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LEBANESE FINANCIAL SECTOR: A HISTORY OF REFORM AND DEVELOPMENT

The Lebanese financial sector has undergone significant reforms since 2005 to create liquidity, attract foreign capital, and promote economic growth.

Early Reforms (2005-2008)

In 2005, the government passed Law No. 705, allowing for the securitization of assets, transforming illiquid assets into securities. This was followed by Law No. 706, which introduced collective investment schemes in securities and other financial instruments, providing additional channels to attract capital and savings.

Tax Reforms (2008-2011)

In 2008, Law No. 44 unified and simplified tax procedures, with implementing decree No. 2488 of 3/7/2009 providing further clarity on the new regulations.

Anti-Money Laundering and Insider Trading Reforms (2011-2015)

To combat money laundering and terrorist financing, Law No. 44 dated 11/24/2015 was adopted, requiring banks and other financial institutions to implement strict know-your-customer (KYC) and anti-money laundering (AML) procedures.

In 2011, Laws Nos. 160 and 161 prohibited insider trading and established the Financial Markets Commission to regulate and monitor the financial markets.

Recent Reforms (2016-2018)

  • Laws Nos. 55 and 60 amended provisions related to tax information exchange and the abolition of bearer shares in 2016.
  • Law No. 75 introduced new tax obligations for individuals carrying out trustee activities, while Law No. 77 broadened the concept of terrorist financing in the same year.
  • In 2017, Law No. 48 aimed to encourage joint projects between the public and private sectors in key sectors such as electricity, telecommunications, and air transport.
  • The corporate income tax rate was increased from 15% to 17%, while Article 51 of Law No. 497/2003 was amended to impose a 7% tax on interest and revenue from all bank liabilities.

Electronic Transactions and Personal Data Regulations (2018)

In 2018, Law No. 81 introduced regulations governing electronic transactions and personal data, protecting the confidentiality of personal information and ensuring the security of electronic commerce.

Ongoing Reforms

The Lebanese government has continued to refine its financial regulations in recent years, with Laws Nos. 85 and 79 amending provisions related to offshore companies and tax procedures, respectively.

These reforms demonstrate the Lebanese government’s commitment to creating a more stable and attractive financial environment, essential for driving economic growth and development in the country.