Real Estate Sales Law No. 15 of 2021 subjects rented properties to a tax calculated based on the property’s current value, as determined by specialised financial committees. 

The tax rates vary, depending on whether the properties are residential, commercial or industrial. This aligns with the principle established by successive Syrian rental laws, which impose a lower rent increase on residential rented properties than on non-residential ones. However, Law No. 15 exempts agricultural lands leased for agricultural investment from the tax on rented properties.

Article 16 of Law No. 15 imposes a 10 percent tax on non-residential properties rented for commercial or industrial activities, based on the annual rent specified in the lease agreement, provided that the value of the tax paid is at least six ten-thousandths (0.0006) of the value of the property. Rented residential properties are subject to a tax rate of five percent of the annual rent specified in the lease agreement, provided the tax paid is at least three ten-thousandths (0.0003) of the prevailing value of the property. The properties subject to these taxes are those rented according to the provisions of the Rental Law No. 10 of 2006, or Rental Law No. 20 of 2015.

Law No. 15 requires both parties in the rental relationship to disclose lease agreements within 30 days from the start of the lease. The taxpayer must present the residential lease contract to the administrative unit where the property is located, and where the contract is registered. Thereafter, the unit sends a certified copy of the contract to the financial department, where the taxpayer is obligated to pay the tax. A penalty of 10 percent of the tax value is imposed on those who fail to submit the contracts as mentioned above.

If tax verification employees discover unregistered lease contracts, or if the rent declared to the administrative unit or financial department is less than the actual rent, then the provisions of Tax Evasion Law No. 25 of 2003 are applied. Law No. 25 imposes penalties of up to one month imprisonment and a fine of 200 percent of the tax for each tax year from which payment has been evaded. Law No. 15 classifies these cases as crimes violating public trust, according to the provisions of the Penal Code.

After Law No. 15 was issued, the General Commission for Taxes and Fees in the Ministry of Finance issued Circular No. 320 of 2021, including a guide to the procedures for collecting taxes on residential unit lease contracts. The circular obliges the taxpayer to submit a request to the financial directorate including property information, and then the tax administration in the directorate grants them a financial register after inspection of the rented property to determine its current value.

The financial register of the property notes the current value, the tax on the lease contract, the local administration fee and the national contribution for reconstruction fee. The financial register is sent to the administrative unit where the property is located for the completion of registration procedures. A 25 percent increase is added to the current value of the property if the rented residential property is furnished. Then the administrative unit registers the lease contracts and collects the tax and other financial costs.

These exhausting financial burdens for the landlord and tenant alike lead many to refrain from documenting lease contracts, which may result in them bearing certain problems and legal responsibilities.

Law No. 15 states that if there is a failure to declare a lease contract, a non-declaration penalty of 10 percent of the tax is imposed in case of a delay of more than one month. However, Circular No. 320 added other rates not stipulated by Law No. 15: the penalty rate increases to 20 percent in case of a delay of more than a year, and increases further to 30 percent in case of a delay for another year. This constitutes a violation of the provisions of Law No. 15 by increasing the penalty without a legal provision to do so.

In addition, Article 16 of Law No. 15 applies the Tax Evasion Law in case of discovery of unregistered contracts. This means that non-declaration or delay in contract registration for a long period is subject to the provisions of the Tax Evasion Law. However, Circular No. 320 subjects evaders to additional fines, leading to a duplication of penalties.