Unremitting official, banking efforts to spare Lebanon from being blacklisted amongst tax haven countries

Tue 20 Sep 2016 at 21:55 Reports and Hot Files

NNA - Written by: Rim Chahine

Translated by: Lina Younis and Aline Mousallem

Lebanon's economic and financial sectors are currently preoccupied with the possible imminent risks of blacklisting Lebanon at the end of the month amongst countries considered as tax havens in the world, based on the recommendation of G-20 Finance ministers, at the sidelines of the Spring Meetings of the IMF and the World Bank in the United States, as well as the Organization for Economic Cooperation and Development (OECD).


Panama and Vanuatu (Dzer archipelago located in the South Pacific) are to be added to this list.


In spite of Lebanon's adoption of a series of legislations in the past years, most recently related to the declaration of mobile funds across borders and laws' pertaining to the fight against tax evasion, the danger is still imminent, especially after the Parliament's failure to convene for legislation purposes, under the presidential vacuum.


The Lebanese government, The Central Bank of Lebanon and Banks' Association are exerting relentless efforts to prevent Lebanon being blacklisted.


In this framework, the government has decided to participate in the meetings of the International Forum on transparency and exchange of information for tax purposes, affiliated to the Organization for Economic Cooperation and Development (OECD) in Paris between 26 and September 30, through a committee comprised of the ministries of finance, justice, economy and Bank of Lebanon, to explain Lebanon's viewpoint and its actions in terms of devised bills of motion in an attempt to move from the first phase to the second phase of evaluation, amidst the current political circumstances that hinder the approval of such project laws demanded by the International Forum.


The Organization issued its decision due to the lack of commitment by a number of countries, including Lebanon, to the standards which it has set to determine the extent of the States' commitment with regard to tax cooperation at the global level, and the lack of flaws which might be exploited by some individuals or companies to avoid paying taxes.


Among the most prominent standards that the Organization is keen on its existence is the international treaty that stipulates the exchange of information for individuals or organizations and companies that are internationally prosecuted on charges of tax evasion, with the concerned State- via this treaty- providing the international sides with the correct information for some taxpayers who are being interrogated in issues related to tax evasion.


The Organization is also considering another standard that States should commit to in the fight against such a "crime", notably commitment to the automatic exchange of information as of the year 2018- an international project that the Organization has re-insisted on since 2011 to limit tax evasion at the request of the G-20 Group.


The Organization stipulates the adoption of a sophisticated system for the exchange of information on taxpayers across borders.


Lebanon seeks through its adopted procedures, at the legislative level and circulars issued by the Central Bank, to convince G-20 and the International Organization that it owns all the appropriate weapons for fighting tax evasion.


MP Ibrahim Kenaan, Chairman of House Committee for Finance and Budget, told NNA in an interview that "the Finance and Budget Committee has endorsed several project laws which have been referred to it by the government, related to tax exchange, transfer of money across borders, money laundering and terrorism financing."


He added that "the parliament has approved these laws amidst the presidential vacuum and under the headline of 'necessary legislation'."


Kanaan added: "As for other project laws, they have not been referred to the Committee and in the meantime we are ready to discuss any bill once referred".


Joseph Torbey, Chairman of the World Union of Arab Bankers and Chairman of the Association of Banks in Lebanon, elaborated during the Arab European Banking Dialogue Conference at its third session in Paris yesterday, "that Lebanon is officially committed as of May 11, 2016, to the implementation of the exchange of information in accordance with the requirements of the OCDE. As such, Lebanon proves its cooperation in this regard, despite the main challenges that the country is currently facing in the implementation of such a pledge, with the need to issue new laws."


Torbey also pointed out the existence of hurdles in front of the implementation of the automatic exchange of information.


"The main obstacles are the paralysis of constitutional institutions and the political life in the country, as well as the failure to elect a president over the past two years, the closure of the parliament and government's paralysis," he asserted.


He warned that politics in Lebanon has become a hostage of war on the country's borders, urging Lebanon and the banks to commit to the fiscal transparency.


"Commitment to fiscal transparency is essential, and we depend on the understanding of our friends in the international community such as the OCDE to implement our commitments gradually," he stressed.


Torbey also indicated that the sturdy banking system in Lebanon, which is supervised by the Bank of Lebanon, and which remained immuned from the negative global repercussions of the financial crisis, has repeatedly proved its commitment to international legislations, such as those issued by the "Basel Committee" and the American "FATCA" law.


Finally, the question remains whether the Lebanese government will succeed in sparing Lebanon the risks of being blacklisted at the outset of September?!.


===================L.Y, A.A.M

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