Tax Alert: MoF decision #893/1 on the Difference of ExchangeJanuary 2, 2021
Tax Alert: MoF decision #893/1 on the Difference of Exchange
The Ministry of Finance’s decision #893/1 dated 31 December 2020 has finally acknowledged the difference of exchange resulting from the purchase of goods or assets in foreign currencies at the black market rate. According to this MOF decision, this difference of exchange should be added to the cost of the goods in the Profit & Loss statement or to the cost of the asset in the Balance Sheet. It has to be recorded in the revenues of the seller as well.
Any pending difference of exchange on goods or assets in progress or stock not yet sold at the closing date of the financial statements should be recorded in a separate Balance Sheet account “Difference of Exchange-Assets or Liabilities” until this good is sold.
Our firm has applied this rule from the very beginning of the financial crisis and the devaluation of the Lebanese Pound early this year and has many times requested for an official acknowledgment from the MOF that has finally been made today.
This is a first step made by the MOF to ease the business in Lebanon in this hyperinflation environment, hoping other decisions will be made to further clarify this major issue that the Lebanese companies are facing among other problems resulting from the current financial and economic crisis.
We remain at your disposal should you need any further clarification or information on this subject.
DAHER & PARTNERS