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Banks association warns against big taxes on profits

People are seen leaving Lebanon's Central Bank in Beirut July 7, 2011.

People are seen leaving Lebanon's Central Bank in Beirut July 7, 2011.

REUTERS/Mohamed Azakir

22 February 2017

BEIRUT: Lebanese bankers warned Tuesday that raising taxes on corporate profits would deal a blow to the country’s financial sector and hurt its position as a financial hub.

The remarks came after a meeting between the Association of Banks in Lebanon headed by Joseph Torbey and Finance Minister Ali Hasan Khalil.

Talking to reporters, Torbey said raising taxes on profits would cause damage to banks and their operations.

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“When taxes are in the same par with other economic sectors, we usually don’t intervene in the state legislation. But the proposed tax will hurt the banks because it is like double taxation. A bank cannot be subjected to 17-percent tax because it did not subscribe to Treasury bills and another bank pay 75 percent tax because it subscribed to the T-bills,” Torbey said.

Bankers argue that banks in past paid 5 percent tax on interest on T-bills held by the lenders but that this tax was deducted from income tax collected by the government.

However, according to the new budget, the tax deduction has been removed, which means that banks have to pay additional taxes, and this is a tantamount to double taxation.

© Copyright The Daily Star 2017.

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