[ad_1]
Elie Ferzli wrote today in the Al-Akhbar newspaper an article entitled: “Allow companies to record the real price of the dollar in their budgets: the Ministry of Finance legalizes the black market”, in which he says:
“The repercussions of the collapse are not going to end. But the government is adopting tweaks to solve the problems it faces. The crisis of the difference in exchange rates and its impact on commercial companies has been addressed by the Minister of Finance by allowing them register your transactions according to the real price of the dollar. This is the first official recognition of the black market, but it implies additional confusion for the administration. ” However, there is real fear that the decision will allow companies to evade taxes and transfer their deposits to the housing market, thus allowing banks to shed the burden of these deposits.
A new term added to the terminology imposed by the financial and monetary crisis. After the official dollar rate, the platform price, the black market price and the sale price of bank checks, the “real dollar” rate joins the list. The real price is practically the market price, but the Ministry of Finance used it, perhaps, because it is less extreme and embarrassing. However, this does not negate their official recognition of the black market price.
In an official memorandum issued on the last day of the year, the Minister of Finance allowed commercial companies to register their transactions in dollars that are carried out according to the market price in their budgets and, therefore, in the budgets presented to the tax administration .
Between the official price and the actual price there is approximately seven thousand pounds to the dollar. For this reason, the head of the Union of Accountants, Sarkis Sakr, points out that the institutions suffered an unacceptable reality, that they buy at the market price and then have to register the operations at the official price. This led, according to Saqr, to a state of financial chaos and the existence of budgets that do not reflect the current reality of companies and, therefore, of the economy.
Finance Minister Ghazi Wazni considers the decision he issued on 12/31/2020, based on the recommendation of the Supreme Accountability Council, “a necessary reform step.” Wazni explains that commercial establishments and companies were forced to carry out transactions in cash dollars and register them at the official exchange rate, which generates significant accounting problems. For example, when a company buys a good for $ 1,000 at a price of 8,000 pounds per dollar, it has practically paid 8 million pounds for it. Assuming it is resold at a price of 9 million pounds, the profit made is one million pounds, which is the amount subject to tax. But because the company is obliged to declare the price of the merchandise at the official price, that is, 1,515,000 pounds in this case, the profit obtained in the book is approximately 7.5 million pounds, and the tax must be paid on it, which generates large losses for companies. Consequently, Wazni clarifies that the decision allowed to register the budget at the rate of the real dollar on the date of the operation, which gives the opportunity to form a real budget.
The decision that defines “the assets of the record of commercial operations and the elements of assets and liabilities in the accounting records, acquired or acquired by operations abroad whose value is affected by the fluctuations in the prices of those currencies”, in its Second article, stipulates the registration of fixed and acquired assets in foreign currency in the institution’s records at the cost of obtaining them in Lebanese pounds according to the value The actual date of the transaction on the date of its occurrence, and that value will be approved upon suspend the accounts and it will be depreciated on this basis.
The decision also stipulates that institutions must maintain an additional special account for the foreign currency fund that is being purchased, indicating the value of those currencies used in financing commercial operations with suppliers or what they used in other operations.
More than ten meetings were held by the Higher Accounting Council, which includes: the General Director of Public Finance of the Ministry of Finance, the Director of Imports of the Ministry, the Director of Value Added Tax, the President of the Banking Supervision Committee, the Chief of Accountants with two experts from the Association, a representative from the Chamber of Commerce and a representative from the Banking Association.
These meetings resulted in a recommendation to the Ministry of Finance that the “real price” be adopted to end the state of confusion faced by corporate administrations, in addition to accountants and tax authorities, through legislation on the registration of a price in dollars different from the official rate.
The problem that this process required, according to Sakr, is that it is not possible to present documents that prove the exchange rate. The exchangers who deal with the market price do not give a receipt for the operations that are carried out, while the accounting rules impose a restriction on each transaction. The ministerial decision allowed the registration of these operations even if the restrictions were not met, which practically led to the formation of correct budgets.
In exchange for emphasizing the importance of the decision to reconstitute valid accounts, the former head of accounting experts, Amin Saleh believes that the decision is a necessity that is not necessary, because the Lebanese and international accounting standards stipulate the possibility of recording all the operations of current economic institutions in foreign currency on the date of their occurrence according to the current exchange rate (applicable). ). Thus, Salih affirms that the current exchange rate can be used, provided that, at the end of the year, the accounts, assets and liabilities (not sales and income) are valued at the officially recognized exchange rate. Thus, it was enough to refer to the application of national and international accounting standards, to be able to adopt the current price, which in this case is the market price. However, when the Ministry referred to the “real price”, it would have caused confusion in the market and among accountants. At the end of the year, at what price should institutions close their accounts?
Saleh says that the basic rule for accounting is to prove the true value of the transaction on the date of its occurrence, and this can be demonstrated by external constraints to the organization (receipts) or internal (data). It also explains that it is not the first time that different exchange rates in dollars have been addressed. This happened in the early 1990s, as well as in the aftermath, when the price of the dollar hovered between £ 1,500 and £ 1,550. Despite the existence of this difference, the Ministry of Finance used the declaration presented by the companies at the price at which they bought the dollar.
Saleh: The decision is necessary so it is not necessary and increases the confusion in the market
An additional problem posed by the decision, Saleh says. In the absence of a party to determine the actual price, ask: How will accountants or tax observers deal with the reality that the actual price will differ from one taxpayer to another and from one region to another?
The most dangerous thing, according to legal sources specialized in accounting matters, is that the circular will open the door for companies to acquire the elements of real estate, especially buildings that are subject to consumption, in a way that allows them to transfer their deposits to the real estate market, as long as they are registered in the assets section, and then they will be subject to consumption rates. This allows banks to shed the burden of these deposits while subjecting them to a real deduction for the discount rate rate for bank checks on the black market.
The sources also warn that the decision allows the possibility of recording liabilities (charges) in the records on the basis of the real price regardless of the exchange rate determined on the date of obtaining them, so that exchange differences are made between the Downloadable loads of tax profit, which means opening a new door from The doors of tax evasion.
Sources say the decision constitutes fertile material for tax evasion in more than one place. For example, the absence of a reference to determine the market price, or the so-called real price, allows the possibility of registering counter-realistic prices for tax evasion.
Union of Accountants: A Way to Prepare Strong Budgets
The accountant captain does not deny the possibility of buying the dollar on the basis of 8000, for example, and recording it on the basis of 8,500, with the aim of reducing profits, but indicates that if this happens, then it should be disclosed when the money It is used in purchase or sale operations, which will be credited to the customer or supplier. Saqr also confirms that the procedure is not ideal, but considers it the most appropriate solution today to address this gap that leads to a lack of precision in budgeting.
The matter is different for Saleh, the real problem is the mess that the decision will cause. Regarding the issue of tax evasion, it is considered that you need a different approach for the years 2019 and 2020, on the basis that your accounts will contain many problems, and they will be difficult and will not be able to be read correctly, which requires radical treatment. For him, the treatment begins with the State assuming its responsibility, since it is responsible for the confusion that has occurred, especially since companies still do not know if they will win or lose, while the absence of a vision for accounting treatment continues and fiscal or even a targeted fiscal policy.
[ad_2]
