The relevance of the OECD and the UN Model Conventions and their Commentaries for the interpretation of Lebanese tax treaties

Introduction

Lebanon has a network of twenty-nine tax treaties in force and is negotiatingwith an additional twenty countries. Until 1995, the only existing tax treatywas with France. Since the end of the war in 1990, one of the pillars ofLebanese government policy has been the improvement of the investment climate.Hence, the Ministry of Finance has focused on the negotiation of tax treaties asone of the main legal tools contributing to the enhancement of the businessclimate.

This policy, however, was not given the necessary resources in terms of human andfinancial capital. In 1996 an external consultant was hired by the Ministry ofFinance to take charge of the negotiations of tax treaties. This consultant wasto collaborate with the Head of the Revenue Directorate – who is mandatedby law to negotiate tax treaties – and train civil servants. To date, nounit dedicated to the negotiations and the implementation of tax treaties hasbeen created within the revenue administration, leading to a limited experiencein this field among civil servants.

This situation accurately reflects the limited extent of the knowledge andunderstanding of tax treaties within the business community and the taxconsulting firms and among lawyers and judges. In this context, it is notsurprising that there is no precedence of applying tax treaties in the Lebanesejurisprudence of the Council of State. The cases covered in this chapter mainlyconcern administrative cases and some queries answered by the tax administrationover time.