Golden Residency as an opportunity to increase state revenues

Source: Nida Al watan

With the aim of attracting investment and preparing for the next phase of economic recovery, the Parliamentary Finance and Budget Committee has approved the draft Golden Residency law. The proposal grants a golden residency permit to non-residents in Lebanon, whether foreign nationals or Lebanese citizens working abroad who require what is known as tax residency, provided they invest at least US$500,000.

The proposal takes into account Lebanon's Foreign Property Ownership Law with regard to real estate acquisitions, requires that investment funds be transferred from abroad, and imposes strict compliance procedures to prevent any attempt to launder money through bank accounts. The residency scheme also extends to the investor's family, subject to the payment of an annual fee of no less than US$50,000 per family member wishing to benefit from tax residency. According to the committee, the initiative would create employment opportunities, generate revenues for the state treasury, and encourage investment once the necessary conditions are in place.

The President of the Lebanese Tax Society, Hisham Al-Mukammel, praised the Golden Residency bill submitted by the Chairman of the Finance and Budget Committee, MP Ibrahim Kanaan, stating in an interview with Nida Al Watan that, "if designed in a well-considered and transparent manner, it could serve as an effective tool to stimulate investment and increase state revenues. However, it is not a magic solution in itself; rather, it must form part of a comprehensive economic and financial reform plan."

Boosting state revenues

Al-Mukammel explained that "the Golden Residency project could enhance state revenues through three main channels: annual fees paid directly into the treasury, new investments that create jobs and stimulate economic activity, and the revitalization of the real estate, financial, and banking sectors, along with the taxes and fees generated by those activities."

He noted that "the success of the project remains contingent upon several key factors, foremost among them security and political stability, banking sector reform, a clear tax system, an improved business environment, and the provision of legal protections for investors."

An opportunity for gulf investors and the lebanese diaspora

Al-Mukammel argued that "the greatest opportunity is not limited to Gulf investors. It also extends to Lebanese expatriates living in Africa, Europe, and the Americas, Lebanese businesspeople working in Gulf countries, as well as investors from Iraq, Jordan, and Egypt, in addition to high-net-worth individuals seeking an alternative tax residency in light of tax or political restrictions imposed in certain countries."

He added: "Despite the substantial financial capabilities of Gulf countries, Gulf investors will not base their investment decisions solely on the availability of a Golden Residency. They require genuine guarantees regarding the protection of their assets and the freedom to transfer and repatriate their funds from Lebanon whenever necessary."

No additional burdens on compliant taxpayers

Regarding taxes that the government could impose to increase revenues without placing additional burdens on citizens, Al-Mukammel stressed that "the priority should be to broaden the tax base and improve tax collection rather than increasing the burden on compliant taxpayers."

In this context, he proposed "imposing taxes on rent-seeking activities, such as large-scale real estate speculation, substantial capital gains, and undeveloped land within urban areas, in addition to levying duties on luxury goods such as high-end vehicles, yachts, private aircraft, and other luxury products. He also advocated imposing taxes on digital services and foreign online platforms in order to achieve tax fairness and ensure equal treatment with domestic companies."

Strengthening tax collection

Al-Mukammel also emphasized "the necessity of strengthening tax collection and improving revenue enforcement," arguing that "Lebanon's fundamental problem does not lie in low tax rates as much as it does in weak collection mechanisms and widespread tax evasion."

With respect to the industrial sector, he called for "reducing the financial burdens imposed on manufacturers, given the sector's vital role in creating employment opportunities and generating foreign currency through exports." He stressed that "any additional taxes should not affect factories, exports, or productive investments."

Electronic integration

Addressing Lebanon's parallel economy, which deprives the state of significant revenues, Al-Mukammel pointed out that "the cash-based and informal economy represents a substantial share of Lebanon's economy and costs the state treasury hundreds of millions of dollars annually."

He argued that "addressing this problem requires the mandatory implementation of electronic invoicing, the electronic integration of the Ministry of Finance, Customs, the Commercial Registry, and the National Social Security Fund, as well as tighter customs controls to combat smuggling across borders and through ports."

He also called for encouraging electronic payment methods to reduce the cash economy and for continuing efforts to combat unlicensed businesses that compete unfairly with registered companies without paying the taxes and fees legally due. In addition, he advocated adopting smart monitoring systems that target major tax evaders instead of increasing pressure on compliant taxpayers.

Al-Mukammel concluded by affirming that "the Golden Residency could represent a promising opportunity for Lebanon if accompanied by genuine economic and financial reforms. It has the potential to attract new investments and generate additional revenues, particularly from Lebanese expatriates and Arab businesspeople. However, the greatest fiscal impact will not come from imposing new taxes, but rather from improving tax collection, combating tax evasion, regulating the parallel economy, and attracting productive investments. What the state needs is to broaden the taxpayer base—not to increase the burden on compliant taxpayers or on the industrial sector, which remains one of the principal drivers of economic growth."