Explained: Executive Instructions of the Financial Law of Administrative Units
The Minister of Local Administration and Environment issued on February 3 the executive instructions for the Financial Law of Administrative Units No. 37 of 2021. The instructions include clarifications on some real estate-related fees and taxes.
The Financial Law of Administrative Units was issued on December 27, 2021, to regulate the fees and taxes collected by local administrative units, as well as the methods for collection. The law also updated some real estate fees, basing them on the current values of real estate properties.
The executive instructions for the law included:
First: The so-called “added fees” are fees collected directly by the Ministry of Finance on real estate properties that are redistributed by the ministry to local administrative units.
Under the executive instructions, these fees are distributed to administrative units on the following basis: 65 percent goes to all the administrative units based on their population size; 12 percent to the city of Damascus; 12 percent to administrative units that are of “developmental nature,” which refers to underdeveloped parts of the country; six percent to port cities; and five percent to “touristic” administrative units. The Council of Ministers is in charge of determining what administrative units count as developmental and touristic, and has the right to amend these share percentages.
Second: The administrative units collect “direct fees” in return for the services it provides and licenses it grants. These include road building, paving and lighting, urban planning costs and construction permits.
Among these direct fees are construction permit fees, set at SYP 3,000 for each permit. The administrative unit also collects one percent of the current value for the total surface area of a multi-storey building, and four percent of the current value for building protrusions, such as balconies. There is also a planning expenses fee of SYP 2,000 and a one-time flat fee for using the sidewalk to store the building materials during the construction period.
The construction permit for a six-storey building remains valid for three years, and extends to five years if there are additional storeys. The administrative unit collects the full permit fee even if construction has not yet begun, or is only partially complete.
The direct fees also include a fee every 10 years for paving the roads that surround a given building. The value of this fee is based on the surface area of the property and its street-facing facades. The administrative unit likewise collects fees for the extensions of sewage networks, for advertising and for cleaning.
Third: Improvement fees are collected for works that are for the public benefit and implemented by either public or private entities, and that result in an improvement in the property’s value. These fees are collected from owners of both built and unbuilt real estate located both within and outside the zoning plans, for every public benefit project that improves the property, i.e., increases its value. Public benefit projects may include the construction of roads, bridges, waterways and stormwater drainage systems and the implementation of urban planning laws, tourism and hospitality projects, modifying the conditions for usufruct, and changing construction codes.
The Improvement Value Estimation Committee
The administrative unit’s executive office is in charge of determining the areas that are undergoing improvement. It inspects the properties that have been improved so that it can be “fair” in either levying or exempting the improvement fees. Then, it informs the Ministry of Finance of the property numbers in the cadastral registry of improved properties in order to re-appraise their current value and to put a mark in the land registry on those properties. The Directorate of Cadastral Affairs will prevent any real estate transaction on these properties until the owners pay the improvement fees.
A special committee composed of a judge appointed by the Minister of Justice, two experts appointed by the governor and two experts representing the residents, appraises the value of the improvement. The committee’s term lasts up to three months, after which the administrative unit has 15 days to inform the property owners of the improvement fees. The property owners are entitled to object to the value of the fee before the committee or appeal it before the State Council. This council was formed under Law No. 32 of 2019 to settle administrative disputes and decide on appeals to decisions issued by public entities.
The improvement fee may not exceed half the value of the increase in the value of the property as determined by the committee.