An International Monetary Fund (IMF) report has found that Lebanon has seen its tax revenue drop by over half between 2019 and 2021, as the country faces its worst economic crisis since the end of the civil war. The IMF said that if active tax measures are not taken, the decline in revenue is likely to continue, leading to severe ramifications. The lender has recommended that the government halts the drain on tax revenue by closing loopholes and modernising its corporate income tax. The IMF has called for the cancellation of regimes for offshore and holding companies and wasteful Tax Incentives.
The report also gives a list of short-term and mid-term policy reform options which will move Lebanon towards a more effective tax system. Lebanon is yet to enforce the essential structural and financial reforms required to unlock assistance from the IMF, which amounts to $3bn.
Lebanon’s economy collapsed after it defaulted on about $31bn of eurobonds in March of 2020, with its currency losing more than 90% of its value against the dollar on the black market. Meanwhile, inflation in Lebanon increased by an average of 189.4% in the first 11 months of 2022, from the same period a year earlier, according to the Central Administration of Statistics.
The international lender has recommended immediate tax measures to improve the tax system and to stop the drain on the country’s tax revenue. The IMF has likewise suggested imposing a single exchange rate that should be used for all tax valuations, which will lead to the adoption of a lower rate than the Sayrafa, an official exchange rate platform managed by Banque du Liban, the country’s central bank, for tax purposes.
عبدالرحمان زمین پیما
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آرمان جعفری
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