Discussions on the launch of a Value-Added Tax (VAT) began under the Hoss administration, with the tax finally coming about based on Law No. 379 on December 24, 2001 under the Hariri government. The VAT was then implemented on the first of February 2002.

VAT Compliance

The VAT applies to all operations within Lebanese borders that involve financial transactions and any services provided for a fee by persons subject to the tax. Those subject to the tax are natural or legal persons who undertake such transactions or services as part of their independent commercial activities, with the proviso that turnover over the four quarters exceeds LL 500 million ($331,000). Businesses whose transactions range between LL 150 million ($100,000) and LL 500 million have the option of voluntary compliance to the VAT.

Specifying which business transactions fall under the VAT can be complicated due to the incorporation of many basic services in one final product.
 

While the final product itself may not be subject to VAT, those involved in generating it may fall under VAT requirements. For example, services provided by doctors or medical professionals, and medication expenses are not subject to the VAT, while electricity, gas, heating and refrigeration are subject to the VAT and are part of the medical services. The following services fall under the VAT:

• Private property rental
• Communications
• Water
• Electricity
• Visual and audio-visual media
• Commercial activities
• Slaughter houses
• Warehouses
• Tobacco
• Car parks
• Cooperatives
• Ports and airports
• Gas
• Property and fixed assets

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