Enab Baladi – Amal Rantisi

The continuing deterioration of the economic and living situation in the Syrian regime’s areas and the depreciation of the Syrian pound, which became close to 5000 against the US dollar, have prompted the Syrian regime government to come up with new ways to provide the State treasury with more revenues through increasing taxes. 

On 25 March, the People’s Assembly of Syria approved the real estate sales tax law, which stipulates the calculation of taxes of sold properties based on their market value, instead of the price agreed upon by the seller and the buyer in financial records, the state-run Syrian Arab News Agency (SANA) reported.

Syria’s Minister of Finance, Kinan Yaghi, stated that the new draft law “will contribute in improving citizens’ living standards” through addressing “tax evasion” in real estate transactions from sale, purchase, and lease. This law will ensure more tax revenues to the public treasury, according to Yaghi.

The law mandates the Finance Minister to set up central, main, and sub-committees in the governorates, cities, districts, and service directorates to determine the market value per square meter of a real estate based on price brackets and according to specific criteria, to be uploaded on a Geographic Information System (GIS), specially designed for this purpose. 

Yaghi pointed out that the real estate monetary value was determined according to financial records that date back to before the 1990s. This value is “far from the current logical pricing of real estate,” he said.

The law defined taxes imposed on real estate sales at the following rate:

• 1% of tax is calculated based on the market value of residential properties and lands outside zoning plans.
• 2% of tax is calculated for lands located within a certified zoning plan.
• 3% of tax is calculated for sales of non-residential properties.

These tax calculations do not include property sales concluded before the law comes into force. 

Non-residential properties leased to Syrians and people of other nationalities are subject to a rental income tax at the rate of 10% on the gross rent received annually, provided that the income tax is not less than 6% for every 10,000 Syrian pounds of the leased real estate’s market value.  

Residential properties are subject to a rental income tax at the rate of 5% on the gross annual rent, given that it is no less than 3% for every 10,000 Syrian pounds of the leased property’s market value.

The law also sets the rates of real estate sales tax on donated or inherited properties at 15% more than the tax rates on standard property sales.

The law permitted taxpayers to object within 30 days, starting after they receive tax bills, on the condition they pay the full tax amount, surcharges, and supplementary fees before submitting the objection application and after paying an insurance amount of 1% of the imposed tax. This insurance amount would be added to the State treasury revenues if the objection request was denied. 

The draft law articles ban cadastral directorates, notary, and any entity authorized to register rights in rem from documenting or registering any such rights unless concerned individuals provide financial clearance obtained from relevant financial directorates.

Any documentation or registration of real estate sale transactions violating the law’s stipulated terms would be nullified. Courts are also prohibited from adjudicating cases of real estate sales registration or rental claims disputes unless provided a document from financial directorates, noting the payment of an amount equivalent to the tax imposed on the litigation’s subject matter.

A new legal cover to financially extort citizens 

Economic academic and researcher Firas Shaabo told Enab Baladi that the new law aims to increase State treasury revenues with massive figures from real estate sales taxes.  

Before 2011, property sellers used to pay about 5000 Syrian pounds (SYP = 100 USD) on average as taxes, depending on the property’s estimated value and location, according to Shaabo.

As for today, the ongoing devaluation of the Syrian pound has depreciated the 5000 SYP tax rate; hence the law came to re-evaluate property prices based on their market value or circulating price in the market. This, however, will be reflected by increased taxes on property sellers and buyers, while collected tax revenues will be transferred to the State treasury, Shaabo added.

Shaabo predicted additional amendment to income taxes on some professions on the ground of the Syrian pound’s deterioration and that the existing taxes are not in line with each profession’s actual income. “This law will be used as a legal cover to generate State treasury revenues through imposing increased taxes on citizens, thus helping the Syrian regime draining people’s money,” he said.

Economic analyst Khaled Turkawi also thinks that the rising prices of real estate in Syria will increase State treasury tax revenues.

The average real estate sales value is estimated at 1 billion SYP (280,112 USD). Consequently, tax revenues of residential properties will amount to approximately 20 million SYP (5,600 USD), while commercial and industrial properties’ tax revenues will be close to 30 million SYP (8,400 USD), Turkawi said.

According to Turkawi, the Syrian regime took this move because the real estate market is growing these days thanks to real estate dealers buying properties for the benefit of Iran, the regime, or influential businessmen. 

Turkawi believes the new law will prompt committees responsible for properties’ value estimation and assessment to exploit citizens through bribery and extortion.

It will also force and ensure the use of the Syrian pound, as real estate sales transactions are made through Syrian banks, which accept nothing but the Syrian pound in payments.

The dangerous aspects of the law

Syrian lawyer Ahmed Sawan told Enab Baladi that this law is part of a systematic legal war waged by the Syrian government against citizens through property expropriation and overwhelming owners with laws imposing more taxes on real estate transactions and dispositions. 

According to Sawan, the dangerous aspects of the real estate sales tax law include:

• The forming of special committees to amend old speculated values of real estate and set new pricing based on the market value per square meter for each property unit in Syria allows these committees to decide values arbitrarily without any limits or control, which is in the interest of the Syrian Finance Ministry. The ministry is only concerned about receiving large tax revenues from individuals, which might result in a price ten times its actual value per square meter.
• Determining sales tax rates on donated or inherited real estates at 15% more than the tax rate imposed on standard sales is unjust, for donation or inheritance is not a business transaction entailing the tax rate imposed.
• The law is unconstitutional, as it prohibits courts from ruling in real estate sales registration or rental claims disputes unless concerned individuals provide a tax payment clearance certified by financial directorates. This prohibition is a grave violation of the principle of the judiciary’s independence, as it interferes with the judicial authority’s work and undermines the constitutional principle of separation of powers. Judges will refuse to adjudicate real estate litigations and fail justice prompted by an unjust law.  
• A property right is a cross-cutting right that allows full property disposition. The real estate sales tax law defies logic and justice by limiting owners from freely disposing of their properties and imposes exorbitant taxes upon undertaking property transactions, thus causing owners to refrain from concluding sales or offering donations for fear of high taxes. 
• The law will exuberate financial burdens on individuals who were forced to sell their properties due to poverty, fulfilling debt payments, and securing life essentials. It will also drive property prices up and worsen Syria’s housing crisis, with a quarter of Syria’s houses being destroyed. 

According to the “Syrian Cities Damage Atlas” report issued by the United Nations Institute for Training and Research (UNITAR) in cooperation with the REACH initiative, Aleppo governorate has the largest number of destroyed buildings in Syria by more than 35,000, followed by the Eastern Ghouta region by 34,000 destroyed buildings, then Homs, al-Raqqa Hama, and Deir Ezzor. 

The “Syrian Cities Damage Atlas” report classified damaged buildings according to their level of destruction; as completely destroyed, severely destroyed, and partially destroyed buildings.