Lebanon's banks risk international blacklisting if tax disclosure bill is not passed

Published September 20th, 2016 - 09:56 GMT
The deadline for the implementation of the automatic tax data exchange ends in September. (File photo)
The deadline for the implementation of the automatic tax data exchange ends in September. (File photo)

Lebanon is at serious risk of being blacklisted upon the recommendation of OECD if the automatic tax information exchange bill is not passed soon by the parliament, a lawmaker warned Monday. “This is a very serious matter. If we don’t pass an amended bill which allows OECD members to ask for disclosure of bank accounts of any citizen or group that have a bank account in Lebanon under the suspicion of tax evasion in a foreign country then Lebanon will be blacklisted,” the lawmaker told The Daily Star over the telephone.

He said the deadline for the implementation of the automatic tax data exchange ends in September.

The lawmaker explained that in November 2015 Parliament passed a number of important bills and one of them involved the exchange of tax information with the Organization for Economic Cooperation and Development members.

But some MPs are reluctant to approve the automatic tax information exchange as it threatens the highly cherished banking secrecy law.

“The current law authorizes the person or group which is requested by some OECD members to disclose bank account to seek a court ruling in Lebanon to overrule the request. But the automatic tax data exchange obliges the banks to disclose the account of their clients at the request of OECD,” the lawmaker said.

He added that if Lebanon is blacklisted then this could put the banking sector in jeopardy. “If we are blacklisted the international correspondent banks will stop dealing with Lebanese banks and ... we will end up with a big financial crisis.”

A senior official at the Finance Ministry confirmed the concerns.

“It is very serious. We can be blacklisted if the automatic information exchange is not passed soon,” the official told The Daily Star.

He added that based on the recommendations of OECD, the G-20 and EU could blacklist Lebanon.

The lawmaker said that Governor Riad Salameh and some MPs explained to OECD officials that Parliament is not convening due to the sharp differences in the country.

Joseph Torbey, chairman of the World Union of Arab Bankers and Chairman of the Association of Banks in Lebanon, also explained the steps Lebanon is taking in regard to the exchange of tax information during a conference in Paris Monday. “Lebanon officially committed as of May 11, 2016. to implement the exchange of information in accordance with the OECD requirement, proving as such its engagement on the path of cooperation, despite the major challenges the country faces in the implementation of such a pledge, with the need to issue new laws.”

He acknowledged that there are hurdles before the execution of the automatic information exchange.

“Major hindrances are the paralysis of the constitutional institutions and political life in the country, the failure to elect a president over the past two years, the closing of the Parliament and the government paralysis. Politics in Lebanon have become hostage to the war on the country’s borders,” Torbey said.

But he stressed the commitment of Lebanon and banks to fiscal transparency. “The commitment in the path of fiscal transparency is firm; but to honor our obligations, we rely on the understanding of our friends in the international community such as the OECD in view of gradually implementing our commitments.”

By Osama Habib 


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