

If it remains recorded in a special account on both the assets and liabilities sides, meaning that it is not included in the asset value and may not be depreciated.
If it is used to cover losses still shown in the balance sheet.
If these profits are reinvested in accordance with Article 5 repeated of the Income Tax Law.

Exceptional Revaluation under Article 45 Repeated of the Income Tax Law

The provisions on exceptional revaluation are no longer applicable after the 2007 fiscal year

Natural and legal persons required to keep regular accounting records under legal or regulatory provisions were allowed, once only, to carry out an exceptional revaluation of fixed asset items, including shares, debt securities and partnership interests, as well as real estate and fixed assets, whether held as fixed assets or for trading purposes, in order to correct the effects of monetary inflation resulting from the depreciation of the Lebanese pound against foreign currencies and from the changes in the value of such real estate and fixed assets since the 1975 fiscal year.

The exceptional revaluation covered all fixed assets, real estate and fixed asset items referred to above, for the previous period and recorded in the institution’s books before 1 January 1994, provided that the value did not exceed the market price.

Positive differences resulting from the revaluation were subject to a new proportional tax at a rate of 1.5% of the value of such differences. These differences were exempt from any other income tax, regardless of their subsequent use.

Income tax rate: Positive differences resulting from revaluation are subject to a proportional tax at a rate of 1.5%.

Deadline: The tax on these differences must be paid within a period not exceeding one month from the date of revaluation.

Taxpayers taxed on the basis of lump-sum or estimated profit may benefit from the revaluation provided for in this article if documents exist allowing the revaluation of fixed assets, real estate and fixed asset items, whether held as fixed assets or for trading purposes.

In all cases, for banks, these provisions may not conflict with the Code of Money and Credit or with the regulatory and implementing texts issued by Banque du Liban.

The procedures for applying this article are determined by decrees adopted by the Council of Ministers upon the proposal of the Minister of Finance.

Forms and Required Documents

A revaluation request addressed to the competent financial unit must include:

The applicant’s name, full address, and registration number with the Ministry of Finance.
The fixed assets or intangible assets to be revalued.
The report of the expert or accounting office that carried out the revaluation.
Revaluation / Reassessment statement under Article 45 of the Income Tax Law:
- Form 25 D for partnerships.
- Form 25 C for capital companies.
- Form 25 F for individuals.
Income tax receipt for revaluation differences, P1, after payment of the tax.

Notes

The request for approval of the revaluation must be submitted within one month from the date of the report prepared by the office or expert who carried out the revaluation.
The tax is paid when submitting the request, according to the advance payment system.

Penalty

If a tax assessment schedule is issued for the value of the tax, the taxpayer must pay it within two months from the date of notification. Otherwise, a collection penalty of 1% per month is imposed on the unpaid tax amount, with any fraction of a month considered a full month.