• Lebanon's Prime Minister Najib Mikati gestures as he speaks to the press after meeting President Michel Aoun at the presidential palace in Baabda. Reuters
    Lebanon's Prime Minister Najib Mikati gestures as he speaks to the press after meeting President Michel Aoun at the presidential palace in Baabda. Reuters
  • President Michel Aoun meets Parliament Speaker Nabih Berri and Prime Minister-designate Najib Mikati at the presidential palace in Baabda before the announcement of the formation of a new government under Mr Mikati. Dalati and Nohra / AFP
    President Michel Aoun meets Parliament Speaker Nabih Berri and Prime Minister-designate Najib Mikati at the presidential palace in Baabda before the announcement of the formation of a new government under Mr Mikati. Dalati and Nohra / AFP
  • Mr Aoun (L) and Mr Mikati before the announcement of the formation of a new Lebanese government ending a 13-month vacancy. Dalati and Nohra / AFP
    Mr Aoun (L) and Mr Mikati before the announcement of the formation of a new Lebanese government ending a 13-month vacancy. Dalati and Nohra / AFP
  • Lebanese Prime Minister Najib Mikat attends Friday prayers at a mosque in downtown Beirut. AP
    Lebanese Prime Minister Najib Mikat attends Friday prayers at a mosque in downtown Beirut. AP
  • Najib Mikati arriving at the presidential palace in Baabda, Lebanon. Reuters
    Najib Mikati arriving at the presidential palace in Baabda, Lebanon. Reuters
  • Lebanese Speaker of the Parliament Nabih Berri arrives at the presidential palace in Baabda. Reuters
    Lebanese Speaker of the Parliament Nabih Berri arrives at the presidential palace in Baabda. Reuters
  • The government palace in Beirut, Lebanon. Reuters
    The government palace in Beirut, Lebanon. Reuters
  • Protesters in Beirut.
    Protesters in Beirut.
  • Anti-government protesters during a demonstration outside the French embassy in Beirut, Lebanon. EPA
    Anti-government protesters during a demonstration outside the French embassy in Beirut, Lebanon. EPA
  • Demonstrators with placards appealing to French President Emmanuel Macron. EPA
    Demonstrators with placards appealing to French President Emmanuel Macron. EPA
  • Protesters outside the French embassy in Beirut, Lebanon. EPA
    Protesters outside the French embassy in Beirut, Lebanon. EPA

Aoun and Mikati sign decree to form new Lebanese government


  • English
  • Arabic

Lebanese President Michel Aoun announced the formation of a government on Friday afternoon, ending 13 months of caretaker governance.

The agreement over a Cabinet line-up headed by telecoms billionaire Najib Mikati as prime minister, came after weeks of wrangling over the distribution of government ministries between Lebanon’s various political parties.

Mr Mikati cut an emotional figure as he announced the government formation after a meeting with President Michel Aoun and Speaker of Parliament Nabih Berri at the Baabda Palace.

In his speech, Mr Mikati vowed to hold next year’s elections on time and promised a “governmental plan to rescue the country”.

He declared the end of Lebanon’s expensive blanket subsidy programme. “There’s no money for us to keep subsidies,” he said. The street value of the Lebanese lira surged to 15,600 to the dollar upon the announcement of the government. In recent weeks it had plummeted as low as 22,000.

Mr Mikati asked the Lebanese people to "fasten their seatbelts" because the nation was "in a state of an emergency landing".

Appearing to hold back tears, he said the new government would work until the end of the current parliament's term in May and then hold elections.

"We must hold elections on time, that is my intention," he said.

Mr Mikati addressed the growing hardships of the country over the course of the past year and said "there will be a governmental plan to rescue the country".

Former Lebanese ambassador to the United States Abdullah Bouhabib was named foreign minister, with central bank official Youssef Khalil announced as finance minister. Firas Abiad, the head of Rafiq Hariri University Hospital and one of the country’s most prominent figures in Lebanon’s response to the coronavirus pandemic, was announced as health minister.

Bassam Al Mawlawi, a nominee of former prime minister Saad Hariri’s Future Movement, was named interior minister. Charge of the interior ministry, which will have oversight of next year’s elections, was one of the most viciously contested seats in government negotiations.

Only one woman features in the Cabinet – Najla Riachi, Lebanon’s former representative to the United Nations, who was named as minister of state for Administrative Development Affairs.

Lina Khatib, director of Chatham House’s Middle East and North Africa programme, said the cabinet would only placate those who were desperate to see a government of any shape formed, and that those looking for significant reform would likely be left disappointed.

“Lebanon’s new government will not convince the international community it is serious about reform, but is likely to still be acceptable to Western countries whose main concern has been political vacuum in Lebanon and who have been eager to see a government form even if many of its faces are familiar,” she told The National.

Ms Khatib added that civil society groups were the biggest losers, while the Iran-backed Hezbollah would likely consider the cabinet line up a success.

“The cabinet would not have been formed without Hezbollah’s blessing. Hezbollah holds significant sway over the government through the presence of its own ministers and those from allied parties as well as through the relative weakness of representation from its rival parties.

"The biggest losers in this cabinet line up are pro-reform independent political parties and groups, who are effectively without a seat at the table”.

Mr Hariri welcomed the formation of Mr Mikati's government, calling for all support to help him "in the vital mission to stop the collapse and launch reforms".

The government of Hassan Diab resigned in the wake of the Beirut port explosion last August, leaving the country with a caretaker government as it battled a cascade of economic crises. Yet efforts to form a new administration floundered as three prime ministers designate took turns in attempting to agree a Cabinet line-up with President Aoun – Mustafa Adib, Mr Hariri and finally Mr Mikati.

Mr Mikati, also a former prime minister, was put forward as a candidate after Mr Hariri’s resignation on July 15.

"The government is the best that can be reached, and it is able to work, and our concerns lie in the priority of solving people's current problems, and we have great responsibilities, and we must work to get out of the current crisis," Mr Aoun later told journalists.

The specs

Engine: 2-litre 4-cylinder and 3.6-litre 6-cylinder

Power: 220 and 280 horsepower

Torque: 350 and 360Nm

Transmission: eight-speed automatic

Price: from Dh136,521 VAT and Dh166,464 VAT 

On sale: now

Global state-owned investor ranking by size

1.

United States

2.

China

3.

UAE

4.

Japan

5

Norway

6.

Canada

7.

Singapore

8.

Australia

9.

Saudi Arabia

10.

South Korea

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

Updated: September 10, 2021, 4:18 PM