LAW |
Microfinance Law
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REFERENCE |
Law 8/2021 |
DATE OF PROMULGATION |
Approved by the People’s Assembly on February 16, 2021
Promulgated by President Bashar Al-Assad on February 20, 2021 |
RELEVANT PROVISIONS |
- Microfinance banks are subject to certain provisions of the Banking Law 28/2001, amended by Law 3/2010.
- Microfinance banks are concerned with providing finance and other banking and insurance services to low-income individuals who are unable to obtain loans from conventional banks.
- New incentives to cater to individuals with limited incomes are included. The Law aims to provide access to finance for the largest segment of the population with low or no income who have the ability to engage in business but cannot obtain banking, insurance and advisory services by licensing microfinance banks in the form of joint stock companies.
- Small businesses can benefit from loans worth up to SYP 30 million with low interest rates, insurance policies that can be reinsured, and money transfer services. Microfinance banks can also provide business training programs to customers.
- Strategic partners with expertise in this field are encouraged to incorporate microfinance banks but foreign shareholder participation is limited to 49%.
- The minimum capital requirement of such financial institutions must be raised to SYP 5 billion to account for the local currency depreciation.
- There is a five-year corporation tax holiday. Once the five-year corporation tax holiday on microfinance banks ends, those that take the form of public joint stock companies will be taxed at the rate of 10% and 14% for private joint stock companies, which is less than the 25% tax rate applicable to banks in general.
- The new Law will reduce the cost of borrowing from microfinance banks by exempting customers from stamp duty, mortgage fees and other costs.
- Depositors also receive tax breaks. The deposits of customers amounting to up to SYP 2 million will be exempt from the applicable income tax.
- Pursuant to the Monetary Law 23/2002, the Monetary and Credit Council ratified the executive regulations of the new Microfinance Law 8/2021 pertaining to the registration and licensing of such institutions, the associated fees, the role of the strategic partner, and so forth.
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RELATED LEGISLATION |
- Repealed and replaced the previous Microfinance Law provided for in Legislative Decree 15/2007.
- To be read in accordance with the relevant provisions contained in the Banking Law 28/2001, amended by Law 3/2010.
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HISTORICAL CONTEXT |
- With the changes in economic policy towards a social market economy taking place, Legislative Decree 15/2007 sought to promote the Syrian market as a potential base for local and foreign investors. However, Law 8/2021 was issued during a severe economic crisis in Syria that required attention to be directed towards financing capabilities for segments of the population on limited incomes.
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