Lebanon to tax WhatsApp calls, adding fuel to fire

How the tax will be implemented from a technical standpoint, however, remains a mystery.
by Georgi Azar

17 October 2019 | 20:20

Source: by Annahar

  • by Georgi Azar
  • Source: Annahar
  • Last update: 17 October 2019 | 20:20

This photo shows Lebanese President Michel Aoun, center, heading a cabinet meeting, at the presidential palace, in Baabda east of Beirut, Lebanon, Tuesday, April 30, 2019. (NNA)

BEIRUT: The government’s proposed plan to charge for WhatsApp calls and other similar services has drawn the ire of both activists and taxpayers alike, as Lebanese continue to reel under the burdens of economic decay and increased taxation.

On Thursday, Information Minister Jamil Jarrah announced a plan to charge the first of any Voice over IP (VoIP) call made every day at 20 cents, which comes down to around 6 dollars per month starting January 2020. (VoIP) services include WhatsApp, Skype, Viber and Facebook call.

How the tax will be implemented from a technical standpoint, however, remains a mystery.

VoIP has surged in popularity in recent years as calls travel over the existing data network – in most cases the Internet. Given that the Internet connection is already paid for by the user (the monthly Internet data plan), any calls that a user makes is essentially free.

“I don’t think the government has thought it through,” a representative from SMEX, a nonprofit focused on advancing free and open online practices in the region, told Annahar.

A number of ways to accomplish the plan exists, he said, but doing it directly through WhatsApp seems unlikely as profiting from any specific functionality within WhatsApp is against the company’s terms of service.

“Splitting the WhatsApp call feature from people’s data plans is one way,” he said, with the government compelling service providers to ditch the VoIP calling from their Internet data package.

Calls would then be charged in a similar fashion to traditional calls, or at 20 cents per day depending on the government’s plan.

Another is to prompt users through WhatsApp to subscribe to the service, he said, adding that this seems farfetched as it would require some sort of compliance from the tech giant, which has shown resistance in allowing governments to meddle with their free to use model.

Any technology introduced to do this is unlikely to give the government access to WhatsApp calls or messages given the service’s end to end encryption, he said. It would, however, increase the amount of metadata available to Lebanon’s two service providers, Alfa and Touch, which are state-owned.

“More information about your calls will be available to them, who you talk to, for how long and so on,” he said.

If their plan fails, the government can outright block VoIP services and roll out its own service at a lower cost than those already available.

“Let’s say WhatsApp calls end up costing 6$ per month, the government would release a service that costs 3 or 4 dollars,” he told Annahar.

These government-owned services are typically less secure than their more established counterparts and often pave the way for privacy violations across the board.

A potential avenue to circumvent any restriction is through the use of a Virtual Private Network (VPN), SMEX told Annahar. 

VPNs are services which extend a private network across a public network and enables users to send and receive data across shared or public networks as if their computing devices were directly connected to the private network. In essence, a VPN provides increased security, protection and anonymity. 

"If the government notices a surge in the uses of VPN, given that ISPs and telecom providers can know when you switch to a VPN connection, they might escalate the matter and resort to even blocking VPNs," he said. 

Lebanon already has the 4th highest mobile data prices in the MENA region, behind only the UAE, Saudi Arabia, and Yemen, according to SMEX.

It also has its own infamous track record of pervasive behavior when it comes to cyber espionage following last year’s Dark Caracal blunder, one of the most prolific hacking campaigns ever documented.

Hundreds of intercepted gigabytes, containing personally identifiable data targeting thousands of victims in over 21 countries, had been collected by operatives based in Lebanon and left exposed on an open server riddled with images, photos, private conversations, text messages and much more.

If the government manages to implement the tax, Lebanon would make history, albeit for the wrong reasons, becoming the first nation to tax VoIP services. 

It would also join a long list of countries who have blocked VoIP or have restricted access to voice calling services with the aim of maintaining a monopoly in the telecommunication sector, cracking down on freedom of expression and censoring content and communications. 

The list includes Saudi Arabia, the UAE, Cuba, Egypt and Iran. 

Lebanese have been slapped with a series of tax measures in recent years, dating back to the tax increase of 2017 used to fund the wage hike of public sector employees. Faced with a widening budget deficit and skyrocketing public debt, Lebanese officials have resorted to the unpopular and unsound measure of raising taxes, including income taxes, corporate taxes, value-added taxes and the tax on income earned from bank deposits. 

MP Paula Yacoubian, who ran alongside the civil society members in last year's election, blasted the proposed measure, saying "people will not pay a single [Lebanese] pound on the platform it insults you [politicians] on.”

“Get the money by stopping your [dubious] deals that you label as projects. The money of the Bisri Dam should be invested in electricity, which has a $2 billion annual deficit,” Yacoubian tweeted.

Lebanon's budget deficit is equal to around 11 percent of GDP, with officials desperate to lower that margin even if it is through tax increases that would further reduce disposable incomes and strain the economy.

Alfa and Touch are the state's second-largest source of revenue after taxation, yet their revenues have witnessed a substantial drop since 2017. 

According to Prime Minister Saad Hariri, the tax would reel in around $200 million per annum to Lebanon's treasury. 

Despite being state-owned institutions, both Alfa and Touch strictly bill their customers in US dollars, unlike other government services like water and electricity that are billed in Lebanese pounds. 

The tax will further put a strain on Lebanese, who are already finding difficulty in securing US dollars in recent months as both the central bank and commercial bank adopt conservative measures to limit dollar spending. 

This has caused a surge in money exchange operations, with conversion rates superseding the official peg of 1,507.5 Lebanese pounds to the dollar, reaching 1,600 LBP in many cases. 

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