Libya Revises Foreign Exchange Tax Rate from 27% to 20%
You may recall the Libyan authorities' decision to impose a 27% tax on foreign exchange rates a few months ago. This move undoubtedly fueled the already thriving parallel market. The tax rate has now been revised to 7% and reduced to 20%, applied based on the official exchange rate of foreign currencies.
Daily foreign exchange transactions worth millions of dollars, carried out by citizens, are controlled by traders who dictate the daily market rate. With the Libyan Central Bank severely restricting the supply of foreign currencies, Libyans have turned to the black market to obtain the US dollars or euros they need, whether for medical treatment in Tunisia, vacations in Turkey, or payment for imported goods.
The demand is so high that it has created a significant gap between the official and black market rates. At one point last year, the black market rate was approximately seven times higher than the official rate, which led to the idea of introducing this tax.
According to the statement issued by the President of the House of Representatives, the revenue generated from the tax will be used to cover the expenses of development projects or added to the specialized resources of the Libyan Central Bank to repay public debt.
This move is expected to ease tensions in the country, especially after the House of Representatives in Benghazi and the High Council of State in Tripoli agreed on the identity of the new governor of the Central Bank.
