May 6, 2019 / 10:39 AM / 17 days ago

UPDATE 1-Lebanese finance minister insists on raising tax on interest

(Adds context)

BEIRUT, May 6 (Reuters) - The Lebanese government insists on raising the tax rate on interest payments to 10 percent from 7 percent, which is a fundamental part of the draft state budget for 2019, the finance minister said on Monday.

“As for the increase in the tax on interest from 7 percent to 10 percent, we insist on it. It is a fundamental part of the organisation of the budget and its balance,” Ali Hassan Khalil told journalists, according to a finance ministry statement.

Joseph Torbey, the chairman of the Association of Banks in Lebanon, last week warned that the proposed hike in the tax on interest income would affect capital flows to Lebanon, weaken banks’ ability to play their financing role in the economy, and obstruct growth.

Interest income had been tax free until the government introduced the 7 percent levy last year.

The draft budget under discussion by Prime Minister Saad al-Hariri’s government aims to bring down the deficit to less than 9 percent of GDP in 209 from 11.2 percent in 2018, the finance minister told Reuters. (Reporting by Tom Perry; Editing by Toby Chopra and Raissa Kasolowsky)

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