Country Name: Syrian Arab Republic
Currency: Syrian Pound (SYP)
Primary Tax Authority: General Commission for Taxes and Fees (GCTF)
Key Legislation:
- Income Tax Law No. 24 of 2003 (as amended)
- Value Added Tax (VAT) Law (proposed, not yet implemented)
- Customs Law
- Investment Law No. 18 of 2021
Fiscal Authority Allocation
Centralized Fiscal System:
Syria operates a centralized tax system, with the General Commission for Taxes and Fees (GCTF) responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), and customs duties. Local authorities have limited involvement in tax matters.
Corporate Income Tax (CIT)
Standard Rate: 22%
Syria imposes a corporate income tax rate of 22% on the net taxable income of companies operating in the country. Certain sectors and small businesses may be subject to lower rates, while oil and gas companies face higher taxation.
Corporate Forms and Taxation:
- Domestic Companies: Subject to a 22% CIT rate on their worldwide income.
- Foreign Companies: Taxed on Syria-sourced income only.
Exemptions and Incentives:
- Investment Law No. 18 of 2021: Offers tax exemptions and incentives to investors in strategic sectors such as manufacturing, agriculture, renewable energy, and infrastructure. These incentives may include reduced corporate tax rates and exemptions from customs duties for up to seven years.
- Free Zones: Businesses operating in Syria’s free zones benefit from tax exemptions on corporate profits for up to five years, provided they meet regulatory requirements.
Goods and Services Tax (GST) / Value-Added Tax (VAT)
Not Yet Implemented
Although Syria has considered implementing VAT as part of its fiscal reform efforts, it has not yet introduced VAT or GST. The country relies primarily on customs duties and excise taxes for indirect taxation. Discussions on introducing VAT have been ongoing, but no formal timeline has been set.
Personal Income Tax (PIT)
Progressive Rates:
Syria applies a progressive personal income tax system, with rates ranging from 5% to 22% depending on income level. The PIT rates for 2023 are as follows:
- Up to SYP 50,000 (approximately USD 12): 5%
- SYP 50,001 to SYP 100,000 (USD 12 to USD 24): 7%
- SYP 100,001 to SYP 200,000 (USD 24 to USD 48): 11%
- SYP 200,001 to SYP 500,000 (USD 48 to USD 120): 15%
- Above SYP 500,000 (over USD 120): 22%
Additional Mandatory Contributions
Social Security Contributions:
Employers and employees are required to contribute to Syria’s social security system, which covers healthcare, pensions, and other social benefits.
- Employer Contribution: 14% of gross salary.
- Employee Contribution: 7% of gross salary.
Withholding Taxes
- Dividends: 7.5%
- Interest: 7.5%
- Royalties: 10%
Syria imposes withholding taxes on dividends, interest, and royalties paid to non-residents. These withholding tax rates may be reduced under Syria’s double taxation agreements (DTAs).
Transfer Pricing Rules
Syria does not have formal transfer pricing regulations. However, related-party transactions must adhere to the arm’s-length principle, and the GCTF may scrutinize cross-border transactions to ensure compliance with market rates.
Special Tax Regimes
- Investment Law No. 18 of 2021: Provides tax incentives to companies investing in key sectors such as manufacturing, energy, tourism, and agriculture. Benefits may include reduced corporate tax rates, customs duty exemptions, and tax holidays for up to seven years.
- Free Zones: Syria’s free zones offer businesses tax incentives, including CIT exemptions for up to five years, exemptions from customs duties on imported goods, and simplified administrative procedures.
Other Taxes
- Customs Duties: Customs duties are levied on goods imported into Syria, with rates typically ranging from 5% to 30%. Essential goods, such as food and medical supplies, may benefit from reduced rates or exemptions.
- Excise Taxes: Syria imposes excise taxes on specific goods such as tobacco, alcohol, and petroleum products.
- Real Estate Transfer Tax: A tax of 5% is imposed on the sale or transfer of real estate properties in Syria, based on the property’s market value.
Double Taxation Agreements (DTAs)
Syria has signed double taxation agreements (DTAs) with several countries, including Egypt, Lebanon, and France. These agreements aim to reduce withholding taxes on dividends, interest, and royalties and prevent double taxation of income earned in Syria and other contracting states.
Local Taxes
Local municipalities in Syria may impose minor taxes and fees for services such as waste collection, but all significant taxes, including CIT, PIT, and customs duties, are centrally administered by the GCTF.
Compliance and Reporting
Annual Filing:
Corporate tax returns must be filed within four months of the end of the fiscal year. Personal income tax returns are due by March 31st of the following year. Businesses operating in free zones may be subject to different filing deadlines, depending on the zone’s regulations.
Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. The GCTF may impose penalties of up to 2% per month of the unpaid amount for late tax payments.
Recent Developments
Post-Conflict Economic Reconstruction:
Following years of conflict, Syria’s economy has been severely impacted, and the government is focused on attracting foreign investment to rebuild critical infrastructure. The Investment Law No. 18 of 2021 aims to incentivize investors by offering tax exemptions and customs duty reductions for projects that contribute to economic recovery.
Free Zones and Investment Promotion:
Syria continues to promote its free zones and tax incentives under the Investment Law as part of broader efforts to attract foreign direct investment (FDI) in industries such as manufacturing, tourism, agriculture, and renewable energy. Businesses in these sectors may benefit from extended tax holidays and exemptions from customs duties.
Discussion of VAT Implementation:
There have been discussions about implementing VAT as part of Syria’s fiscal reforms. VAT could help diversify government revenue sources and improve tax compliance, but no formal date for implementation has been announced.
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