São Paulo – The government of Libya has put in place customs and import tariffs on goods from various countries, but goods from Brazil are exempt, the Embassy of Libya to Brazil reported. The measures have been put in place by the Government of National Unity by means of the Ministry of Economy and Trade.
A document issued by the ministry last week and obtained via the Embassy of Libya in Brazil informs of selective implementation of a tax on consumption in Libya to be levied on imports of goods alternatives to which are locally manufactured or whose imports exceed domestic demand.
The ministry mentions reasons including reducing demand for foreign currency, developing local industry, creating job opportunities in manufacturing, and driving customs revenues to fund the State budget.
“Directing the economy towards a focus on developing local industry across all sectors and increasing production capacity at national plants, facilitating the achievement of equilibrium faster, which is reflected in a reduction of product cost,” the document reads, providing one of the reasons and breaking the news of the rollout of preventative measures towards industrial development.
The ministry goes on to explain another reason for the tax: “Increasing customs revenues from roughly LYD 353 million to over LYD 2 billion approximately, shoring up sovereign revenues that help fund the overall State budget.”
The ministry breaks down the situation leading up to the implementation of the tax. It reports that in prior years, the process industry in Libya made strides, with production capacity outstripping domestic demand and foreign market ambitions. The document points out that in the early 2010s, customs tariffs on incoming foreign goods were suspended, yet there were hurdles on exports due to the Value Added Tax (VAT).
“Prolonged political instability and the security challenges that plagued Libya over the past few years wrought an unfavorable economic environment when it came to protecting the national industry,” the ministry argues, citing susceptibility to dumping of foreign goods, the proliferation of products that fail to meet quality standards, and the compromising of competitiveness of Libyan goods in Arab and non-Arab international markets.
Trade reciprocity
“This picture contrasts with the growing adoption of protectionist policies by major global economies, a case in point being the measures implemented by the United States regarding the measures put in place by the United States as regards products from China and other nations, in a bid to safeguard their domestic markets,” the document reads. The ministry reports that in the past 14 years, the Libyan State had abstained from implementing any form of tax on goods, prioritizing the mitigation of fiscal impact upon domestic prices, yet it has deliberated in favor of the tax in the face of the maturing of process industries and in consonance with the principle of trade reciprocity.
Translated by Gabriel Pomerancblum
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