Shops in Furn al-Shubbak on Sept. 3, 2025. (Credit: Philippe Hage Boutros)
The Economic Bodies, which position themselves as the top employers' organization in Lebanon, have expressed their "total opposition" to the government's plan to add a 3 percent tax advance in the 2026 state budget.
The provision is included in Article 31 of the draft budget currently under review by the government, with hopes that discussions will be finished by the end of next week.
"Theoretically, and as outlined in Article 31, this tax would constitute an advance on income tax. But in practice, it will become an additional tax, as it will be impossible to recover it for a host of reasons, notably the absence of mechanisms guaranteeing the reimbursement of the sums paid, which undermines the rights of businesses and citizens," the employers' organization said in a press statement.
The organization added that this tool, devised by the government, is not "the best method to combat tax evasion; on the contrary, it will worsen it," indirectly responding to Information Minister Paul Morcos, who said at the end of the last budget review session on Friday that the government was focusing on tax fraud to increase public treasury revenues.
This tax advance system was introduced in the draft budget through three articles (29, 30 and 31). It allows public entities that sell goods and services (such as Ogero or Electricité du Liban), customs authorities and certain taxpayers to collect an amount on behalf of the Treasury equivalent to 3 percent of the transaction (service sale or customs clearance).
This tax would then be deducted at the end of the fiscal year from the amount owed to the Treasury by the taxpayer who paid it through withholding, if they are subject to income tax, corporate tax or VAT.
‘Absence of logic’
The employers argue that only companies already paying their taxes will be penalized by this measure. This concern is often raised by the private sector, which claims the government is not doing enough to combat informal businesses in a business environment heavily influenced by political patronage.
"One of the main reasons for our total refusal is the lack of logic behind this measure. The Finance Ministry plans to collect $600 million only to return it via corporate profit taxes, even though the yield of that tax has not exceeded, in the best years, $150 million to $180 million annually. On what basis, then, will the amounts collected through the 3 percent tax be returned?" the employers' organization continued, without expanding on its reasoning.
The statement warned that "the economic and social situation cannot bear new taxes; on the contrary, a country still suffering from the consequences of the financial crisis at these levels needs lower charges to revive economic momentum and lighten the burden on the Lebanese people."
The Economic Bodies — which notably include the Association of Banks in Lebanon — have also been prominent since the start of the crisis for opposing a plan to distribute the country’s financial losses in a way that places most, if not all, of the burden on the government.
The International Monetary Fund opposes this approach, advocating for a solution that respects the hierarchy of responsibilities and considers any promise to fully repay the billions of dollars in deposits still frozen by Lebanese banks as unrealistic.
The government is set to continue reviewing the draft budget on Monday at 3 p.m.
This article was translated from L'Orient-Le Jour.
Rubio condemns Iran's 'outrageous' attacks on Kuwait
