Illustration photo of stamps. (Credit: Mohammad Yassine/L'Orient-Le Jour)
For the past week, the press and media have been abuzz about the findings of a Court of Audit report concerning tax stamps in Lebanon.
This 69-page document, disseminated to Parliament, the government and the Finance Ministry, sheds light on a black market primarily comprising authorized entities. These entities have illicitly profited around $20 million over two years, exploiting an orchestrated scarcity of these stamps. Citizens are mandated to affix the stamps to numerous official documents as proof of fulfilling requisite tax obligations.
Additionally, the report’s authors advocate for several immediate actions to rectify the market, including initiating a tender for implementing electronic stamps to replace the current ones, as outlined in an excerpt from the document viewed by L’Orient-Le Jour.
On Tuesday, the Finance Ministry, responsible for overseeing the printing and distribution of stamps to authorized sales outlets, announced that it had received the report from Judge Mohammad Badran, the President of the Court of Audit.
“The Ministry highly values the efforts of the Court of Audit and will handle the published report with the utmost gravity, adhering to the principles and laws currently in effect,” stated caretaker Finance Minister Youssef Khalil.
When did the Court of Audit start its investigation?
The Court of Audit, tasked with overseeing the regularity of public accounts, intervened at the end of winter 2023.
While Lebanese law grants it the authority to act independently, the court did so in response to mounting political pressure amid reports of an orchestrated shortage of stamps.
In January 2023, Denniyeh (North Lebanon) MP and Chairman of the Parliamentary Committee for Defense, the Interior and Municipalities Jihad Samad queried Khalil regarding the causes of the market’s malfunction.
In February 2023, another member of the committee, MP Samy Gemayel and leader of the Kataeb party, forwarded a request to the financial prosecutor’s office. He sought to initiate an information memo, urging an investigation into the scarcity of tax stamps.
What are the report’s findings and content?
The public contract for revenue stamp production is typically awarded through an invitation to tender. However, in recent years, it has been governed by a mutual agreement between the Finance Ministry and the Lebanese Army printing works, with distribution carried out by approved agents.
As per a press release from the official National News Agency, the report overseen by Judge Nelly Abi Younes delved into this system, with a specific section dedicated to the observed violations and their repercussions.
Information from the report, leaked to the press notably by the daily Nida Al Watan, indicates that the Court of Audit highlighted the existence of a black market predominantly controlled by “approved sellers,” accounting for “97 percent” of its operations.
The Court of Audit additionally underscored the substantial profits garnered by these sellers, amounting to $20 million between 2022 and 2023, leveraging their connections within the authorities responsible for stamp production and distribution. This starkly contrasts with the meager revenue of $1.8 million per year collected by the state during the same timeframe.
The court’s recommendations
The Court of Audit has outlined recommendations to halt the observed violations and advocated replacing traditional stamps with their electronic counterparts.
Based on the extracted report, the court specifically suggests the following:
· Suspending all collaborations with approved distributors and revoking their licenses;
· Initiating legal proceedings against the distributors and officials implicated in the scheme;
· Terminating the agreement with the army printing works and fulfilling the remaining printing requirements within a maximum timeframe of three months;
· Retrieving the marking tools, refurbishing them and returning them to operation within one month;
· Requesting taxpayers to settle amounts exceeding LL500,000 for tax stamps in cash;
· Retrospectively reimbursing tax-exempt individuals for amounts paid in tax stamps;
· Prohibiting all tender procedures for physical stamps.
This article was originally published in L'Orient-Le Jour. Translated by Sahar Ghoussoub.
