New Decree Grants Tax Exemptions for Historic City Centres

In August, the government issued Decree No. 13, which grants wide-reaching tax concessions and exemptions within historic city centres in the Aleppo, Homs and Deir-ez-Zor governorates. These city centres include old, historic souks.

The most significant part of the decree regarding housing, land and property rights is the temporary exemption it grants from the fees usually associated with restoration and rehabilitation work, as well as from real estate and building plots income taxes.

Restoration and rehabilitation work

Article 1 of the decree stipulates a temporary exemption until the end of 2023 from taxes, local and financial fees, service allowances and any additional or supplemental payments usually imposed for restoration and rehabilitation work on local facilities, shops and homes. The exemption extends to taxpayers, facilities and people carrying out “economic activities.”

Under the decree, “taxpayers” are  defined as any taxpaying homeowners and non-commercial professionals, while “facilities” refer to factories. People engaging in “economic activities” are those who own workshops, craft shops and small businesses.

Taxes and local fees refer to taxes imposed by the state on all citizens to secure funds for the treasury, without having to provide a direct service in exchange for such payments. Financial fees refer to those levied to benefit the public treasury in exchange for certain services, such as real estate fees. Local fees, on the other hand, are imposed by local councils in return for providing public services; these might include sanitation fees, for example. Only the beneficiaries of such fees must pay them.

Service allowances are fees imposed by public entities or institutions in exchange for providing services such as rubble removal or water and sewage networks. Additional and supplemental payments to these allowances are imposed for restoration and rehabilitation work, such as supervision from engineers and employees of the Directorate of Cadastral Affair’s Surveying Department.

Rehabilitation means returning a building to usable condition through repairs that change it as little as possible. Restoration, meanwhile, includes repairing a building’s external structure, fixing the doors and roof, reinforcing the insulation and updating certain networks to prevent their collapse.

Under Article 4 of the August decree, exactly which people and institutions qualify as facilities, taxpayers or economic activities are determined by a decision  made by a governorate’s Director of Finance and ratified by the head of the General Establishment of Taxes and Fees. However, so long as the decision  does not explicitly mention an exemption for any given category, all facilities, tax payers and economic activities are considered to be included automatically, including those who do not have financial records.

Real estate and building plots income taxes

While Article 2 of Decree No. 13 exempted the above-mentioned groups, until the end of 2027, from revenue and income taxes, real estate and building plots income taxes in historic city centres and transaction fees usually imposed for practising certain manufacturing professions and crafts whether for commercial or non-commercial purposes.

Real estate income is simply the revenue made from rental payments, while a building plot (a type of property referred to in Syria as an “aarseh”) is a plot of land prepared for construction and located within the zoning plan of an administrative unit. The real estate rent building plots income tax is an annual tax on the theoretical profits or rental payments that an owner may gain from their property.

Meanwhile, Article 3 retained the real estate sales and rent tax stipulated in Law No. 15 of 2021, and did not include an exemption from such payments.