Business conditions in Lebanon’s private sector deteriorated marginally in May despite new export orders rising at their fastest rate in almost eight years.
The country's Blom purchasing managers’ index, a measure of the strength of its private sector, fell to 49.4 in May, from April’s 49.5.
Readings above 50 signal an improvement in business conditions on the previous month, while one below shows a deterioration.
“This slight drop can be attributed to a decline in employment. However, amid this decline, an interesting trend emerged as new export orders witnessed an increase,” Stephanie Aoun, research analyst at Blom Bank, said.
“This can be explained by the devaluation of the Lebanese currency against the US dollar, which has made Lebanese goods more competitive in the international markets.”
Lebanon's central bank devalued the pound in early February, with the official exchange rate changing to 15,000 to the US dollar, compared with the peg in place since 1997 of 1,507.50 to the dollar.
The official exchange rate changed to 15,000 pounds to the US dollar, compared with the peg in place since 1997 of 1,507.50 to the greenback.
Lebanon is going through its worst economic crisis in decades. Inflation hit an annual rate of about 269 per cent in April as the country's currency continued to lose value on the parallel and official markets since it was devalued by 90 per cent at the start of February.
Lebanon's economy contracted by about 58 per cent between 2019 and 2021, with gross domestic product falling to $21.8 billion in 2021, from about $52 billion in 2019, according to the World Bank – the largest contraction on a list of 193 countries.
The World Bank estimates that the real gross domestic product declined by 2.6 per cent in 2022 and is projected to contract by 0.5 per cent this year.
The country's economic crisis is being exacerbated by a political impasse that has blocked the formation of a new government and the enactment of reforms required to unlock billions of dollars in aid from the International Monetary Fund and other international donors.
The country has grappled with a presidential vacuum since the departure of former president Michel Aoun from office in October.
Lebanon’s parliamentary opposition formally nominated former finance minister Jihad Azour for the presidency on Sunday, moments after MP Michel Moawad announced the withdrawal of his own candidacy.
“Looking ahead, there is a sense of optimism among businesses in Lebanon, as they anticipate a potential boom during the summer season. This optimism is driven by several factors, including the expected influx of tourists and a better overall capability to deal with the crisis,” Ms Aoun said.
“It is expected that the PMI in the upcoming months will display a more positive trajectory.”
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
SM Town Live is on Friday, April 6 at Autism Rocks Arena, Dubai. Tickets are Dh375 at www.platinumlist.net
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THE SPECS
2020 Toyota Corolla Hybrid LE
Engine: 1.8 litre combined with 16-volt electric motors
Transmission: Automatic with manual shifting mode
Power: 121hp
Torque: 142Nm
Price: Dh95,900
Groom and Two Brides
Director: Elie Semaan
Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla
Rating: 3/5
