Result Based Management Framework - METAC

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Risks/Assumptions
Political stability in Lebanon and commitment of the authorities to the PFM reform
agenda are maintained.
The budget environment is normalized with the approval of the 2014 budget which will
allow delivery and implementation of sustainable PFM reform.
D. Revenue Administration
Past Activities
With high levels of government debt, revenue mobilization through improved tax and
customs systems remains a key priority. The MOF has embarked on a wide reform
program to modernize the tax system and its administration and to improve tax
collections. Following the successful introduction of VAT in 2002, a number of structural
measures were taken to modernize the tax administration towards a unified functionbased
structure, fully automated business processes, risk-based compliance programs, and
improved legislations.
METAC has supported the efforts of the authorities in designing the reform strategies and
developing a phased implementation plan to modernize the revenue administration. Since
2005, TA focused on the following main areas: (1) re-organizing the tax administration –
including the network of field offices – along functional lines based around a strong HQ;
(2) strengthening operations in the LTO that was established in 2005; (3) integrating the
administration of the VAT and income tax using modern systems and processes under the
framework of a new TPC; (4) developing risk-based compliance strategies; and (5)
strengthening collection enforcement.
The authorities responded well to the TA provided by METAC despite the difficult
political environment. Several key results were achieved, including: (i) establishment of a
LTO; (ii) development of risk-based auditing; (iii) re-structuring of tax offices on a
function basis; (iv) establishment of new HQ units, serving as basis for future HQ
functions; and (v) ratification of a TPC.
The Lebanese authorities have been successful in introducing significant reforms to the
tax administration and in setting up a sound platform for building a modern
administration on a full self-assessment basis. Nevertheless, several obstacles are still
hindering the overall tax performance and preventing the tax administration from
securing significant improvements in tax compliance, including: fragmented
organizational arrangements (with VAT being administered separately), on-going
amnesties on penalties and interest, unsatisfactory performance of the LTO, and
collection enforcement embargoes.