The Banque du Liban headquarters in Beirut. (Credit: João Sousa/L'Orient Today)
It took a whole week and mounting pressure from a growing number of labor unions for employers to finally react to some of the tax measures recently passed in the 2022 budget law. These measures, which came into effect on Nov. 15, have already been criticized by several labor unions for adding tax burdens to employees.
In a statement issued Thursday, the Economic Organizations, an employers’ organization headed by former minister Mohammad Choucair, demanded that caretaker Finance Minister Youssef Khalil reverse the two decisions adopted last week (No. 686/1 and No. 687/1 of Nov. 23) to implement the new rules related to payroll tax.
The Beirut Traders Association, which is part of the Economic Organizations, also sent a written request in this regard on its own behalf.
Earlier in the morning, the bank employees union called for the cancellation of these measures.
On Wednesday, some of the Beirut International Airport’s staff threatened to go on strike in protest against these same measures entering into force.
The two ministerial decisions are designed to implement the provisions of Articles 27, 33 and 35 of the budget law that update the calculation methods of this tax, tax brackets and allowances, abandoning the old pegged official rate of LL1,507.5 for an “effective rate.”
The latter must be in line with that of Banque Du Liban’s Sayrafa platform (LL30,300 to the dollar on Thursday) for employees paid in fresh dollars (subject to banking restrictions) or with the LL8,000 rate as per BDL’s Circular No. 1515, for those still paid in “bank dollars” or “lollars,” namely the foreign currency funds blocked by banking restrictions.
Yet, the combination of these measures not only increases the nominal and real value of taxes deducted by employers from their employees’ salaries but can also have a major impact on the calculation of the end-of-service indemnity.
All that is taking place against a backdrop of continued banking restrictions and a national currency depreciation, which hit a record low for two second consecutive days of LL41,000 against the dollar.
Customs dollars rate
The Economic Organizations said Thursday that these measures consist of “the final blow” to a private sector already moribund after more than three years of crisis, The group called on the caretaker minister and Mikati’s cabinet to suspend their implementation until an “agreement is reached,” so as to find a viable solution, as part of a “comprehensive plan” for the country’s recovery.
The 2022 budget law was adopted at the end of September and came into force nearly a year late.
The other outcome of the law includes the customs dollars rate, which was increased to LL15,000 against the dollar when calculating customs duties. This measure came into effect Thursday, in accordance with another announcement made by Khalil on Nov. 23.
This article was originally published in French in L’Orient-Le Jour. Translation by Joelle El Khoury.
