Beirut, Lebanon, on May 12, 2020: After the numerous campaigns that targeted petroleum importing companies in Lebanon, and the financial prosecutor’s call upon companies’ representatives, regarding the exemptions from a minor part of the customs duties of a various number of products and commodities, including gasoline imported from European countries, it is important for the Association of Petroleum Importing Companies in Lebanon (APIC) to clarify the following:
In 2002, the Lebanese state concluded the Euro-Mediterranean Cooperation Agreement to establish a partnership with the European Union and its member states in order to strengthen trade between the signatories, and build permanent relations based on reciprocity, solidarity, partnership and common development, by encouraging importers to trade and import their products in exchange for simple customs exemptions that motivate them to choose European goods over similar goods imported from other countries. Similarly, in the framework of reciprocity, many Lebanese goods exported to European markets were exempted from customs duties.
Under this agreement, the Lebanese customs implemented tax exemptions for a various number of goods imported from the countries that signed the Euro-Mediterranean Cooperation Agreement, including gasoline. Therefore, the Higher Customs Council set the procedure to be followed to allow companies to benefit from customs duties exemptions. Accordingly, the Lebanese State, represented by the Higher Customs Council, implemented a simple exemption on the unified customs duty for gasoline (20 L), estimated at around 70 LBP, while the State still collects the domestic consumption fees estimated at around 13,000 LBP, in addition to the VAT of around 2,300 LBP.
In confirmation of Lebanon’s commitment to international agreements, Law No. 23 was published again on 23/02/2017 in the official gazette, with regards to the Euro-Mediterranean Cooperation Agreement. However, the Higher Customs Council, in violation of the international agreements and the law, decided on 28/03/2017 to temporarily stop implementing the customs duties exemption, even though the Euro-Mediterranean Cooperation Agreement is still valid. Petroleum importing companies applied the decision with discontent, despite their objection to the Higher Customs’ Council’s decision, based on their conviction that the international agreement should be applied, and that re-imposing the simple customs duties is unjust.
In order to assert the righteousness of implementing customs duty exemptions, and to answer to the consultation request of H.E Minister of State for Anti-Corruption Affairs Mr. Nicolas Tueni on 04/07/2017, the Legislation and Consultations Committee at the Ministry of Justice, issued on 17/07/2017 the following legal opinion:
“… The concerned party in the exemption of customs duties is the trader who owns the capital and imports goods from a member State of the trade treaty after he is exempted from paying the customs duties on the said goods…”
“… The Lebanese state is prohibited from collecting any customs fee from companies that import liquid fuels from the European Union or from Arab countries or other countries with which agreements have been concluded in this regard, and it is not held accountable by other member states should any item of the binding agreement be vetoed, but it risks being considered as withdrawn from it…”
“… the companies should not, in all cases, be subject to the re-imposition of the customs duties… In the event that the Lebanese State should collect customs duties, and violate the international and internal laws, then it is considered as illicit enrichment for the State…”
The seven-page report of the Legislation and Consultations Committee at the Ministry of Justice concluded that “… The Lebanese State is prohibited from collecting customs duties from Petroleum distribution companies in Lebanon, which import the product from the European Union or from any country with which agreements have been concluded in this regard, whether at present time or at any previous time.”
Despite the clarity of the Euro-Mediterranean Cooperation Agreement, the Lebanese state dealt with the issue in a contrary way, as the Higher Customs Council made its temporary decision, in contradiction with the international agreements, leading to a wide campaign to discredit APIC in Lebanon, which was portrayed as a cartel stealing state funds, and was accused of corruption and the most vicious and false attributes.
Therefore, based on the abovementioned, and in order to clarify, set the record straight, and reveal the truth for the Lebanese public opinion who may have been misled by this campaign, it is important for APIC to inform the public opinion of the following:
First, the petroleum importing companies are part of the national component, and they stood by the Lebanese people in the most critical conditions, from the years of war to the aggressions, and during economic crises, when they made sure that the market was not cut off for a single day. Nowadays they are cooperating with official entities to regularly meet the needs of the market despite the massive deterioration in the economic situation. And they would have wished for the state’s support, and solidarity, instead of its false accusations against them.
Second, the petroleum importing companies are a private warehouse regulated by two authorities, namely the Ministry of Energy and Water and the Ministry of Finance represented by the General Directorate of Customs, which has the exclusive right to determine and collect the fees due at each purchase and sale of any petroleum and gasoline products from them. As a matter of fact, the gasoline does not come out of the petroleum depots until the customs data that the company pays under a mandatory customs registration statement (IM4) is confirmed without giving the importing companies any rights to amend the fee imposed on it.
Third, the companies that make up the association are large Lebanese companies, or branches of international foreign companies, and companies with major international shareholders from the United Kingdom, France, Kingdom of Saudi Arabia, and Kuwait. These companies perfectly fulfill their moral, national, economic, and financial obligations. They pay all their taxes to the Ministry of Finance and have no unpaid dues to the Lebanese state whatsoever.
Fourth, the petroleum importing companies are among the largest and most important collectors of taxes and fees paid by the Lebanese citizens, obtained by the companies and returned to the Lebanese state without any return or delay. The petroleum importing companies collect in fact over 2,000 billion LBP per year, according to the current fees.
Fifth, The petroleum importing companies create many job opportunities, as they directly ensure more than 5 thousand job opportunities, and indirectly more than 20 thousand job opportunities. They boast a high level of corporate social responsibility comparable to the largest international companies in this domain.
Sixth, from a purely legal standpoint, APIC confirms the righteousness of the legal points which were included in this statement, and confirmed by the consultations of senior legal, constitutional and financial advisors in Lebanon and abroad. This was unequivocally established by the opinion of the highest legal advisory authority in Lebanon, namely the Legislation and Consultations Committee in the Ministry of Justice.
Seventh, if any party should return any amounts of money to the other, it would be the Lebanese state that must return to the petroleum importing companies all the customs duties that they paid unlawfully and in a gross violation of a valid international agreement signed and ratified by Lebanon.
Eighth, in light of the stifling economic, financial, monetary and social crisis that Lebanon is going through and which is unprecedented in both its recent and ancient history, and an existential crisis that threatens companies with closure and employees with unemployment, APIC asks which image does Lebanon want to give abroad? How can it encourage and attract investments and funds when companies are required to pay fictitious, illegal, and illegitimate money and dues?
APIC affirms that the member companies which it includes are companies with a leading national, economic, financial and societal responsibility. Therefore, it is not permissible to tarnish their image, harm their reputation, and depict them as corrupt and irresponsible companies that waste or loot public money. APIC further reiterates that all accusations against it are false, defamatory and harmful to a vital sector in Lebanon.
In addition to this statement, the Association of Petroleum Importing Companies wished to invite the esteemed Lebanese media to attend and cover a press conference which was to be held on Wednesday, May 13, 2020 at 11 am in the Press Club of Lebanon, in order to explain this matter with uttermost transparency. However, the prevention measures to counter the second unfortunate wave of coronavirus prevented us from holding the press conference, which APIC will reorganize as soon as possible.
In conclusion, APIC confirms its trust in the Lebanese Judiciary, based on its integrity and the belief that justice will prevail.