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VAT To Be Calculated At Sayrafa Rate
Lebanon is set to move forward with a new system for calculating Value Added Tax (VAT/TVA) based on the Sayrafa rate. The official decision, which was published in the official gazette on April 27, will see a new mixture of rates used in the application of VAT.
Different interpretations of the decision and tax rates in Lebanon are currently abundant, with no official clarification on how the system will actually work. From what we have gathered, VAT will now operate between a mixture of the customs dollar rate, Sayrafa rate, and market rate. According to LBCI, this move aimed to solve a discrepancy where merchants would import and trade products at the official rate of VAT (15,000 LL-USD) before charging customers VAT at the market price.
Under the new system, the importer would have to pay a VAT rate pegged to the customs dollar (which currently stands at 60,000 LL/USD)*, the wholesale merchant would have to pay a VAT rate pegged to the Sayrafa rate (86,500)*, and retail consumers would have to pay a VAT rate pegged to the market rate (97,500)*.
*the rates at the time of publishing
It is still unclear how this system will work in practice and how the tangled web of different exchange rates will continue to operate in the country. While this decision will secure valuable revenues to the government’s depleted coffers, it will also probably lead to continued inflation as locals bear the brunt of rising costs for merchants.
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Different interpretations of the decision and tax rates in Lebanon are currently abundant, with no official clarification on how the system will actually work. From what we have gathered, VAT will now operate between a mixture of the customs dollar rate, Sayrafa rate, and market rate. According to LBCI, this move aimed to solve a discrepancy where merchants would import and trade products at the official rate of VAT (15,000 LL-USD) before charging customers VAT at the market price.
Under the new system, the importer would have to pay a VAT rate pegged to the customs dollar (which currently stands at 60,000 LL/USD)*, the wholesale merchant would have to pay a VAT rate pegged to the Sayrafa rate (86,500)*, and retail consumers would have to pay a VAT rate pegged to the market rate (97,500)*.
*the rates at the time of publishing
It is still unclear how this system will work in practice and how the tangled web of different exchange rates will continue to operate in the country. While this decision will secure valuable revenues to the government’s depleted coffers, it will also probably lead to continued inflation as locals bear the brunt of rising costs for merchants.
1