Banks complain to BDL about tax rules

Withholding taxes affect mostly
offshore companies

The Association of Banks (ABL) complained, during its meeting last week with the Central Bank (BDL) that the Ministry of Financeis asking banks to withhold taxes from the accounts of their clients, especially offshore companies registered in Lebanon. The ABL considers it as a misinterpretation of the income tax law and in violation of the current laws and regulations.

The BDL governor promised that he will review this issue with the Ministry of Finance.

The Finance Ministry has expanded in the interpretation of taxation laws in the past two years. It pushed many banks to stop some of their activities and place them outside their balance sheets to save the interests of their clients abroad, according to the ABL.

“The withholding of taxes related to offshore companies cannot be done by the banks due to the financial complexity of such a process. Normally, taxpayers should handle their own obligations,” said Joe Sarrouh, Executive Advisor to the Chairman at Fransabank. “In case the banks are requested to settle taxes on behalf of offshore companies, this matter would need proper legislation from the BDL,” he said.

The ABL suggested creating a work team, including representatives from the Ministry of Finance, the BDL, and the ABL, in order to resolve this contention.