BEIRUT — Almost a month after the last increase to the exchange rate used to calculate customs duties on imports — commonly referred to as the "customs dollar" — the rate raised again on Friday, the Finance Ministry confirmed to L'Orient-Le Jour.
The Finance Ministry said the rate will rise to LL86,000 per dollar for all types of imported goods, a level almost equivalent to the central bank's Sayrafa rate (LL86,300 per dollar) as of Friday. The rate will remain valid until May 31.
This is the fourth change to the custom dollar since the beginning of December.
VAT on the rise
Prior to the onset of Lebanon's economic crisis in 2019, the custom dollar for all imported goods was equivalent to LL1,507.5. That rate increased to LL15,000 on Dec. 1, 2022, and was then further adjusted to LL45,000 on March 1, 2023, and to LL60,000 on April 18, 2023.
The repercussions of the rate increase go beyond customs duties.
Under a decree issued by the cabinet on April 18, the calculation of value-added tax (VAT) should take three different rates into account, including the "customs dollar" rate.
Consequently, importers must calculate their owed VAT in lira, based on the pre-tax dollar price of the imported product and a rate set jointly by caretaker Finance Minister Youssef Khalil and Banque du Liban (BDL) governor Riad Salameh.
This rate is, in principle, aligned with that of the customs dollar, which is now increased to LL86,000 on the dollar. However, the Finance Ministry and BDL were unable to verify this information on Friday.
By raising the rate of the customs dollar, authorities reduce the margin between the various rates by which VAT is calculated.
The same importer, or any other trader who sells a product or service to another trader, will apply the Sayrafa platform's rat— a rate now almost identical to that of the customs dollar.