The Lebanese government is reopening an explosive tax area: digital services paid for by households and businesses. While the draft budget for 2027 has just been forwarded to the Presidency of the Council, several readings of the text and reactions from economic journalists indicate an extension of the tax collection to digital services provided from abroad, with platforms such as Netflix, ChatGPT and other online subscriptions in the viewer. Technically, it would be less a matter of inventing a completely new tax than of bringing these services more systematically into the scope of existing taxation, particularly VAT. Politically, the shade may be much less audible: in Lebanon, any digital usage tax immediately awakens the memory of the « WhatsApp tax » of October 2019, which had served as a spark for a much broader national challenge.
The budgetary context explains why this path has reappeared. Finance Minister Yassine Jaber transmitted the draft 2027 budget to the Council of Ministers on 31 August. The government seeks to preserve a budget without an apparent deficit, as funding needs increase. Public spending is now estimated at at at least $7 billion by 2027, after rising public salaries, social assistance, war-related needs and government operations. At the same time, the expected revenue growth in 2026 was hampered by the resumption of hostilities and the slowdown in activity.
This constraint pushes the executive to look for revenue where they are still out of collection. Foreign digital services are precisely a difficult tax area to control. A paid subscription to a foreign platform does not necessarily require a supplier established in Lebanon. Payment can be made by card, through an application shop or directly with the foreign company. The tax administration must therefore identify the supplier, determine the location of the consumer and impose a collection mechanism on a company which sometimes has no local legal presence.
This includes streaming, software, online storage, digital advertising, artificial intelligence and various platforms. Netflix and ChatGPT have become the most cited examples because they are widely identifiable by the public, but the potential issue is much wider. Any extension of the tax regime to imported digital services may involve dozens of pay platforms and, eventually, professional subscriptions subscribed by Lebanese companies.
A « new tax » that the government otherwise presents
The paradox is that relatives of the Ministry of Finance at the same time claim that Budget 2027 does not contain « new taxes ». A minister’s advisor again this week explained that the main objective was to improve the collection of existing taxes and duties, to fight against escape and to recover the revenues that are now outstanding from the Treasury. This presentation is legally compatible with an extension of the collection of VAT to foreign digital services: the rate can remain unchanged while touching transactions which, in practice, were not yet collected.
For consumers, however, the distinction is much less clear. If a Netflix, ChatGPT or other online service increases because a Lebanese VAT is now added or collected systematically, the result is a higher bill. The user does not necessarily distinguish between a newly created tax and the new application of an existing tax to an expenditure that was previously largely exempt in practice.
This ambiguity already feeds critics. Lebanese economic journalists have stressed on social networks that the draft budget remains highly dependent on indirect levies, i.e. taxes borne by consumption rather than levies on profits, wealth or high incomes. One of them calculated that almost 78.5 per cent of the planned tax revenues would come from indirect taxes, compared with 21.5 per cent for direct taxes. According to this calculation, the State would collect approximately $3.65 in consumer taxes for each dollar from direct taxes.
The same journalist noted that the expected income from income tax on wages and salaries would increase by 66 per cent, compared with about 22 per cent for income tax revenues. This structure reinforces the argument of those who accuse the government of favouring the most easy-to-collect sources of income rather than rebalancing taxes towards wealth, high profits and sectors where escape remains important.
Over 5 million Internet users potentially affected
The potential scope of taxation on digital services is considerable in Lebanon. The country had approximately 5.38 million Internet users by the end of 2025, or 91.8 per cent of the population. The question therefore no longer concerns marginal consumption reserved for a small category of households. Streaming, artificial intelligence, online storage, professional software and cloud services are now part of the daily use of a widely connected population.
However, there is no sufficiently precise public figure to establish the exact number of Lebanese subscribers to Netflix or the number of paid users of ChatGPT. International groups generally do not publish their market subscriptions for Lebanon. Any precise estimate should therefore be presented as such and not as official data.
Moreover, the tax issue goes far beyond these two brands. With more than five million Internet users, the potential market includes subscriptions to streaming platforms, artificial intelligence tools, storage services, professional software, video conferencing platforms and pay applications. For the Consolidated Revenue Fund, even a low average monthly expenditure applied to several hundred thousand subscriptions can be several million basic dollars taxable each year.
By way of illustration, if 500,000 paid digital subscriptions were subject to an average monthly expenditure of $10, the annual value of transactions would reach $60 million. With a VAT of 11%, the maximum theoretical yield would be around $6.6 million per year, before exemptions, collection deficiencies and differences in consumption. With a million subscriptions, the taxable base would reach 120 million dollars and theoretical VAT 13.2 million. These figures are only scenarios for measuring the order of magnitude: they do not correspond to an official estimate of the number of subscribers.
This difference is important in the political debate. A digital tax may seem attractive because it is simple to draw on electronic payments and difficult to circumvent for consumers. However, its performance remains relatively limited in response to the government’s budgetary requirements of billions of dollars. This reinforces the argument of those who see this more as an easy revenue search than a structural reform of public finances.
The 2019 WhatsApp Tax Spectrum
The parallel with October 2019 is politically inevitable. At the time, the government had approved a levy of 20 cents a day on calls made via Internet voice applications, including WhatsApp. This measure was to bring additional revenue to a State already facing an acute fiscal crisis.
The project was withdrawn very quickly, but too late to stop anger. On October 17, 2019, demonstrations broke out in Beirut before winning the entire country. The WhatsApp tax was not the root cause of the uprising. Rather, it was the trigger of an accumulated anger against corruption, the deterioration of public services, unemployment, inequality and a political class accused of charging citizens instead of reforming the state.
Seven years later, the context is different but some springs remain familiar. The purchasing power has been destroyed by the monetary collapse, depositors have still not recovered most of their bank assets, public services remain fragile and a large part of the population now depends directly on digital tools to work, communicate or access professional services. Taxing these uses can therefore be seen as an easy tax choice for those whose payments are traceable.
Revenues are growing, but where’s the money going?
The most sensitive issue is not just the level of taxes. It’s about their destination. The government had justified several tax increases decided in 2026 by the need to finance the gradual upgrading of public sector wages and pensions. In particular, an increase in VAT and other levies had been discussed to cover temporary allowances and compensation adjustments.
The organisations representing employees and pensioners in the public sector warned, however, that they did not want their rights to be financed by new taxes on consumption. They call on the government to recover lost revenues from smuggling, customs, public maritime and river business or tax evasion, rather than transfer the bill to all consumers.
Another reading is circulating in economic circles. According to an analysis transmitted to Libnanews under the guise of anonymity, the increase in tax revenues would not only serve, or even primarily, the promised wage increases. Part of the additional resources would indirectly support, through the financial mechanisms between the Treasury, the banking system and the Bank of Lebanon, the continuation of circulars organizing partial repayments of blocked bank deposits.
This should be distinguished from an officially demonstrated budget allocation. Tax revenues are part of the general resources of the State and there is no public traceability at this stage to assert that a dollar from a particular tax is directly transferred to a specific circular from the Bank of Lebanon. But the approximation between the increase in levies, the liquidity needs of the system and the continuation of the mechanisms of restitution has given rise to a broader question: does the State collect more to finance services and wages, or to participate progressively in the resolution of the banking crisis?
Bank of Lebanon continues partial repayments
This issue is becoming even more important as the Bank of Lebanon continues to change its deposit return mechanisms. On 4 June 2026, it issued two new interim circulars on the progressive repayment of foreign currency deposits and on exceptional measures concerning deposits established before 30 June 2023. These texts extend an architecture that has been in place for several years to allow for limited withdrawals in a system where depositors remain deprived of much of their funds.
The Bank of Lebanon also established a central depository register in August. This trend aims to better identify the beneficiaries and the amounts involved at a time when the debate on the distribution of bank losses remains open. It also intervenes as public authorities seek solutions to finance a gradual return without causing a massive new monetary creation or a fall in reserves.
The debate on new government revenues cannot therefore be separated from the banking file. Since 2019, one of the major unresolved issues remains the distribution of losses between the State, the Bank of Lebanon, commercial banks, their shareholders and depositors. Any sustained increase in the resources of the Treasury mechanically revives the fear that the State will be called upon to bear an increasing share of this bill.
A budget still dominated by indirect taxes
The structure of the 2027 budget reinforces this social concern. The data released since the project was transmitted show a massive use of indirect taxes, while the government had promised to move towards a more equitable system. Consumption levies have the advantage of being relatively simple to collect. They also have the disadvantage of having a proportionately higher impact on modest and medium-sized households, which spend a larger share of their income on current expenditure.
Digital taxation is part of this problem. VAT on Netflix can be considered a tax on leisure. A ChatGPT tax, professional software, storage solution or cloud service can, however, become an additional cost to an independent, small business, student or start-up. Digital is no longer a homogeneous category of optional consumption.
This difference should weigh in the discussion of the draft in the Council of Ministers and then in Parliament. Taxation of profits made in Lebanon by large foreign platforms does not have the same economic effect as directly charging VAT to the final consumer. In the first case, the objective may be better contribution by multinationals. In the second, the risk is that the company will simply pass the entire tax on the subscription price.
Government faces the easiest choice
The debate that opens therefore goes beyond Netflix or ChatGPT. It affects the tax model chosen since the beginning of the crisis. The government can quickly increase revenues by taxing more visible transactions, employees, consumers, fuels and now digital subscriptions. It can also seek more difficult revenues to collect, in the fight against customs fraud, illegal occupation of the public domain, under-declared profits and insufficiently taxed assets.
Recent figures show the extent of the problem. Customs revenues in 2025 remain much lower than they were before the crisis relative to the volume of imports. An estimate published in the spring estimated about $1.26 million per day as a difference between revenues that could have been collected on the basis of 2016 performance and those actually received in 2025. The recovery of some of these amounts may be more than some new small taxes.
The memory of 2019 is precisely that perception. The WhatsApp tax did not alone cause the political collapse of the time. It symbolized a state unable to reform its own structures but able to find a few tens of cents in each citizen’s telephone. In 2026, taxation of Netflix, ChatGPT and other digital services could have the same symbolic effect if it is seen as a substitute for promised reforms.
Draft Budget 2027 must now be reviewed by the government before it is transferred to Parliament. It is at this stage that the exact scope of the digital services concerned, the collection mechanism, the rate applied, the liability of foreign platforms and the real impact on subscribers’ bills will need to be clarified. The political question will be just as important: after seven years of crisis, can Lebanon still look for additional revenue in the daily expenses of citizens without demonstrating, in parallel, where exactly the funds already raised go?
