Explained: Taxes, Duties, Stamps and the Reconstruction Committee

Law No. 13 of 2013 introduced a five percent fee on both direct and indirect taxes and fees under the title “National Contribution for Reconstruction.” This tax applies to those liable for real profit taxes and other tax and duty payers, while income tax on salaries and wages as well as electricity fees are exempted from this tax hike. In practice, the National Contribution for Reconstruction is a tax on taxes.

Law No. 13 imposed this increase retroactively on real profit taxpayers who had not settled their dues for the year 2012, while it applied to other taxpayers from the beginning of 2013. Law No. 13 established bank account number 6119 where the revenues from this tax increase are deposited. These are considered part of the general budget revenues under the heading of the “National Contribution for Reconstruction.”

Law No. 13 applied for a period of three years from the date of its enactment; it was extended through Decree No. 3 of 2016 and later by Law No. 46 of 2017. Law No. 46 increased the “National Contribution for Reconstruction” rate to 10 percent on both direct and indirect taxes and fees and did not specify an end date for this tax increase.

According to the executive instructions of Law No. 13 issued by the Ministry of Finance, the direct taxes and fees relevant to the land and property rights include: real estate and building plots income taxes, taxation of lands slated for construction, land registration fees, and irrigation fees. Indirect taxes and fees include notary fees, judicial fees and stamps. These tax increases are collected by the financial departments and authorised entities for both direct and indirect taxes and fees.

The General Director of the General Commission for Taxes and Fees at that time, Zubair Darwish, told the state-run Tishreen newspaper in July 2013 that Law No. 13 “establishes a national project based on the principle of solidarity and partnership, sharing the burdens caused by the crisis the country is experiencing, and it will not be a burden on citizens because it exempts taxes that directly affect the lives of citizens, including the salary and wage tax for both public and private sector employees.” He added that the resources collected under Law No. 13 “will be spent on supporting the reconstruction and repair of what has been destroyed, as well as supporting the resettlement of displaced families.”

To collect the increased tax on fees collected via stamps, the Ministry of Finance in 2013 issued two types of reconstruction stamps, one valued at SYP 10 and the other at SYP 50. It became mandatory to affix one or both of these stamps on any official transaction, without exception. Due to the compulsory nature of these stamps on official transactions, there has been a high demand for them, leading to shortages in the market and illegal price increases. No official transaction can be completed without these stamps, and in many cases, financial departments provide a receipt for the stamp payment to complete the transaction without actually affixing the stamp.

In November 2021, a financial department official in Damascus told state-run newspaper Al-Thawra there was a proposal to collect the duties of the stamp without affixing it, because the cost of printing the stamp is much higher than its value. The official explained that collecting the stamp value in cash from the citizen was a temporary emergency solution.

According to the Minister of Finance’s Decision No. 2045, dated October 25, 2023, the ministry began issuing an electronic sticker displaying all required fees and promised to put it into service starting from November 2023. That month, the Ministry of Finance issued decision No. 2091, adopting two new reconstruction stamps, one valued at SYP 100 and the other at SYP 200, both featuring the same image of a building under construction alongside a tower crane.

The number of stamps required varies depending on the type of transaction and the nature of the taxes and fees imposed on it. In cases where stamps are actually unavailable, employees collect varying amounts without providing a receipt for the actual value of the stamps purchased for those transactions.

Law No. 13 of 2013, its executive instructions, subsequent amending laws, and decrees and decisions from the Ministry of Finance, do not refer to any official body for managing the funds collected from the tax increase and the stamps.

However, it is worth noting that a committee called the Reconstruction Committee was formed by a decision of the Prime Minister, No. 13387 on September 23, 2012, chaired by the Deputy Prime Minister for Services – Minister of Local Administration and Environment. The committee’s responsibilities include disbursing compensation for uninsured private property damage in the governorates, advancing payments and compensation to military personnel, approving cost estimates prepared by ministries, governorates, and relevant public bodies for the rehabilitation and maintenance of public buildings, taking necessary actions for the rehabilitation and maintenance of damaged infrastructure and public facilities according to a prioritised implementation and expenditure schedule, and funding the construction of temporary housing units in the provinces through public construction companies.

Information about this committee is scarce. The last post about the committee on the Ministry of Local Administration website dates back to March 2019, stating that the committee had planned to remove debris from demolished houses in the city of Palmyra and transport the waste to designated dumps outside the city. The latest news from the Prime Minister’s website dates to August 2019, discussing the committee’s approval of an emergency reconstruction plan for the public authorities for 2019 worth SYP 25 billion.

The total financial appropriations implemented by the Reconstruction Committee since 2012 to date amounted to SYP 380 billion, according to a report published on the Ministry of Finance website on November 12, 2023, titled “Parliament refers the 2024 budget project to the Budget and Accounts Committee.”  The committee has completed 11,909 projects, repaired 99,800 homes, rehabilitated 32 hospitals and 175 health centres, repaired 10 grain silos, 36 bakeries, 8 cow sheds, and 3 poultry farms, among other projects. There are no published decisions or decrees indicating the funding sources for the Reconstruction Committee, but it is likely that they come from the National Contribution for Reconstruction taxes.