The Ministry of Local Administration and Environment issued 14 decrees on December 6, 2022, approving 14 similar decisions by Syria’s 14 governorate councils to increase direct and indirect taxes for 2023. Real estate fees and taxes made up a large portion of these decisions.
Governorate council decisions
The 14 governorates’ decisions, issued in November 2022, all resembled one another. They were largely based on the Financial Law of Administrative Units No. 37 of 2021 and its executive instructions regarding the regulation of taxes and fees that administrative units collect and the collection methods.
Under Law No. 37, administrative units fund themselves from two sources. First are direct fees the units collect in exchange for providing services and granting certain licences. Second are added taxes and fees, including those collected by public entities that are transferred to administrative units.
The decisions by the 14 governorates state that the rate of increase in these added taxes and fees will only apply to 2023, indicating that they may change in the future.
The language in the decisions makes clear that the added taxes and fees constitute a source of independent funding for governorates. They will serve to implement projects and services planned in their budgets. The 14 decisions also laid out the methods for collecting these taxes and fees, including how to pay them. The decisions clarified that they would be similar to the original taxes and fees, meaning that failure to pay them on time results in additional financial penalties.
All 14 governorate decisions contain the following three terms in their first article:
- The percentages to be added to state and administrative unit taxes and fees:
The 14 decisions stated that administrative units would take an additional 10 percent share from certain taxes and fees collected by the state – that is, from indirect taxes collected by public entities. This includes real estate income taxes, arsat taxes, and some fees stipulated in Real Estate Fees Law No. 17 of 2021.
Arsat are plots of land slated for construction. The Law on Arsat Construction No. 82 of 2010 imposed an annual 10-percent tax on arsat based on each of the property’s estimated value. Meanwhile, the real estate income tax is a yearly tax on any real estate or building, whether completed or still under construction, for residential, commercial, or industrial purposes. This tax is equal to the rental allowance estimated according to the provisions of Real Estate and Building Plots Income Tax Law No. 53 of 2006.
Similarly, administrative units will add 10 percent to the fees they collect directly and benefit from, including the rental contract registration fees, construction permit fees, and improvement fees. Under Law No. 37, administrative units charge improvement fees in exchange for public benefit projects implemented by public or private entities that increase property values.
- Revenues from specific transactions:The decisions also stated that administrative units may impose local “fees” on certain transactions within their localities and for their benefit. For example, a one-time fee of one percent of the annual rental payment for each property rented by official public institutions will be collected upon signing the contract. Likewise, a one-percent fee will be collected for each amount invoiced by the state-owned company OMRAN – General Establishment for Domestic Trade of Metals and Building Materials, as well as one percent of each amount invoiced by private sector companies selling iron and building materials.
- Third, local fees for violations of laws and regulations:Within their localities, administrative units also collect one percent of the fines for violations of laws and regulations. The 14 decisions did not clarify what might constitute these violations or whether they include unlicensed construction.