Private sector employees who receive their salaries in "fresh dollars" have accepted the recent decision by the Minister of Finance, issued the day before yesterday, which reduced the income tax dollar from the "Sayrafa" rate mentioned in the 2022 budget to 8,000 Lebanese pounds for the period preceding November 15, 2022. For the period following the budget publication, from November 15 to December 31, 2022, the dollar will be calculated at a rate of 15,000 pounds. They considered this "acceptable" given that the previous deduction was significantly higher (around 25%), comparable to Western countries, in a nation where the basic necessities for a decent living are not met. However, these workers did not realize that the income tax for 2023 will not be the same as that for 2022.
In this context, certified accounting expert Jamal Ibrahim Al-Zoghbi stated in an interview with "Nidaa Al-Watan" that "the income tax for 2023 will be calculated based on the currently applied exchange rate, and thus its amount will increase significantly compared to what will be collected this year." He added: "The annual salary, which amounts to around 2,000 dollars per month for a married individual (whose spouse does not work) with two children, will amount to 173 million Lebanese pounds after family deductions subject to tax, according to the recent decision of the Minister of Finance and the 2022 budget. In 2023, it will become 320 million pounds unless there is an adjustment to the currently applied exchange rate."
From here, the income tax for 2023, based on the current exchange rate for the same case (i.e., for a salary of 2,000 dollars), will be 35,490,000 pounds, instead of 13,720,000 pounds for 2022 and 1,390,000 pounds for the previous period when the dollar was calculated at the official rate of 1,500 pounds. The taxable salary is usually calculated according to the Minister of Finance’s decision as follows: The lowest family deductions for a single individual are 37,750,000 pounds, plus 12,500,000 for a non-working spouse. If the spouse works, no additional deduction is provided for the husband; rather, a deduction of 1,250,000 pounds is calculated for one child instead of 2,500,000 pounds. The maximum family deduction is 62.5 million pounds if the individual is married and has five children, with a non-working spouse.
The income tax calculation process is then carried out based on salaries according to seven brackets:
- First: 2% for those with salaries between zero and 18 million pounds (for those earning less than 450 dollars).
- Second: 4% for those with salaries between 18 million pounds and 45 million pounds (for those earning less than 1,125 dollars).
- Third: 7% for those with salaries between 45 million pounds and 90 million pounds (for those earning less than 2,250 dollars).
- Fourth: 11% for those with salaries of 90 million up to 180 million pounds (for those earning less than 4,500 dollars).
- Fifth: 15% for those with salaries of 180 million up to 360 million pounds (for those earning less than 9,000 dollars).
- Sixth: 20% for those with salaries between 360 million and 675 million pounds (for those earning less than 16,875 dollars).
- Seventh: 25% for salaries exceeding 675 million pounds (for those earning more than 16,875 dollars).
