Syrian Law Journal

Legal Briefing – March 2015

by · 04/04/2015

In its second Legal Briefing, the SLJ is pleased to inform you of the latest news items affecting Syrian law. The Ministry of Finance is currently implementing new amendments to the Income Tax Law and is pursuing new ways to tackle tax evasion, which remains a growing concern. The Minister of Labour continues to reveal the revisions that employers and employees should anticipate in the upcoming Employment Law. On the other hand, lawyers are preparing themselves for the changes that the new Legal Profession Law is expected to introduce. Meanwhile, contractors have been pressuring the government to compensate them for projects they are unable to complete as a result of the instability in the country. With banking courts up and running, banks continue to file lawsuits against defaulting borrowers while the Central Bank aims to curb violations of foreign exchange regulations. While the government pushes for adjustments in the appeals process of the Terrorism Court, interested parties are calling for the establishment of new courts to try insurance and forgery-related offences and for more powers to be afforded to the customs courts. On the international front, Syria has signed the Mauritius Convention on Transparency and continues to conclude new agreements with Iran.

  • In accordance with Article 154 of the Constitution, all legislation must have been compatible with the Constitution as of February 27, 2015. It is not yet clear whether this obligation has been met.
  • The Income Tax Law 24/2003 has been amended by Legislative Decree 10/2015. The changes touch on the classification of taxpayers such as small businesses who are entitled to pay a fixed lump-sum amount as opposed to complying with the relevant tax brackets. This law further provides that state-owned joint stock companies operated in accordance with the Companies Law provided for in Legislative Decree 29/2011 are taxed at the single rate of 22%. Finally, it exempts the sale of shares in both public and private joint stock companies from capital gains tax. Please see the Recent Legislation section.
  • Prime Minister Wael Halqi has directed the Ministry of Finance to impose a tax on profits earned by importers of diesel fuel after recent reports emerged confirming the sizable earnings they have been making.
  • The Minister of Finance Dr. Ismail Ismail called on the responsible public officials to enforce the provisions of the Stamp Duty Law provided for in Legislative Decree 44/2005 or face legal accountability.
  • Tax evasion has become a considerable problem in Syria and the General Federation of Trade Unions recently stated in its report that tax evasion amounts to eight percent of Syria’s GDP. Among the measures the Ministry of Finance and the General Commission for Taxes and Fees have already taken to combat it are adopting legislation to simplify the taxation process, lowering rates, withholding tax at source and granting exemptions to taxpayers. The Minister of Finance stated that work on incorporating the billing system will take place this year.
  • The Minister of Labour Dr. Khalaf Al-Abdullah reiterated that the Council of Ministers will soon start consultations on the bill containing the new unified Employment Law. He also indicated that amendments to the Employment Law 17/2010 will include additional benefits to employers and employees who have been affected by the current crisis. These points will address situations where businesses have had to cease or partially cease their operations. Changes that are also expected in the bill include an annual increase in salaries and wages that will be authorized by law as opposed to the provisions presently in force, which leave it to employers and employees to agree on this issue. Please see the Legislation under Review section.
  • Prime Minister Wael Halqi issued a circular, which calls on public bodies that employ foreign employees to settle their status in accordance with the Employment Law 17/2010, specifically with regards to granting them renewable work permits.
  • The Council of Ministers approved the Executive Regulations of Law 36/2014, which allocates 50% of job vacancies in the public sector to the families of martyrs. The Executive Regulations were submitted by the Ministry of Justice. The Council of Ministers also discussed a bill to provide further support to the families of martyrs, missing persons and those who have sustained severe disabilities during the ongoing conflict.
  • The Minister of Labour indicated that the proposed amendments to the Social Security Law provided for in Legislative Decree 92/1959 seek to improve the level of entitlements offered to subscribers in addition to other features. The Council of Ministers has recently passed a regulation laying down rules for workers aged between 18 and 65 years who wish to subscribe to the General Establishment for Social Security.
  • A new draft legal profession law will be presented to the government for consideration. The Bar Association is currently completing its final review of the draft law before submitting it to the Ministry of Justice, which will in turn pass it on to the government for the required deliberations. It incorporates provisions that take into consideration recent developments in the legal profession that are expected to improve the ability of lawyers to practise the law under the current circumstances. Please see the Legislation under Review section.
  • During the annual general meeting of the Damascus branch of the Construction Contractors Syndicate, participants called for the termination of contracts they concluded with public bodies for projects they are unable to complete as a result of the current crisis affecting the country. In return, they expected to be compensated accordingly. The Ministry of Public Works responded that it is preparing a law to address these concerns. Recently, Prime Minister Wael Halqi mandated that relevant compensation to make up for inflationary pressures would be provided to contractors for all projects contracted with public bodies.
  • The state-owned Industrial Bank revealed that it has filed up to 11,000 lawsuits against defaulting borrowers, whose outstanding loans are valued at more than SYP 800 billion (more than US$3 billion). The Bank announced that it has settled 392 loans worth approximately SYP 595 billion in accordance with Legislative Decree 8/2014, which permitted the rescheduling of debt repayments to public banks. The provisions of Legislative Decree 8/2014 were further extended by Law 30/2014 for another two-month period, which expired on February 9, 2015.
  • The 385 lawsuits that the state-owned Real Estate Bank has already initiated against defaulting borrowers are being transferred to the banking courts and this number may rise in the future. Furthermore, travel bans have been imposed on 23 individuals who have defaulted on their loan repayments.
  • The Central Bank has blacklisted a further 446 individuals for contravening regulations concerning the purchase of foreign currency, which is having a negative impact on the value of the Syrian Pound. The government currently sets limits on how much foreign currency individuals are permitted to purchase for certain designated purposes. The Central Bank has warned the persons blacklisted to return the unauthorized amounts or face a fine and possible prosecution in line with smuggling and money laundering legislation.
  • After meeting with representatives of private banks, the Governor of the Central Bank Adib Mayaleh announced that the classification of credit risk applied to borrowers will undergo a review so as to encourage debtors to repay back their loans in order to improve their credit ratings. On the agenda was also the issue of increasing the minimum capital requirements for private banks in line with Law 3/2010. They also discussed the possibility of creating an Association of Banks in Syria and ensuring compliance with the Foreign Account Tax Compliance Act (FATCA) in the United States. FATCA targets tax non-compliance by American taxpayers with foreign accounts.
  • The provincial authority of Damascus is preparing to distribute 18,000 share certificates for Southeast Mezzeh, an area that is subject to the urban redevelopment project in southern Damascus in accordance with Legislative Decree 66/2012. The provincial authority is carrying out this project through a corporate structure.
  • The Minister of Electricity Imad Khamis denied that the electricity sector will face privatization. The current Electricity Law 32/2010 instead encourages public-private partnerships to increase energy supplies in the country. Before the crisis, Syria’s energy needs amounted to 9,000 megawatts while only between 1,500 and 2,500 megawatts of electricity are produced today according to the Minister.
  • The General Federation of Trade Unions released a report that focuses on a range of subjects, specifically legal reform during the reconstruction phase. It calls for reassessments of commercial, banking, investment, public-private partnership and planning legislation.
  • The Ministry of Justice is studying a bill that would establish a special chamber in the Court of Cassation to challenge acquittals by the Terrorism Court. The bill would grant the Public Prosecutor the right to file these appeals. The Ministry is also looking at ways to speed up trials of accused individuals charged under anti-terrorism legislation. Members of the legal profession are also encouraging the Ministry of Justice to collect all laws relating to terrorism, such as terrorism financing, into one comprehensive law.
  • The Minister of Justice Dr. Najm Al-Ahmad issued a circular calling on the Public Prosecutor’s Office to be involved in all decisions affecting arrests and investigations of suspects and in the judicial and administrative reform program.
  • The Minister of Justice has also set up a committee whose goal is to lay down the necessary framework to combat cyber crimes.
  • There have been calls from interested parties in the insurance industry for the creation of courts that specialize in insurance-related lawsuits. On another matter, the Damascus Chamber of Industry is recommending that special courts be set up to try forgery cases.
  • The administrators of the customs courts are studying a proposal that would grant them the power to hear smuggling claims after they have been adjudicated by the criminal courts in accordance with the Smuggling Law provided for in Legislative Decree 13/1974. In this instance, the customs courts would only have the authority to grant compensation while the criminal courts would apply penal sanctions. Please see the Legislation under Review section.
  • Criticism has been leveled against the special body tasked with bringing perpetrators of oil theft to justice despite the fact that legislation and agreements with other countries are in place for combating this crime. The majority of Syria’s oil fields are presently outside of government control and therefore, oil theft is rampant. This has forced a decline of more than 95% in national oil production.
  • The Competition Commission has criticized the lack of prosecutions directed against individuals who manipulate the prices of subsidized goods for unlawful gain.
  • The Ministry of Economy and Foreign Trade issued two regulations concerned with the organization of exhibitions and shopping festivals to try and bring them in line with international practices.
  • The Bar Association issued a circular requiring all civil registration certificates that are used by individuals for the purposes of ratifying powers of attorney documents to be certified by the Civil Registry following an increase in forgery claims. Moreover, personal identification cards can also be used to ratify powers of attorney documents.
  • Law 3/2015 was recently enacted and deals with the organization and licensing of nurseries for children under the age of three years. Please see the Recent Legislation section.
  • Syria has signed the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (the “Mauritius Convention on Transparency”). This convention seeks to promote transparency with regards to arbitrations conducted in accordance with investment treaties where a state is a party to the dispute. Its provisions include making relevant documents and hearings open to the public.
  • Syria and Iran have signed a second round of economic agreements this year that seek to strengthen cooperation in the fields of energy, industry and agriculture, and which aim to encourage joint and private sector investments in Syria. The previous round of talks focused on enhancing cooperation in agriculture, industry, oil, electric power, health and medicine.