Rebuilding Lebanon’s Tax Administration Through Holistic Digital Transformation Reforms

The IMF’s Fiscal Affairs Department advises Lebanon to pursue digital transformation in tax administration as a broad institutional reform, not just an IT upgrade, emphasizing the need to fix deep structural problems first. It recommends a five-year roadmap focused on unifying the tax administration, stabilizing existing systems, and only then adopting a modern integrated tax administration system .

This report prepared by the International Monetary Fund (IMF), specifically its Fiscal Affairs Department, following a technical assistance mission to Beirut in September 2025, carried out in close collaboration with Lebanon’s Ministry of Finance. Written by IMF expert Joshua Aslett, the document summarizes the IMF’s advice on how Lebanon can modernize its tax administration through digital transformation. It is intended to guide policymakers and development partners by clearly explaining why past approaches have fallen short and what kind of reform is needed to make digital investments effective in a country facing deep fiscal and institutional stress.

Why Digital Reform Cannot Be Just About Technology

A central message of the report is that digital transformation is not the same as buying new software or computers. The IMF explains that technology on its own cannot fix weak tax collection if it is added to outdated laws, inefficient procedures, and fragmented institutions. In many countries, digital tools have failed because they were introduced without changing how tax administrations actually work. For Lebanon, the report stresses that real gains in compliance and revenue will only come from a broader transformation that reorganizes functions, improves management, and simplifies processes, with technology supporting these changes rather than replacing them.

The Structural Problem Holding Lebanon Back

The report identifies a major structural obstacle at the heart of Lebanon’s tax administration: taxes are administered through two separate directorates. Each directorate uses its own old and obsolete IT system, and there is little integration between them. As a result, Lebanon effectively operates two parallel tax administrations. This situation makes it extremely difficult to manage data, enforce compliance, or provide consistent services to taxpayers. Modern digital tax systems are designed for unified administrations with shared databases and standardized procedures. Without addressing this split structure, the IMF warns that even large digital investments would deliver limited results.

The Five-Year Roadmap for Change

To tackle these challenges, the IMF and the Ministry of Finance jointly developed a five-year digital transformation roadmap. This roadmap is designed as a practical plan for reform rather than a theoretical vision. It is built around six closely linked areas: changes to government decrees and administrative policies, stronger reform governance and project management, redesign of the organizational structure, improvements in human resource management, modernization of operational processes, and reform of information technology and data systems. Together, these reforms aim to move Lebanon toward a unified, function-based tax administration supported by reliable digital services. If implemented as planned, the roadmap would help standardize procedures, clarify responsibilities, and make better use of staff and data.

What Needs to Happen First, and What Comes Next

The report sets out clear priorities for action. First, the authorities are encouraged to carefully review, adjust, and finalize the roadmap so that its goals, sequencing, and requirements are fully understood. Early clarification with the IMF and other partners is seen as essential to avoid delays and misunderstandings. Second, the IMF stresses the urgent need to stabilize existing core IT systems. This includes consolidating regional databases into a centralized platform and upgrading software that is no longer supported by vendors. These steps are described as necessary foundations for any future digital reform.

Only after these basic issues are addressed should Lebanon move toward acquiring a new Integrated Tax Administration System. An ITAS is the main digital platform used internationally to manage the entire tax process, from registration to filing, payment, audit, and enforcement, in one integrated system. The IMF is clear that such a system could bring major benefits to Lebanon, but only if it is introduced alongside structural and organizational reform. Otherwise, a new system would risk reinforcing old problems instead of solving them.

Overall, the report delivers a clear and realistic message: digital tools can play a powerful role in strengthening tax administration, but only when they are part of a broader effort to reform institutions, processes, and governance. For Lebanon, digital transformation is presented not as a quick fix, but as a long-term path toward a more effective, credible, and sustainable tax system.