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Hotels, restaurants and jewelers must now pay portion of VAT in cash

Hotels, restaurants and jewelers must now pay portion of VAT in cash

The Finance Ministry in Adlieh, Beirut. (Credit: PHB)

The Finance Ministry released a statement Monday notifying the Syndicate of Owners of Restaurants, Cafes, Nightclubs, and Patisseries, the Syndicate of Hotel Owners and the Syndicate of Jewelers in Lebanon that they are required to pay a portion of their VAT bills in cash to the tax authorities.

This new regulation applies to VAT due in the first quarter of 2023.

According to the announcement, restaurateurs and hoteliers must pay at least 50 percent of their declared proceeds in cash, with the remainder payable by check or bank transfer.

For goldsmiths and jewelers, the ratio is 75 percent in cash and 25 percent by check or wire transfer, mirroring the same ratio recently imposed on fuel importers.

The Finance Ministry has designated a single account number (No. 700361115) at the Banque du Liban Treasury for cash deposits.

Speaking to L’Orient-Le Jour, Jean Beyrouthy, head of the Federation of Touristic Syndicates — of which the Syndicate of Owners of Restaurants, Cafes, Nightclubs, and Patisseries is a part — expressed regret regarding the disorderly adoption of these measures without any “predefined strategy in place.”

Meanwhile, the head of the Syndicate of Hotel Owners, Pierre Achkar, told L’Orient-Le Jour that he was examining the situation in consultation with other affected sectors.

The Syndicate of Jewelers and Goldsmiths could not be reached for comment on the announcement.

Efforts to reduce liquidity

The ministry’s recent measures, which were not specified in the statement, are in line with efforts to reduce liquidity from the market over several months. These efforts come amid an economic crisis, the massive depreciation of the Lebanese lira, which has lost over 98 percent of its value against the dollar, and persistent informal and ad hoc banking restrictions imposed since 2019.

One reason for this is that the value of Lebanese lira deposited in bank accounts, which only exist as a bookkeeping entry, is lower than that of physical banknotes.

To withdraw a significant amount of Lebanese lira from their accounts, bank customers in Lebanon are left with no choice but to sell a check for the desired amount on the parallel market, where the check’s face value is discounted.

Another reason is that the Finance Ministry is facing increasing difficulty in financing the salaries of civil servants, which tripled last November, due to the ongoing crisis in the country.

Furthermore, since the beginning of this year, the ministry has been attempting to absorb as much liquidity in lira as possible from the market — a move that may aid Banque du Liban with its goal to regain control of the market rate.

However, the Finance Ministry’s decisions do not provide a sustainable solution to the government’s cash flow problems or stabilize the country’s financial situation.


This article was originally published in French by L'Orient-Le Jour. Translation by Sahar Ghoussoub.

The Finance Ministry released a statement Monday notifying the Syndicate of Owners of Restaurants, Cafes, Nightclubs, and Patisseries, the Syndicate of Hotel Owners and the Syndicate of Jewelers in Lebanon that they are required to pay a portion of their VAT bills in cash to the tax authorities.This new regulation applies to VAT due in the first quarter of 2023.According to the announcement,...