Enab Baladi – Amir Huquq

The tax system is considered one of the fundamental pillars of any economy in the world, as it is one of the most important sources of state treasury income.

The tax system in Syria has suffered from distortions and a lack of transparency in recent years, making it a collection system from which taxpayers evade in various ways.

Finance Minister Mohammed Yosr Bernieh confirmed on May 28 that the current tax system is complex and intricate, and work is underway to amend it entirely, with a committee being formed to review tax policy.

On May 18, the Ministry of Finance issued a decision to extend the deadline for submitting the tax declaration by an additional two months, until the end of July, based on requests from Syrian industrialists.

Low effectiveness

Economic circles believe that the current tax system in Syria lacks the elements of justice, appropriateness, clarity, and economy in collection expenses, achieving only the first goal of taxation, namely the financial goal, at the expense of economic and social objectives.

The Dean of the Faculty of Administrative Sciences at the private Ebla University and economic expert, Dr. Sabri Hassan, told Enab Baladi that the tax system in Syria today is officially in place. However, it faces significant challenges due to the economic crises the country has experienced.

The effectiveness of the tax system today is low due to the spread of the informal economy, tax evasion, the black market, the state’s weak administrative capacity to efficiently collect taxes, exemptions and privileges for certain categories, inflation, and economic collapse.

Thus, tax laws are unable to keep pace with reality, leaving the tax system incapable of achieving its primary objectives of financing the state and ensuring tax justice.

According to economic expert Dr. Hassan, the main features of the current tax system in Syria are:

• Direct taxes: including income tax on individuals and companies.
• Indirect taxes: such as value-added tax (VAT) and sales tax on imports, which represent a significant source of revenue due to the decline in local production.
• Special taxes and fees: the government imposes additional taxes and fees in some sectors, such as fuel taxes, communications, and real estate.

A collection and theft system

Economic expert Mohamed al-Halaq stated to Enab Baladi that the previous tax system is a collection and theft from the pockets of citizens in all forms, containing multiple distortions and lacking transparency.

Income taxes in Syria are numerous and varied, and they are distorted, requiring a comprehensive and complete overhaul of the tax system, without patchwork politics, according to al-Halaq’s description.

He believes that to improve the tax system, inputs and outputs should be defined, clearly delineated, and aligned with all government legislation transparently. Additionally, the income tax should be revisited, as it is unjust, and the minimum income should correspond with the size of work.

Regarding the new law, al-Halaq clarified that all economic actors, especially the business sector, should be involved in discussing the new law. It should be a flexible and applicable law that achieves its intended goals, as simpler procedures would yield better expected results.

The previous tax system was a collection and theft from the pockets of citizens in all forms, containing multiple distortions and lacking transparency.

Mohamed al-Halaq, Economic expert

Tax reforms

Reassessing and reforming the tax system forms an important step toward building a more effective and equitable tax framework that contributes to enhancing financial resources and achieving economic and social development.

University professor and economic expert Dr. Sabri Hassan believes that there are fundamental axes that need to be reconsidered to achieve economic efficiency, social justice, and simplify the tax system.

The main axes that need amendment or abolishment are:

• Tax exemptions and incentives: The need to review exemptions and retain only those that stimulate real investment (productive), exemptions for startups, and reduce profit tax for small and medium enterprises. This should tie tax incentives to employment or innovation standards, especially those that consider environmental criteria and low-income individuals.
• Reducing tax duplication: working on coordination between taxes to avoid duplication, particularly on essential goods or those related to the poor.
• Combatting tax evasion: by enhancing electronic oversight and linking databases (such as electronic invoices).
• Achieving tax justice: by increasing progressive taxes on income and wealth (like inheritance tax or luxury real estate assets) and exempting or reducing VAT on essential goods (medicines, food).
• Simplifying the tax system: by simplifying procedures through digital platforms, unifying tax brackets, and reducing exceptions.
• Activating environmental taxes: by imposing green taxes on emissions while redirecting their revenues to support clean energy.
• Adopting tax decentralization: granting local authorities the authority to impose specific taxes (like property tax) to fund local projects.

Economic repercussions

In Syria, the tax system is considered one of the main tools affecting the economic sector, but it suffers from structural and operational challenges exacerbated since 2011.

Dr. Sabri Hassan predicts that the repercussions of the current tax system and its implications for the economy are:

• Limited tax revenues: due to weak tax collection and significant reliance on indirect taxes, which increases the burden on poor and middle-class individuals.
• Distortions in the tax system: as a result of disproportionate tax burdens on official sectors and increased rates of tax evasion.
• Corruption and tax evasion: due to weak oversight and administrative corruption, alongside a boom in non-taxed trade.