Jad Hatem is a partner at B.E.C.A. Hatem & Partners, one of Lebanon’s leading accounting firms. The company has around 500 clients, many of whom are due to file taxes online for the first time ever in 2014, after the Lebanese government introduced the system at the end of 2013. In coordination with the Ministry of Finance, B.E.C.A. have been helping prepare their clients through specific training programs.
E What companies have to pay their taxes online this year?
For the year 2014, all the large companies will submit online but the smaller companies still do hard copies. In the coming years all companies will be obliged to pay online. For now the larger companies are paying VAT, completed on a quarterly basis, annual tax income and real estate taxes online.
E How significant a difference can online taxes make for both the government and the companies?
I would say it is going to be a win-win situation. For the taxpayer it will be much easier to submit it on the web directly rather than a hard copy to be completed, signed and submitted to LibanPost — with the fees attached. For the Ministry of Finance it will be much easier. In the past they used to get hard copies from the LibanPost, scan it, enter the data into the system — now that won’t be necessary. So on both sides it will be beneficial.
Nevertheless, I am sure the first two years there will be complications — it is new, people don’t know how to do it, and there might be bugs in the system. Many accountants from an older generation are not familiar with IT and the internet. So it might be tough for them in the beginning but later on it will be much easier.
E The government is aiming to get all companies to pay taxes online by 2015. Is that realistic?
It will be feasible as long as the large taxpayers’ scheme is successful this year. There is no reason why it can’t happen.
E How well is the e-taxation system that was launched at the end of last year working?
We cannot judge yet, we don’t have feedback as the first quarter that has been submitted is this quarter. So the first test is now — the deadline was postponed till the end of January. It is too early to know. But what we can say so far is that people, companies and accountants are not well informed about how to proceed with this file.
E So the potential problems are more to do with knowledge than the functioning of the system?
We don’t know yet how efficient the system will be but what we know at this stage is people are not aware how to do it. So we need to have workshops so taxpayers know how to succeed.
E How have you been training your clients to avoid problems?
We carried out a three-hour briefing for over 100 of our clients to give them the knowledge to register online, get an access number, and complete the forms.
We had 140 attendees, all of them from our clients — the chief accountants.
E Is three hours training enough to learn how to submit your tax forms online?
Yes, after three hours they should be able to register, to get online, to get the login and have 80 to 90 percent of the knowledge required to file their tax returns.
E Are some businesses that you work with hesitant to go online?
There is hostility, mainly from the older generation, which has been doing it for decades. For them they don’t want to change but on the other hand it is not an option — this is how things are moving. Now those in big companies cannot do it offline any more, it is compulsory.
E How many years behind is Lebanon in going online?
IT-wise and in terms of internet penetration, compared to Europe we are far behind. Lebanese are not very familiar — if you look at the statistics most of them are into social media but that is it, in terms of using the internet for e-payment, etc. Lebanese are still not used to paying for things online. But compared to other Arabic countries, excluding the UAE, we are not far behind.
E Does auditing online make the system more transparent, thus potentially reducing corruption?
The information will be available much quicker, so as soon as you submit, the information will be available. In the past it was completed manually, then sent to the Ministry of Finance to be processed. All of this process took months but not any more. But the impact on transparency will be indirect.