Syrian Law Journal

Legal Briefing – October 2015

by · 04/11/2015

Welcome to our latest legal briefing covering the news of the past month- here is a taste of what is in store: It appears that the Draft Billing Law is now ready to be submitted to the government for approval after amendments by the Ministry of Finance were recently included. Syrian MPs in the People’s Assembly have been criticizing the measures taken by the Governor of the Central Bank, which they blame for putting unnecessary pressure on the Syrian Pound. The Ministry of Finance has recently initiated deliberations on a new law for the insurance sector that would consolidate all legislation in this field into one comprehensive document and facilitate the entry and exit of insurance companies in and out of the market respectively. Property transfer fees have lately been the subject of an ongoing review that appears to be nearing its end as the final touches are being applied to the relevant amendments. Finally, a draft law is being debated that would see property owners exempted from paying construction permit fees if they are intending to carry out repairs on their properties to fix damages sustained as a result of the conflict in the country.

Taxation

  • It appears that the Draft Billing Law is now ready to be submitted to the government for approval after amendments by the Ministry of Finance were recently included. The Ministry of Finance held discussions about the provisions of the Draft Law after receiving feedback from the Damascus Chamber of Commerce and other interested parties. If enacted, this piece of legislation will introduce the billing system into Syria, which is anticipated to have a positive effect on the economy and the operation of the tax system. It is also envisioned that the billing system will help curb any fraudulent activity and increase transparency especially when it concerns customs documents. Additionally, the Ministry of Finance has stated that the Draft Billing Law will complement the provisions of the recently-enacted Consumer Protection Law.
  • Legislative Decree 48/2015 has doubled the payroll tax for employees who receive an income comprised of a fixed payment to 10% from five percent. Moreover, the minimum amount exempt from the payroll tax was recently increased to SYP 15,000 from SYP 10,000 in accordance with Legislative Decree 46/2015. The provisions governing the payroll tax are provided for in the Income Tax Law. The passage of Legislative Decree 48/2015 also follows Legislative Decree 41/2015, which grants public sector employees, both civilian and military personnel, a monthly increase of SYP 2,500 in their salaries.
  • Sources within the Ministry of Finance have disclosed a draft regulation that sets out fixed lump-sum income tax provisions based on three categories.
  • 12 years after its enactment and a law professor has come forward claiming that the Income Tax Law gives the Minister of Finance unconstitutional powers. The law professor argues that the Law is unjust because it reduces income tax and increases the payroll tax.
  • The Prime Minister has formed a committee to assess the effects of the new customs duties regime, which took effect at the beginning of this year.
  • According to the Ministry of Tourism, touristic businesses have a duty to charge consumption taxes to their customers in accordance with Legislative Decree 11/2015 and pay them to the Public Treasury.

Finance

  • Syrian MPs in the People’s Assembly have been criticizing the measures taken by the Governor of the Central Bank, which they blame for putting unnecessary pressure on the Syrian Pound.
  • The Central Bank is permitting exporters to export on behalf of other parties as long as they comply with export proceeds regulations. The Central Bank currently requires exporters to sell all of their earnings to the banks, which is testament to the financial strain the economy finds itself under at the present time.
  • The Prime Minister has issued a circular that prohibits the shipment of currencies to and out of Syrian territory unless prior permission is granted by the Central Bank.
  • The Economic Committee, which is linked to the Council of Ministers, is working alongside the Ministry of Justice and the Central Bank to study plans that would envision the establishment of an entity to guarantee loans to small and medium-sized enterprises.
  • Legislation is being drafted to settle the cases of non-performing loans owed to public banks, which has been a recurring problem since the conflict in Syria began. The draft law in this respect is currently the subject of governmental consultations and may be approved soon. However, according to a source in the Ministry of Finance, the draft law does not take into consideration the observations made by public banks and additionally, the argument has been made that the current legal regime in this respect works better.
  • Controversies have been surrounding the imposition of freezing orders on the assets of defaulting debtors since they seem to be applied without much consideration. Thus, a number of businesses that are finding themselves served with a freezing order, which is not completely justified, are feeling the negative commercial effects that are associated with this stigma.
  • President Bashar Al-Assad has referred the draft national budget for 2016 estimated at SYP 1.98 trillion to the People’s Assembly for approval.
  • In an effort to reduce financial waste on the part of the Public Treasury, the government is requiring public entities to submit monthly financial statements.

Insurance

  • The Insurance Law is expected to face significant revisions. The Ministry of Finance has recently initiated deliberations on a new law for the insurance sector that would consolidate all legislation in this field into one comprehensive document. Once enacted, it is expected to facilitate the entry and exit of insurance companies in and out of the market respectively.
  • The Minister of Finance has defended his handling of the drafting of the new Insurance Bill, particularly the composition of the committee charged with overseeing the process. There have been concerns as to whether the committee sufficiently represents all the interested parties in this sector.
  • Another law targeting this sector may mandate the creation of insurance courts to try insurance-related cases, which would resemble the set-up of banking courts. There have been calls from interested parties in the insurance industry for the establishment of these types of courts for some time now.

Property

  • The provisions in Law 429/1948 regulating property transfer fees have lately been the subject of an ongoing review. The latest news is that the final touches are being applied to the relevant amendments after talks were held between the General Commission for Taxes and Fees and the Ministry of Local Administration.
  • A draft law is being debated that would see property owners exempted from paying construction permit fees if they are intending to carry out repairs on their properties to fix damages sustained as a result of the conflict in the country.
  • The Ministry of Housing and Urban Development is preparing the executive regulations to the Housing Cooperatives Law that notably permits the sale of social housing units.

Commerce

  • Three months after it came into force and traders are still feeling confused by the provisions of the new Consumer Protection Law.
  • The Draft Free Zones Law is expected to focus on promoting industrial investments and the creation of new free zones. At the same time, the government is planning on establishing two new free zones in the provinces of Suwaida and Rural Damascus.
  • Licenses granted to businesses in the coastal region of Syria have come under governmental scrutiny.
  • The Prime Minister has emphasized that goods should not be exported outside of Syria unless the local markets already have sufficient access to them.
  • The Ministry of Economy and Foreign Trade has prohibited the export of timber following a request by the Ministry of Agriculture.
  • The Competition Protection and Anti-Monopoly Commission has held that some traders are trying to illegally monopolize the food industry.
  • The Ministry of Petroleum and Mineral Resources has declared last year’s policy to permit the private sector to import petroleum products to be a failure and therefore, the state has reasserted full control over this business.
  • The price of a liter of diesel has been raised to SYP 135 from SYP 130 while the price of a gas cylinder has been increased to SYP 1,800 from SYP 1,500.
  • Proposals have been discussed within the government with a view to further reduce bread subsidies. In this respect, the price of a bundle of bread has been increased to SYP 50 from SYP 35. In January, the price was raised to SYP 35 from SYP 25.

Tourism

  • Undercover visits by the competent authorities have revealed that tourist operators are working as brokers in violation of their licenses.
  • The Ministry of Tourism and the Ministry of Internal Trade and Consumer Protection are preparing to increase their supervision over restaurants, especially with respect to meal prices and bills.
  • A new pricing mechanism for touristic establishments is set to be introduced very soon, particularly for restaurants.

Transport

  • New legislation in the works aims to improve operations at the state-owned national carrier Syrian Arab Airlines and the air travel industry in general.
  • Allegations are being made by the Competition Protection and Anti-Monopoly Commission that government contracts signed with transport companies are leading to monopolistic practices in this sector.

Employment

  • It now appears that 90% of the draft amendments to the Employment Law have been completed by the Ministry of Labour, which is also waiting on the Ministry of Administrative Development to complete its part of the legal review.
  • A seminar has been held to discuss the draft amendments to the Public Employment Law, which regulates the employment of public sector employees. The changes to the Law are expected to address salary ceilings and re-examine the procedures for recruiting public sector employees, which are usually done by conducting competitions among candidates. According to the Ministry of Labour, the legal revisions covering public sector employees are intended to further guarantee their rights and increase their salaries. They will also touch on the matter of temporary workers employed in the public sector and ways to provide them with permanent job security.
  • Debate has centered on the controversial Article 137 of the Public Employment Law, which gives the Prime Minister considerable authority to dismiss public sector employees. The point of contention surrounding this provision stems from the thousands of state employees who were fired based on potentially false rumors pertaining to their character and performance. In this respect, the power of the Prime Minister is expected to be a source of deliberation among lawmakers in the People’s Assembly who will decide its fate as part of the package of draft amendments to the Public Employment Law.
  • The People’s Assembly has approved a bill amending Art. 36(a) of the Public Employment Law, which would permit the Council of Ministers to extend the employment term of certain workers for one year.

Public Procurement

  • Construction companies are breathing a sigh of relief after Article 63 of the Public Procurement Law was said to have been activated in order to compensate contractors for price increases. The Prime Minister initially called for compensation to be granted to private contractors after their government contracts were terminated. The move comes in response to requests by contractors who sustained financial losses as a result of significant inflation since the current crisis erupted. During the annual general meeting of the Damascus branch of the Construction Contractors Syndicate earlier this year, participants called for the termination of contracts they concluded with public bodies for projects they are unable to complete due to the unrest affecting the country.
  • The Prime Minister has called on public entities to fully comply with the provisions of the Construction Contractors Law 9/2014 for the purposes of executing construction contracts.
  • The Minister of Industry and the Minister of Agriculture have urged the state to follow up on contracts that were signed with foreign companies but not fully implemented.
  • The Russian energy firm SoyuzNefteGaz has dropped out of the Syrian offshore oil and gas exploration deal after it was awarded the contract in a straightforward procurement process in December 2013.

Agriculture

  • The Ministry of Agriculture has reported that amendments to the Forestry Law are ready to be submitted to the People’s Assembly.

Immigration

  • The Syrian Bar Association is prepared to act against any lawyer caught working with human smuggling networks, which have propped up during the conflict and are associated with the migrant crisis.
  • A Sharia judge in Damascus has noticed an increase in the number of minors migrating from Syria following a rise in guardianship authorizations.
  • Five new controls imposed on expatriates seeking to obtain passports could be introduced in an attempt to prevent forgeries.

Government/ Parliament

  • During his surprise visit to Moscow, President Bashar Al-Assad and Russian President Vladimir Putin appear to have discussed the prospects of parliamentary and presidential elections.
  • Decree 256/2015 sets Saturday, November 28th as the date for holding a parliamentary by-election in Idlib province.

Local Councils

  • Following more than four years after the passage of the Local Administration Law, the extent of decentralization of authority from the central government in Damascus to the local councils throughout Syria has come under the spotlight.

Judiciary

  • In a meeting with judges and lawyers, the Minister of Justice has lamented attacks on the judiciary throughout the conflict in Syria and has called for cooperation between all the affected parties to hold those responsible accountable before the courts. In an effort to increase the efficiency of the judiciary in this respect and others, the possibility of salary increases was also discussed.
  • The Minister of Justice has called for expanding the scope of criminal court jurisdictions and shortening the length of litigation before the courts.
  • A Syrian MP in the People’s Assembly has noted that Daraa province is suffering from a shortage of judges as a result of the conflict.

Criminal Law

  • In August this year, the Ministry of Justice tasked a special committee with looking into cases of looted factories in Aleppo and Idlib provinces to prepare for possible prosecutions. It has now expanded its scope to include the eastern provinces of Deir Ez-Zor, Hassakeh and Raqqa. Furthermore, the Ministry of Justice has called on owners of industrial businesses in these provinces to document and inform the committee of the destruction and theft they sustained during the present conflict.
  • The Ministry of Justice has ordered the release of 237 suspects held by the Terrorism Court.
  • The authorities are getting tougher on individuals who purchase stolen gold as new penalties are introduced.