Syrian Law Journal

Legal Briefing – July 2015

by · 04/08/2015

Welcome to our latest legal briefing covering the news of the past month- here is a taste of what is in store: The new Consumer Protection Law has finally taken effect. Legislation has been ratified that will see Iran lend around US$1 billion to Syria. The listing of foreign exchange companies on the Damascus Securities Exchange may soon become a reality. New criminal courts with jurisdiction over economic and financial disputes have been created while a body to guarantee loans to small and medium-sized enterprises may soon see the light. Even though the government is giving customs offenders and other taxpayers a break, it intends to increase its revenues with plans to raise customs duties and to assess capital gains tax using actual market valuations. As for the property investment sector, changes in the law are expected soon. Meanwhile, the People’s Assembly has made headlines by expelling 10 MPs and seeking to hold the local authorities in Damascus and Aleppo to account for their performance. With the conflict continuing in Syria, a general amnesty has been granted to military personnel.

 

Commerce

  • The Consumer Protection Law 14/2015 has come into force replacing the previous Law 2/2008. The new Law promotes competition, includes provisions governing prices, regulates imports, imposes standards on the quality of products, gives consumers the right to be informed about the goods and services on offer, prohibits false advertising or fraudulent acts, and much more. A number of these items have been adapted from the previous Law 2/2008. Among the new Law’s core provisions are important controls on merchants to protect consumers against price increases and monopolistic practices. These measures include deploying inspectors into the markets to monitor vendors. Strict penalties have also been adopted to deter the sale of products, which may be of poor quality or contaminated. Sanctions against violators are expected to include heavy fines and imprisonment.
  • Syria plans to join the Eurasian Economic Union (EEU) by first signing free trade agreements with its member states. In response, the EEU has stated that it looks to establish a free trade zone with Syria once stability returns to the country.
  • The Ministry of Economy and Foreign Trade plans to facilitate the issuance of licenses for the importation of raw materials and intermediate goods unless they are produced locally in Syria.
  • Up to 500 importers who brought goods into Syria without obtaining import licenses may face fines.
  • The Economic Committee, which is linked to the Council of Ministers, has approved a proposal by the Ministry of Economy and Foreign Trade to permit industrialists to import second-hand electric generators for projects undertaken in accordance with investment legislation.
  • The Council of Ministers has approved two draft laws for setting up commissions- one for developing SMEs and the other for promoting local products and exports.
  • The Ministry of Internal Trade and Consumer Protection has increased the price of a liter of gasoline by SYP 10 from SYP 150 to SYP 160. The last price increase before that was in June when it was raised from SYP 140 to SYP 150.
  • The Ministry of Health is carrying out a review of drug prices but not with the intention of raising them. Instead, it is looking to secure the supply of medicines in the country and a decision to this effect is expected soon.

Finance

  • Following negotiations, Iran has agreed to loan Syria around US$1 billion, which will be used to finance the import of goods and commodities as well as implementing various projects. The two parties that agreed the deal are the Commercial Bank of Syria and Iran’s Export Development Bank. In order to give the agreement legal authority, the People’s Assembly deliberated on the matter before Law 8/2015, which ratifies this latest credit line, was enacted.
  • Law 9/2015 authorizes the Minister of Finance to provide emergency loans from the Public Treasury when necessary.
  • The Central Bank has held that licensed banks are not entitled to grant loans to their own management personnel or their relatives. As some incidents in this regard have arisen, the Central Bank will investigate these cases.
  • A proposal is being discussed that would facilitate the listing of foreign exchange companies on the Damascus Securities Exchange. In this respect, these companies will have the right to trade up to five percent of their shares without the need to obtain the consent of the Central Bank.
  • The Court of Cassation, the highest in the land, has admitted to a rise in unlicensed foreign exchange dealings. At the same time, the Central Bank has advised purchasers of foreign currencies who exceeded the legal limits to rectify their status so as to avoid prosecution. Moreover, up to 300 cases of foreign exchange violations were settled last year without the need to resort to prosecutions.
  • The Monetary and Credit Council, the body in charge of governing the Central Bank, first permitted banks to raise interest rates on deposits up to 20% and has now added a further 10% on that amount.
  • The Central Bank has also amended some of the rules governing certified cheques and their endorsement.
  • Law 15/2015 creates criminal courts with jurisdiction over economic and financial disputes. During the current conflict and even before, there has been a surge in crimes of this nature.
  • Public and private banks along with the Ministry of Economy and Foreign Trade have reviewed a draft law for the establishment of a body to guarantee loans to small and medium-sized enterprises (SMEs). However, some reservations have emerged with questions as to whose authority it will fall under- the banking or insurance regulators?

Insurance

  • New legislation is being considered to target the insurance industry and the potential establishment of insurance courts, which would resemble the set-up of banking courts, is still being contemplated.

Taxation

  • Law 7/2015 exempts customs offenders from certain fines incurred in accordance with the Customs Law 38/2006 as long as they pay the required duties. Exemptions from fines will apply if overdue customs duties along with other taxes and fees are paid up. However, a fine worth 40% of the total value of the imported goods will also have to be paid. Where applicable, other fines will be reduced to 10% accordingly. Moreover, committees will be set up in accordance with this Law to conclude settlement agreements with offenders. Law 7/2015 applies to offences committed before July 9, 2013.
  • The Federation of Syrian Chambers of Industry has called for a review of customs duties and of the penalties provided for in the Customs Law 38/2006. However, it looks like the Ministry of Finance may consider raising customs duties in order to increase revenues to the Public Treasury.
  • The government may push for changes to the Capital Gains Tax Law 41/2005, which currently uses out-of-date real estate valuations to assess tax liabilities. The objective is to change this provision to use actual market valuations. A proposal that would have done just that was rejected in 2010. However, it might be more forthcoming today as a result of the increases in real estate prices in safe areas of the country.
  • The Ministry of Finance intends to pursue restaurant owners in order to oblige them to pay consumption taxes based on their actual monthly income.
  • The Ministry of Finance has informed the Ministry of Transport that a 3.5% consumption tax will be imposed on all international airline tickets.
  • Law 12/2015 exempts taxpayers from fines resulting from the late payment of income, consumption and property taxes as long as they pay them by the end of this year.
  • Law 13/2015 exempts persons from interests and other penalties if they settle their municipal fees and others liabilities, such as building violation fines, by the end of this year.
  • A decision from the government is expected to provide other exemptions to income taxpayers soon.
  • The Ministry of Finance will not be granting industrial businesses the tax exemptions it offered them in the past.

Industry

  • The People’s Assembly is looking into the possibility of setting up new industrial cities in safe areas after some were affected by the ongoing conflict in the country. Meanwhile, the government is using the three-percent fee it imposes on imports to protect the existing industrial cities.
  • The Ministry of Industry has laid down a number of proposals to deal with the economic situation in the country. For instance, these include amending the Cotton Law, enacting the Draft Public-Private Partnerships (PPP) Law and the new Investment Law, and removing price controls. The latter were reinstated when the conflict broke out after they had initially been removed in 2004.

Property

  • The General Commission for Real Estate Development and Investment has completed its final amendments to the Property Investment Law 15/2008.
  • New measures have been put in place to verify the authenticity of real estate transfer documents by notaries public in an effort to prevent title deed forgeries. Since the current crisis erupted, numerous complaints have been made of persons forging title deeds in order to dispossess property owners.
  • The Governorate of Damascus has approved plans to establish a holding company that will fund new infrastructure and housing projects in southern Damascus.
  • A real estate expert has alleged that local authorities in Damascus took advantage of and profited from Legislative Decree 40/2012 by abusing its provisions. This law was enacted with the aim of countering all attempts to illegally construct residential units.
  • The Prime Minister has authorized the General Housing Establishment to build residential units in the provinces of Tartous and Suwaida outside the cities.

Intellectual Property

  • A draft law that would exempt inventors from paying annual patent fees is being reviewed.

Employment

  • According to the Council of State, Legislative Decree 7/2015– grants an additional SYP 4,000 in monthly salaries to public and private sector employees- is being implemented correctly. Previously, a number of complaints were made alleging to its inadequate application by a number of individuals who had not yet received their compensation.
  • The Ministry of Labour is reviewing legislation to replace contractor agreements with annual contracts.

Transport

  • The Ministry of Transport is seeking to hasten both the issuance of the port tariff and the redrafting of the law regulating the transport of goods.
  • With respect to the licensing of car rental businesses, the Ministry of Transport has set down new controls and procedures for prospective entrepreneurs to follow.
  • The Ministry of Transport has also taken measures in coordination with the Ministry of Interior to prevent forgeries of International Driving Permits.

Agriculture

  • The Council of Ministers has provided its consent to a draft law that would make Syria a party to the International Federation of Organic Agricultural Movements (IFOAM)

Parliament

  • The People’s Assembly has expelled 10 MPs in accordance with Article 174 of its Rules of Procedure.
  • A lawmaker in the People’s Assembly has called on the government to establish a special body to review and submit draft laws to the People’s Assembly in an attempt to bypass deliberations in the Council of Ministers since, as he put it, “most Ministers do not read [them]”.
  • Other lawmakers have requested the formation of a parliamentary committee to investigate the lack of public services in the war-torn city of Aleppo.
  • In an unprecedented move, the People’s Assembly seeks to question the Governor of Damascus on his performance and on suspicions of corruption in the city after a motion to this effect was pushed for by lawmakers.

Local Councils

  • Law 10/2015 permits extending the duration of investment and lease contracts that have been signed between local councils and their counterparties. In certain areas of the country, these contracts have become difficult to implement by the contracting parties and thus, this Law seeks to remedy these situations as a result.
  • Law 11/2015 amends Article 55(1) of the Local Administration Law, which relates to the powers of governors in the various provinces throughout Syria. In the event of a provincial governor’s absence, the police chief in the province becomes the representative of the executive authority there and the deputy head of the province’s executive office acts on the governor’s behalf in all matters related to this body.

Criminal Law

  • Legislative Decree 32/2015 grants a general amnesty to military deserters both inside and outside Syria and to those who should be performing their mandatory military service but have refrained from doing so. This law applies to violations committed before July 25, 2015.
  • Up to 2,000 lawsuits concerning the theft of gold are pending before the criminal courts in Syria. On a related matter, judicial sources indicate that some debtors are transferring ownership of their gold to trusted third parties in order to avoid paying back their creditors.
  • 297 cases were handled by the Anti-Money Laundering Commission in 2014.

Miscellaneous

  • New legislation is being prepared to reform the Central Bureau of Statistics, a body involved in data collection since 1960.
  • Up to 260 new judges have graduated from the Supreme Judicial Institute, which has been set up under the jurisdiction of the Ministry of Justice to train judges, prosecutors and court staff for their respective professions.
  • Plans are underway to offer courses in International Humanitarian Law at Syrian universities.