provisionally-largely-compliant

Lebanon

To see the determinations and rating of all published reports click here.

Overall rating is Provisionally Largely Compliant

Lebanon has been reviewed under the fast-track procedures and assigned provisional overall rating. Lebanon will be scheduled to undergo a full review under the strengthened 2016 Terms of Reference in the near future.

Table of Determinations and Ratings of the Supplemental Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Lebanon introduced tax filing requirements providing for the identification of the shareholders and a prohibition for banks and financial institutions from undertaking operations with Lebanese joint-stock companies and partnerships limited by shares which have issued bearer shares, thereby reducing the materiality of the bearer share issue in Lebanon. However, bearer shares can still be issued by joint stock companies and partnerships limited by shares in Lebanon. Appropriate legal mechanisms to allow identification of owners of bearer shares are not in place.  Lebanon should ensure that appropriate legal mechanisms are in place to identify the owners of bearer and to order shares in all instances. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Lebanese legislation does not ensure that reliable accounting records or underlying documentation are kept for foreign trusts which are administered in Lebanon or in respect of which a trustee is resident in Lebanon.  Lebanon should establish obligations for the maintenance of reliable accounting records, including underlying documentation, for foreign trusts which are administered in Lebanon or in respect of which a trustee is resident in Lebanon. These records should be kept for a minimum of 5 years. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Whilst the new EOI Law grants access to information (including banking information) for tax purposes, this is subject to restrictive conditions which are not in line with the standard. The Lebanese authorities indicated they can also access information through the AML/CTF Law. Furthermore, the BDL issued a binding Decision requiring banks and financial institutions to provide banking information for EOI purposes. Notwithstanding the restrictions in the EOI Law, Lebanon’s interpretation of the combined legal effect of EOI and AML/CTF Laws and the BDL Decision is that it provides access to information for EOI purposes in all cases. However, this interpretation could lead to legal uncertainty regarding the access powers of the Lebanese authorities.  It is recommended that Lebanon quickly amends the legislation to remove any uncertainty and restrictive conditions, so that it is ensured the authorities have the power to obtain and provide information, including banking information that is the subject of a request under an EOI agreement in accordance with the international standard. 
The scope of the professional secrecy safeguards appears to be broader than the professional secrecy protected under the international standard.  Lebanon should ensure that its professional secrecy rules do not operate to prevent exchange of information in accordance with the international standard. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Under the procedure for accessing bank information, a prior notification is made in writing to the person under investigation. There are no exceptions to this notification of the account-holder prior to exchange of information, for example for cases where the information requested is of a very urgent nature, or where prior notification is likely to undermine the chance of success of the investigation in the requesting jurisdiction.   Lebanon should ensure that disclosure of information relating to an EOI request in the course of the court process to access bank information includes appropriate exceptions to notification prior to exchange of the information. 
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Lebanon’s interpretation of the combined legal effect of the EOI and AML/CFT Laws and the BDL Decision is that it provides access to information for EOI purposes in all cases. However, there remains a legal uncertainty regarding the access powers of the Lebanese authorities, which would prevent Lebanon from giving effect to its EOI agreements.   It is recommended that Lebanon quickly amends the legislation to remove any uncertainty and restrictive conditions, so that it is ensured the authorities have the power to obtain and provide information, and therefore comply with and give effect to its EOI agreements. 
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.     Lebanon should continue to develop its EOI network to ensure it has agreements for exchange of information to the standard with all relevant partners.  
Lebanon’s interpretation of the combined legal effect of the EOI and AML/CFT Laws and the BDL Decision is that it provides access to information for EOI purposes in all cases. However, there remains a legal uncertainty regarding the access powers of the Lebanese authorities, which would prevent Lebanon from giving effect to its EOI agreements.   It is recommended that Lebanon quickly amends the legislation to remove any uncertainty and restrictive conditions, so that it is ensured the authorities have the power to obtain and provide information, and therefore comply with and give effect to its EOI agreements. 
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.