Finance Minister Youssef Khalil signed a decision regarding the determination of the foundations for settling fines imposed under tax laws for violations occurring from 1/8/2019. The decision states the following:
**Article One:** Contrary to any other text, this decision specifies the details of implementing the provisions of Law No. 662 dated 4/2/2005, which allows the Minister of Finance to settle fines imposed and collected by the General Directorate of Finance in the Ministry of Finance in accordance with direct and indirect tax laws for violations committed from 1/8/2019 until the date of issuance of this decision.
**Part One: Verification Fines**
**Article Two:**
1. The verification fines imposed under income tax laws, property tax laws, the transfer tax, and the indirect taxes mentioned above, as well as Value Added Tax (VAT) fines imposed under the amended texts of these laws (Tax Procedures Law, ...), shall be reduced according to the provisions of Article Five of this decision.
2. The verification fines addressed by this decision include:
- Percentage fines, including the minimum.
- Fixed amount fines.
3. The reduction on the percentage or fixed verification fine imposed or to be imposed for one tax period shall not result in the verification or collection fines being less than 50,000 Lebanese Lira after the reduction.
4. The following fines are excluded from the settlement:
- Fines subject to special legal texts.
- Fines that are not permitted to be settled by legal texts.
- Fines lower than fifty thousand Lira.
- Fines not paid with the tax or fee within the specified payment period or request for installment.
- Fines resulting from repeated violations that are set at a fixed amount.
5. The authorization to settle any verification fine, where the reduction exceeds one billion Lira, is subject to the approval of the Council of Ministers. It is noted that the calculation of the reduction in this case is done as follows:
- For each tax period independently of other tax periods.
- The reduction of both verification and collection fines is calculated together.
- The reduction of a single verification fine resulting (with the related collection fine) for each violation is calculated if there are multiple violations for one tax period.
**Article Three:** The settlement covers verification fines for violations mentioned in Article One of this decision that were imposed or will be imposed under tax assessments, payment orders, urgent assessments, tax notices, or self-assessments, provided that the taxpayer pays the reduced fine along with the due taxes or fees in accordance with the provisions of this decision.
**Article Four:** This settlement includes fines resulting from violations occurring from 1/8/2019 until the date of issuance of this decision according to the provisions of Article Five below, benefiting:
- Taxpayers who have been imposed verification fines under assessments before the issuance of this decision or will be imposed after its issuance until the expiration of its validity, which have not yet been paid for the aforementioned violations, provided the fine is paid with the tax within the period specified in Article Nine of this decision.
- Taxpayers filing installment requests for taxes that may be legally subject to installment, provided that they pay the first installment within the deadline specified in this decision, which runs from the date of its implementation and expires on the date specified in Article Nine of this decision.
**Article Five:** The verification fines are reduced from the date of the issuance of this decision until the date specified in Article Nine of this decision as follows:
- Type of Verification Fine:
- Percentage Fine: 85% for violations specified in Article Four of this decision.
- Fixed Fine: 60%.
**Part Two: Late Payment Fines (Collection Fines)**
**Article Six:** The settlement covers the late payment fines (collection fines) related to various types of direct and indirect taxes, including the financial stamp tax and VAT, that are due or will be due during the validity of this decision, regardless of whether the late payment occurred before or after the validity date of this decision.
**Article Seven:** The late payment fines mentioned in Article Six of this decision are reduced, provided that taxes and verification fines are paid within the timeframe specified in Article Fourteen of this decision, by seventy-five percent (75%).
**Article Eight:** The competent collection units will directly reduce the collection and verification fines when collected from the taxpayer based on automated collection programs, provided that the non-automated collection unit organizes monthly data of reduced fines and submits it to the collection department in the regional financial department it belongs to, which will audit the accuracy of the amounts collected in accordance with the provisions of Articles 2, 5, and 7 of this decision. The qualitative tax departments in the provinces and the property tax department in Beirut are required to coordinate with the electronic center within a month of issuing additional urgent assessment notices during the reduction period to issue matching additional assessment tables and audit these tables.
**Article Nine:** Regarding VAT: The collection department at the VAT Directorate is required to issue adjustment notices to reduce the verification fines due on the taxpayers that are paid within the periods specified in this decision.
**Article Ten:** The employee who organizes the tax assessment document must indicate on this document the type of fines imposed and specify whether they cannot be settled according to the provisions of this decision and whether the fines are percentage fines or fixed fines.
**Part Three: Miscellaneous Provisions**
**Article Eleven:** The taxpayer's right to settle the fines subject to this decision is forfeited if the reduced fine is not paid with the due tax or fee within the timeframe specified in Article Nine of this decision. Contrary to the above paragraph, the tax administration may allow taxpayers to benefit from the reduction of fines according to the provisions of Articles Five and Seven above, without tying it to the payment of the tax or fee, if the payment was made coercively through withholding from amounts due to the taxpayer, provided that the fine is collected as follows:
- For each tax period independently of other tax periods.
- The reduction of both verification and collection fines is calculated together.
- The reduction of a single verification fine resulting (with the related collection fine) is calculated for each violation in case of multiple violations for one tax period.
**Article Twelve:** Fines paid at any time are considered an acquired right for the treasury and cannot be refunded except for reasons based on material error (including double payment of the fine) or as a result of legal objections.
**Article Thirteen:** Taxpayers requesting installments on due taxes and fees and benefiting from a reduction on fines based on this decision reserve their rights to settle the aforementioned fines in case of default on any installment, whereby all remaining installments become due along with the applicable interests.
**Article Fourteen:** This decision shall remain in effect until 31/12/2022.
**Extension of Deadlines:** Additionally, Khalil signed a decision to extend, for the last time, from 30/04/2022 until 31/05/2022, the deadline for submitting the annual declaration related to income tax on salaries and wages (R5) and individual annual statements (R6) as well as the overall annual statement (R7) for the business year 2021, and the payment of taxes if due.
**Adjustment Documents:** Furthermore, the relevant income tax units will prepare adjustment documents for taxpayers who have submitted declarations from 30/04/2022 until the present regarding verification fines without the need to submit an appeal or request, according to a statement issued by the Ministry of Finance.
