Lebanon's Ministry of Finance has introduced reductions in tax penalties for eligible tax assessments issued from 16 November 2022, with taxpayers able to benefit from the settlement measures until 30 December 2026, subject to payment and other conditions.
Lebanon’s Ministry of Finance (MoF) has issued Decision No. 642/1 on 10 July 2026, granting reductions in tax penalties for eligible tax assessments issued from 16 November 2022, the publication date of the 2022 Budget Law.
The measure, issued under Article 22 of Law No. 10 (Budget Law 2022), applies regardless of when the underlying tax infringement occurred, provided the assessment was issued on or after that date.
The decision allows taxpayers to benefit from the penalty reductions until 30 December 2026, subject to meeting the applicable settlement conditions.
Taxes covered
The penalty reduction applies to taxes and fees administered by the Directorate General of Public Finance. Covered direct taxes include income tax, built property tax, inheritance tax, and offshore and petroleum-related taxes.
The measure also covers indirect taxes, including Value Added Tax (VAT), stamp duties, and specific fees imposed on products such as alcohol, tobacco, cement and soft drinks.
Penalty reduction rates
The level of relief depends on the type of tax and the nature of the penalty.
For most taxes, proportional verification penalties are reduced by 85%, flat-rate verification penalties by 60%, and collection penalties by 75%.
For additional assessments relating to VAT and salary or wage tax, proportional verification penalties are reduced by 50%, flat-rate verification penalties by 60%, and collection penalties by 50%.
No reduction is available for penalties relating to VAT and salary or wage tax self-assessments.
Eligibility conditions and exclusions
To qualify for the reductions, taxpayers must pay both the reduced penalty and the underlying tax within the period specified in the decision and no later than 30 December 2026.
The reductions do not apply to penalties below LBP 200,000, or below USD 3 or EUR 3 for taxes denominated in foreign currency. They also exclude penalties where the principal tax was not paid within the statutory deadline and penalties already covered by special settlement laws.
The decision further states that penalties paid before its issuance are considered final revenue of the Treasury and are not refundable.
Where the value of a penalty reduction exceeds LBP 60 billion – or approximately USD 667,000, approval from the Council of Ministers is required.
Administrative procedures
Under the decision, the Department of Collection will issue revised payment orders reflecting the reduced penalties for eligible taxpayers.
Taxpayers who fail to pay both the reduced penalty and the corresponding tax within the prescribed period will forfeit their right to benefit from the settlement measures.
