Lebanese business organizations voiced strong opposition on Monday to a proposed 3% tax outlined in Article 31 of the 2026 draft budget, describing it as illogical, inflationary, and punitive for compliant companies in a country where the informal economy thrives.
Officially framed as an advance on income tax, the measure, business leaders warn, risks becoming an additional levy due to the absence of clear reimbursement mechanisms. “It infringes on the rights of businesses and citizens,” their statement said.
The government is projecting $600 million in revenue from the tax, which is intended to be offset against corporate income tax. Critics, however, say this figure is unrealistic, pointing out that the levy has never generated more than $150–180 million in past years. “On what basis will collected funds be reimbursed?” they questioned.
Economists warn that implementing the tax could directly raise prices by 4–5%, further eroding Lebanese purchasing power. They also argue the measure will not combat tax evasion and may instead drive more operators into the informal economy.
The draft budget’s Articles 29, 30, and 31 outline a mechanism requiring public institutions, such as Ogero and Electricity of Lebanon (EDL), as well as customs authorities and certain taxpayers, to withhold 3% on services and imports for the Treasury, theoretically creditable against taxes owed at year-end.
For the private sector, the core issue is fairness: companies already paying taxes are being overburdened, while the informal economy largely escapes scrutiny. Business groups are urging the government to broaden the tax base and tackle smuggling and customs fraud rather than penalize compliant taxpayers.
“The economic and social situation cannot bear additional burdens,” the organizations warned, emphasizing that Lebanon’s priority should be stimulating growth and easing household pressures.
The announcement comes as the government continues deliberations over the draft budget, with the next session scheduled for Monday afternoon.
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