Message from the Director of Imports to the Director General of Finance: The customs dollar must be increased

The Director of Imports of the Ministry of Finance, Louay Hajj Shehadeh, sent a letter to the Acting Director General of Finance, George Al-Maarawi, asking him to calculate the customs dollar on the exchange rate in the parallel market. What is understood by customs dollar is the price of goods imported from abroad and the collection of customs duties and value added tax based on this price. Haji Shehadeh bases his request on the existence of three exchange rates of the pound against the dollar in force in the market: the price set by the Central Bank of Lebanon at 1515 Syrian pounds, the price of the platform issued by the Banque du Liban also of 3900 lire, and the price in the parallel market, which reached 10,000 pounds at a time. At the same time, it indicates that Article 35 of Decree 4461 requires customs to convert the value of invoices for merchandise issued in foreign currency to Lebanese currency based on the conversion rates determined monthly or periodically by the Banque du Liban, and that this issue will only result in a limited increase in raw material prices. Processing through the ration card or similar measures.

Message text
His Excellency the Chief Financial Officer
Subject: Modification of the official foreign exchange rate to collect customs duties and value added tax at the time of importation.
Whereas, since the end of 2019, Lebanon has witnessed an increase in the exchange rate of the US dollar and other foreign currencies towards the Lebanese pound, reaching around ten thousand Lebanese pounds to one dollar over a period of time, and currently it is dealing on the black market up to £ 7,000 at a time. That is still the official price of 1515 lire.
Since the Banque du Liban issued more than one circular or decision to limit the slippage in the US dollar exchange rate, this did not prevent more than one price from arising between the official rate, the rate of transfer through banks and companies. of money transfer, the price of the electronic platform and the price in the market. Black.
Given the scarcity of the US dollar in the financial and banking market, the phenomenon of changing bank checks for cash dollars has exploded. The transfer used to be done initially with no or limited discount, then started with an incremental discount until the discount is now around 70%.
Considering that Lebanon depends on imports to guarantee the vast majority of its needs, and given the scarcity of the US dollar and the difficulty of opening credits through banks, unless dollars are obtained in cash and since importers have to resort to the parallel market to obtain their dollar needs to be able to import,
Considering that, the Ministry of Finance and the Tax Administration received numerous reviews from economic institutions and organizations that requested a mechanism for the fiscal and accounting treatment of the problem resulting from the existence of more than one price for the US dollar and their obligation to buy dollars on the black market due to the inability of authorized money changers to fully satisfy their needs or because they issue invoices specifying the price at which the dollar was sold.
Considering that, to date, the needs of the local market in terms of goods, materials, goods and equipment have been divided into three categories:
– The first category includes fully subsidized goods or 85% from the Central Bank of Lebanon, whereby the Banque du Liban provides dollars to importers at the official price of 1515 Lebanese pounds.
– The second category: includes subsidized raw materials that are classified as basic by the Ministry of Economy and Trade in total, so that the Banque du Liban assures importers dollars on the price of the electronic platform.
– The third category includes the rest of unsubsidized goods, for importers to ensure their needs for black market dollars.
Considering that, in accordance with the above, the Lebanese market has adopted three exchange rates in US dollars:
– The official price.
The price is according to the online platform.
The price is according to the black market (parallel).
Considering that, Article 35 of Decree 4461 of 12/15/2000 (Customs Law) establishes that if the value of the merchandise included in the invoice is denominated in foreign currency, it is converted into Lebanese currency based on the rate of conversion effective on the date of registration of the preferential declaration based on conversion rates. Determined by the Central Bank of Lebanon monthly or periodically.
Whereas, continuing to collect fees and value-added taxes on the price of £ 1,515 will lead to the loss of large resources for the urgently needed Lebanese treasury, especially after the significant decline in the value of the Lebanese currency.
Therefore, based on the above, I believe that it is necessary, at least for the purposes of collecting customs duties and value added taxes, to adjust the exchange rate of the dollar and other foreign currencies, at a price that mimics the real reality of the price of these currencies, indicating that the slight increase in the prices of raw materials that will appear in the market and will be reflected in final consumers, since merchants who buy from importers can recover or deduct the value tax added, which can be addressed and its negative impact on them reduced, by adopting a policy of direct support to Lebanese consumers by providing them with food cards or other similar measures. Especially since a number of commodities are exempt from value added tax.

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