For a third consecutive time, the Damascus Governorate Council agreed on March 9 to delay imposing a tax on plots of land within the Marota City project that are slated for construction. The tax has been postponed for an additional year, ending in March 2023.
The Building Plot Construction Law No. 82 of 2010, divides plots of land slated for construction (known as arsat in Arabic for plural and arsa for single) under several categories: plots resulting from zoning laws; plots resulting from expropriation laws; plots and properties located within real estate development zones; plots in areas belonging to housing cooperatives outside a given zoning plan; and, finally, some endowment plots of land.
Law No. 82 of 2010 imposed an annual tax on these properties at a rate of 10 percent of their estimated value. The tax remains in force pending the obtention of a construction permit, starting one year after the zoning plan is announced. If four years pass with no construction permit, then the plot is offered for sale via a public auction by decree of the local administrative unit.
If the owner of the plot does manage to obtain a construction permit, then they are exempted from the tax for a period of three years, which may be extended to five years. If the construction licence period for a given plot ends without any construction having taken place, then the property is subject to a tax of 10 percent of its estimated value for two successive years. Afterwards, if the construction is still uncompleted, the plot is sold via public auction, with the administrative unit receiving one percent of the estimated value as a commission. Law No. 82 of 2012 prohibits the formal registry of any sale of a plot whose owner fails to build within the licence period granted to them. Registration may only occur after the owner pays the required tax and after the deduction of a quarter of the estimated value of the plot for the benefit of the administrative unit.
Under Law No. 82, the values of the plots are estimated according to a bracket system previously approved by the Ministry of Finance. It is still not clear whether the law may be amended at some point to adopt the current value of real estate properties in line with Real Estate Sales Law No. 15 of 2021. If the current value is indeed adopted without reducing tax rates, then the tax will become very expensive.
Here a distinction must be made between the tax imposed by Law No. 82 of 2010 and another tax called the Real Estate and Building Plots Income Tax Law, which was issued by Decree No. 53 of 2006. The latter is an annual tax on real estate properties and construction of all kinds, whether they are fully or only partially built, for residential, commercial or industrial purposes. The tax is calculated, theoretically, from the supposed income each liable individual earns by charging their tenants rent, and is collected as one payment at the beginning of the year. Plots of land and other properties in Marota City are not exempt from the Real Estate and Building Plots Income Tax under Law No. 53 of 2006. Only properties belonging to public institutions or used for agricultural purposes have exemptions. In 2013, law No. 15 was issued to impose a 10 percent tax on the real estate and building plots income tax issued by Decree No. 53. In practice, this is a tax on a tax. It started being levied in 2014.