On April 19, the Budget Law appeared in Lebanon’s Official Gazette, with Article 55 stating that eco-friendly cars, including hybrids and electric vehicles (EV), will now have reduced customs duties and excise taxes when entering the Lebanese market. The day before, Minister of Energy and Water Cesar Abi Khalil announced the news for the first time in a speech at the Antonine University. Speaking to Executive magazine, advisor to the Association des Importateurs d’Automobiles au Liban (AIA) Selim Saad confirmed the news, adding that it was thanks to their lobbying efforts that the ruling is now in effect.
Currently, Lebanese car buyers pay 20 percent customs duty on vehicles that are valued up to LL20,000,000 ($13,333), and 50 percent on those valued higher.
This new law means that buyers wishing to purchase a hybrid vehicle will now have to pay only 20 percent customs for a vehicle of any value, if that vehicle is for private use, and 10 percent for public use. Meanwhile, EVs will be exempted from customs altogether. Likewise, for both hybrids and EVs, owners do not pay registration nor the first Mecanique fees.
These incentives are definitely encouraging for those looking to purchase eco-friendly vehicles in Lebanon. Hybrid cars are already sold here, and one hopes the customs cut will have a positive effect on sales. However EVs are not yet sold in Lebanon, and the law raises a lot of questions about how a country with such poor infrastructure will be able to deal with the technology that’s required to power the vehicles.
If EVs are to enter the Lebanese market, dealers and other entities in the automotive sector need to figure out solutions to a host of challenges, such as the need for charging stations throughout the country, as well as to deal with some of the vehicles’ other high-tech features, like self-driving capabilities which rely on digital maps. Most people that have tried to use Google Maps and its counterparts in Lebanon know that the struggle is real, while often the roads indicated are not, which would be a major problem when a car relies on this technology to drive. Lebanon would also need technical service capacity building in maintenance and repair by dealers, further incentives in terms of parking and insurance provision, as well as public awareness campaigns to spread the message about the benefits of EVs. The new tax exemptions are a great step forward, but they will require additional efforts if they are going to be effective at all.