A farmer and his wife harvest their olive trees in Marjayoun, near the border with Israel in southern Lebanon. Reuters
A farmer and his wife harvest their olive trees in Marjayoun, near the border with Israel in southern Lebanon. Reuters
A farmer and his wife harvest their olive trees in Marjayoun, near the border with Israel in southern Lebanon. Reuters
A farmer and his wife harvest their olive trees in Marjayoun, near the border with Israel in southern Lebanon. Reuters

South Lebanon farmers fear grim harvest if war breaks out


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“The biggest risk is that what happened in 2006 will occur again,” says Merhej Shamaa, a farmer in the picturesque south Lebanon village of Deir Mimas, nestled on a promontory surrounded by olive fields overlooking the Litani River.

That war between Israel and Hezbollah, the powerful Lebanese Shia militia whose exchanges of fire with the Israeli military have raised fears of a new conflict, caused significant damage to the village, injuring one resident and injuring several others, Mr Shamaa said.

The 60-year-old farmer said that despite being a Christian village, Deir Mimas was shelled heavily by the Israeli army.

“The bombings also severely affected the quality of our crops until now,” he said.

With the sound of bombs heard once again after Hamas, a Palestinian militant group and Hezbollah ally, carried out a deadly attack in southern Israel on October 7, residents of Deir Mimas are keenly aware that further escalation would be disastrous.

“Our economy hinges on tourism and agriculture, with a war, both will vanish,” Mr Shamaa said.

Sitting at a table, Mr Shamaa and his fellow farmers discuss the looming spectre of war over a dish of hummus and freshly pressed olive oil, the distant hum of Israeli planes in the background.

“In 2006, the whole village had to leave: this idea that Israeli bombs only target Shia villages is a misconception. Israel is against all Lebanese, regardless of their religion,” he said.

Villages in the deep south have, for the most part, become deserted as families escape the daily clashes. “Only journalists visit nowadays,” Mr Shamaa said with a smile.

Deir Mimas has remained untouched so far, allowing olive farmers like Michel Beshara, 27, to continue with their harvest even in the face of nearby shelling.

A dozen Syrian workers, mostly young men and women, use manual or electric olive rakes to shake the fruit from branches of the trees in his field.

“The main issue right now revolves around finding workers, who are predominantly Syrians,” Mr Beshara said.

Deir Mimas's farmers needed 400 workers for the olive harvest last year, he said, but this year some of them had left the conflict-affected border areas, “making it challenging for some farmers to find replacement”.

Asked whether he had a backup plan in case of escalation, Mr Beshara simply said: “For now I'm staying, I will leave with the workers if things get worse”.

Emergency plan

Mohamad Hussein, the head of the farmers' union for south Lebanon, said there had been no help from the government to cope with the situation.

“There is no official emergency plan in place for Lebanese farmers, leaving them to make individual decisions,” he said. “The government is always reactive rather than proactive when it comes to responding to emergency.”

Agriculture is crucial to the economy in southern Lebanon, where a significant portion of the population is engaged in farming. The crops affected by the continuing clashes so far are olives, of which the region accounts for 20 to 30 per cent of national production, and tobacco, said Mr Hussein.

“At present, the challenge is that some farmers are worried to approach areas frequently bombed to collect their crops.”

Other crops cultivated primarily in coastal areas of the south, such as bananas, citrus and exotic fruits, have not been affected, added Mr Hussein.

“However, in the event of a war, farmers might also encounter difficulties for the current season regarding these crops,” he said.

Mr Hussein said that about 90 per cent of banana production, 70 per cent of lemon production and 80 per cent of avocado production was concentrated in the south, between the coastal cities of Saida and Naqoura.

“A war could potentially lead to shortages,” he said.

The primary challenge in the event of a conflict would be the transportation of produce, he said, based on the experience of 2006 conflict when road infrastructure was systematically targeted and destroyed by Israeli raids.

“Of course, we are concerned, especially with a neighbour like this,” Mr Hussein said.

“Lebanese farmers are essentially left to fend for themselves. In 2006, they had to absorb their losses alone, as no one came to their assistance.”

Timeline

2012-2015

The company offers payments/bribes to win key contracts in the Middle East

May 2017

The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts

September 2021

Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act

October 2021

Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence 

December 2024

Petrofac enters into comprehensive restructuring to strengthen the financial position of the group

May 2025

The High Court of England and Wales approves the company’s restructuring plan

July 2025

The Court of Appeal issues a judgment challenging parts of the restructuring plan

August 2025

Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision

October 2025

Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange

November 2025

180 Petrofac employees laid off in the UAE

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

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Updated: October 22, 2023, 12:03 PM