Sweeping Real Estate Sales Tax Reform Discussed

Table of Contents

Sweeping Real Estate Sales Tax Reform Discussed

In Depth Analysis

On 27 January, the Syrian Cabinet discussed a sweeping makeover of Syria’s property sales tax rules which threatens to upend the way taxes are assessed, while potentially delaying sales and introducing further opportunities for corruption and graft into a system that is already deeply flawed.

What is at stake?

The law under discussion, Syria’s Real Estate Sales Law, was proposed in June 2018 as an amendment of Law No. 41 of 2005. The new bill proposes a novel way of calculating real estate sales taxes — according to an estimated fixed value for all properties located within a designated zone, rather than property values assessed individually. The bill proposes that zones be assigned a value according to a three-tier quality scale. Each zone is to be further subdivided into main and secondary areas, with assessed values adjusted accordingly. Assessments are to be made by a committee comprising members from the Ministry of Finance, the Engineers’ Syndicate, the Property Registry, and local appraisers.

Sweeping Real Estate Sales Tax Reform Discussed

In this system, individuals taxes will be levied on property sales according to the estimated square metrage and the pegged value of the zone where the purchased property is located. The tax ranges from 1 percent of the estimated price for finished units, to 1.5 percent for unfinished units, to 2 percent for undeveloped land. It is worth noting that the taxation system also applies to properties included in asset transfers between relatives as well as inherited properties, albeit with a reduction of 10 percent (for transfers between relatives) and 50 percent (for inheritances). The estimated values will be also utilised to determine the value of mortgages.

The proposed updates to the law were written in 2017 and announced in June 2018; they have not yet been approved by the Cabinet. The earlier delay was due to the need to digitalise regulatory plans and registry documents and to categorise property lots into taxation groups. According to Issam Qouli, the head of legislation and property registration at the Directorate of Real Estate Affairs, 99 percent of properties in Syria have so far been documented. However, Qouli notes that there is a yawning gap between official building plans and the reality on the ground, and it is not clear how these records square with wartime developments, particularly in areas that have lain outside Government control for nearly a decade. Furthermore, it is not clear if informal residential areas or conflict-affected areas have been included in the documentation process. Such areas are of particular interest for donor-funded aid projects, and any change to Government of Syria policy concerning HLP documentation may have a pronounced impact on beneficiary pools.

Tax reform or a push toward informal sales?

Syria’s antiquated property sales taxation scheme is badly in need of reform. However, the proposed law is unlikely to remedy its most obvious shortcomings. It will, however, squeeze small property holders and increase taxes paid while heightening the incentive for corruption.
Currently, the real estate sales tax is calculated according to assessed values noted in an out-of-date property registry. According to this system, sales taxes amount to 25 percent of the registered price, if the property’s value was recorded before 1985, or 15 percent, if the price was recorded after 1986. Although the new scheme represents a nominal decrease in the sales tax rate, the amount to be collected will rise significantly. According to Imad Agha, the head of the Property Taxation Department at the General Commission for Taxes and Fees, the highest value currently registered for a property in Damascus is around 100,000 SYP (approx. $80), meaning the theoretical sales taxes collected would be no more than 25,000 SYP (approx. $20).

Given market fluctuations, it is not clear that the proposed zone-based system would keep pace with inflation and avoid falling out of step with real values any better than the system it is designed to replace. Moreover, Syrians frequently dodge the formal property system altogether by buying or selling real estate without formally transferring ownership, either by establishing an irrevocable contract of agency for the buyer — which allows them to utilise, rent, or sell the property — or by renting the property for 99 years. Perhaps most importantly, the new bill will require a lengthy, nationwide evaluative process, which may impede sales indefinitely, if the bill becomes law. This will add to current security approval procedures that are already a cause for delays and a prompt for bribery. Finally, by formalising the sales tax onus (now a matter for ad hoc agreement between buyers and sellers), the bill may drive up prices.

The Government of Syria has adapted to stay afloat amidst economic privation. Efforts continue to impose greater oversight on large financial transactions. In this sense, the bill is a further step to hand Damascus authorities more control and more cash. In February 2020, the Government of Syria mandated that all real estate and automobile purchases be conducted through formal banking institutions (see: Syria Update 3 February 2020) — reining in the informal financial sector, forcing the use of the Syrian pound, and increasing tax revenues. State interest in real estate will certainly continue. Future property development is expected to be among Syria’s most bankable sectors in a post-conflict context. While the proposed Real Estate Sales Law continues the Government of Syria’s adaptation in revenue generation, market volatility and currency depreciation will remain watchwords of Syria’s economic forecast for the foreseeable future.

Whole Of Syria Review

1. Spate of Bombings Rocks Turkish-Influenced Northern Syria

Azaz, Afrin, Al Bab, Aleppo Governorate: On 2 February, media sources reported that one person was killed and four were injured in a truck bomb targeting the industrial city 5 km outside Al Bab, in northern Aleppo. This was the latest in a series of similar incidents: on 28 January, a lieutenant colonel of the Sham Legion was killed in a roadside bomb in Jarablus; a bomb in Afrin on 30 January killed several people and wounded dozens; on 31 January a car bomb in A’zaz killed six civilians; and on the same day another car bomb at a checkpoint in Um Shakif killed five members of the Syrian National Army. The UN has condemned bombings in Afrin and A’zaz that resulted in the deaths of five people, three of whom were children, and the wounding of around 20 others. In the first official public comment by the new U.S. administration on the Syria file, on 1 February the State Department condemned what it described as “despicable and senseless” terrorist attacks targeting civilians in A’zaz, Afrin, and Al Bab that “threaten to destabilise the region further.”

Euphrates rift

As per usual, no actor has yet claimed responsibility for the explosions. The persistent uncertainty over the responsibility and motivation for VBIED attacks carried out in Turkish-influenced areas of northern Syria has led many observers to conclude that Kurdish partisans antagonistic toward Turkey are to blame, while others see in the attacks hallmarks of an Islamc State (IS) insurgency (see: Syria Update 12 October 2020). Not surprisingly, Turkey has blamed the Kurdistan Workers’ Party (PKK) for the incidents, which destabilise Turkish-controlled areas of northern Aleppo, while many in the Syrian Democratic Forces (SDF) camp continue to point fingers at IS.

These attacks converge with several important trends. First, the SDF has recently taken steps to cast itself as a viable interlocutor for Turkey; these steps include initiatives to publicly distance its main forces and the Self-Administration as a whole from the PKK, a longtime foe of Ankara (see: Syria Update 7 December 2020). This is in alignment with the U.S.’s expressed interest in reducing tensions between the SDF and Turkey. Second, ideological rifts within northeast Syria have been exacerbated as various actors compete for influence and the region’s future is hashed out. Northeast Syria is not a single, ideologically cohesive whole, and factions within the region hold to potentially irreconcilable agendas. Among these is a power base of Qandil-trained PKK forces that cannot be ignored. Manoeuvres by other factions to marginalise hardliners will naturally be met with hostility internally — and may prompt acts of deliberate sabotage elsewhere. Finally, the Biden administration’s public comment coincides with its long-delayed first official government-to-government contact with Ankara. There is ample evidence the Turkish-U.S. relationship remains frosty. Whatever the complications that persist, U.S. condemnation of the attacks will be read as a reassurance that American efforts to placate Turkey in northeast Syria will continue, even if the fundamental visions of the two governments differ greatly. That said, such attacks remain distinctly possible for the foreseeable future.

2. Criminal Security Arrests Eight Individuals on Cybercrime Charges

Various locations: On 30 January, the Ministry of Interior’s Criminal Security Division arrested eight individuals on charges of “spreading false news and rumours on social media.” Among those arrested was Hala Jerf, a presenter on state-owned Syria TV, who reportedly criticised socioeconomic conditions in a series of Facebook posts, lamenting Syria’s return to the “stone age.” Jerf denounced the state’s use of the cybercrime law to silence critics, writing “let the motto of the next stage be: stay at home and remain silent.” At the time of writing, those arrested are yet to be released. The head of Syria’s Government-aligned Union of Journalists, Mousa Abdel Nour, claimed that Jerf’s posts were in “clear violation” of the cybercrime law, which bans the posting of content that undermines “national sentiment” or “defames the nation.” Relatedly, media sources reported that Government of Syria security forces had arrested a number of civilians in Lattakia Governorate after they reportedly criticised living conditions and corruption in the region. Among those arrested was cartoonist Edward Samandar, who previously gained attention after drawing a cartoon commenting on the high death toll among Syrian Arab Army fighters.

Syria, free of free speech

The state’s arrest campaign, which mainly targeted erstwhile Government of Syria sympathisers can be seen as an effort to control and contain an emerging narrative concerning Syria’s socioeconomic decline and deteriorating living conditions. The arrest of Hala Jerf, a prominent Syria TV presenter, highlights two abiding political concerns: the Government of Syria’s paranoia over its grip on the economy and its fear that condemnatory comments might embolden further public criticism. Jerf, a public figure, has the potential to inspire further collective expressions of public frustration against the government. Since the beginning of the conflict, a key survival tactic of the state has been its ability to control the narrative concerning the situation in Syria and to claim that the Syrian state has remained an irreplaceable provider of basic services. Especially in light of the upcoming presidential elections, preventing an unfavourable narrative from taking root is critical. The cybercrime law of 2018, an updated version of a 2012 law, threatens an already narrow space for freedom of expression and allows the state to interpret what constitutes cybercrime as it deems fit. That said, popular discontent is unlikely to subside, given that the socioeconomic situation will — barring a miracle — continue to deteriorate.

3. Uncertainty over COVID-19 Vaccine Persists

Various locations: On 26 January, the Syrian Council of Ministers approved Syria’s participation in the COVAX vaccine programme, an initiative of the World Health Organization (WHO). Syrian Prime Minister Hussein Arnous stated that the authorisation came after “resolving some sticking points” related to vaccine procurement. Thereafter, the WHO predicted that Syria would likely first receive the Oxford/AstraZeneca vaccine, given the relative simplicity of logistics compared with the Pfizer vaccine, which requires specialised storage and refrigeration. At the same time, pro-Government media sources reported that Syrian Foreign Minister Faisal Mekdad is conducting negotiations with the Indian ambassador to Syria to discuss the possibility of obtaining an Indian-developed vaccine. The Indian government is yet to comment on the news. Meanwhile, Hezbollah-affiliated media sources reported that a vaccine shipment of 10,000 doses had arrived in Damascus from the UAE via Beirut. Curiously, the shipment also reportedly included 10 Rolex watches. At the time of writing, it remains unknown whether the shipment was sent to the Government of Syria, the UAE embassy in Damascus, or to private businessmen.

Smoke and mirrors

Almost three months after the first COVID-19 vaccine was approved for use globally, the Government of Syria is still struggling to reach a consensus regarding the procurement and administration of the vaccine. The constant stream of diverging statements on the source of the vaccine from health officials and ministers illuminates the likelihood that the Government of Syria has yet to cement a workable vaccination strategy, to say nothing of a programme for containing the wider effects of the pandemic (see: Syria Update 25 January 2021). According to various authorities’ statements, no fewer than six different vaccines are set to arrive in Syria between February and April. In reality, as of writing, no solid plans have yet been published.

The news about Syria’s participation in the COVAX vaccine does not necessarily mean that the Government of Syria has a solid rollout plan. In fact, the minister of health’s statement regarding “national sovereignty” as a barrier to obtaining the vaccine (see: Syria Update 25 January 2021) may indicate the state’s unwillingness to include areas outside of its control in a potential rollout plan. Indeed, Syria’s tripartite division poses one of the biggest challenges to vaccine procurement and equitable distribution (see: Syria Update 16 November 2020). Human rights organisations fear that vaccines will be unfairly distributed and their availability (or unavailability) potentially used as a weapon in the ongoing conflict. Indeed, the Government of Syria has relentlessly blocked food and medicine from reaching civilian populations in areas held by opposing forces during the course of the conflict, and there are few clear safeguards to ensure that a potential vaccine strategy would not follow suit.

Meanwhile, the number of confirmed COVID-19 cases in Government-controlled areas in Syria continues to rise, reaching 14,404 as of writing, according to the Syrian Ministry of Health. However, the actual number of cases is thought to be many times greater, although accurate figures are impossible to obtain given the lack of testing capacity. Meanwhile, positive cases in northeastern and northwestern Syria have reached a confirmed total of 8,490 and 21,006, respectively, although both regions face their own testing impediments.

4. SDF and GoS Partially Lift Sieges

Quamishli and Al-Hasakeh, Al-Hasakeh Governorate; Sheikh Maksoud and Tel Rifaat, Aleppo Governorate: On 2 February, Syrian media reported, and local sources confirmed, that Russian mediators had facilitated the relaxation of sieges maintained by the SDF and the Government of Syria in the governorates of Aleppo and Al-Hasakeh. The SDF sieges affected Al-Hasakeh and Quamishli, while the Government had besieged areas in Sheikh Maksoud, Tel Rifaat, and Aleppo. The SDF claimed that it preemptively eased its restrictions as a “gesture of goodwill” and that it is committed to “preserving the blood of Syrians.” The concrete barriers set up to prevent movement to and from Government-controlled areas were removed by SDF forces, allowing materials to enter. Similarly, the Government of Syria relaxed checkpoint procedures at the entrances to SDF zones in Aleppo, Sheikh Maksoud, and Tel Rifaat. Media sources reported that the Asayesh, the SDF’s local security forces, announced that the sieges on areas controlled by Government of Syria forces had ended, with the goal of achieving stability in these areas. The sieges of both sides had been running for around 20 days (see: Syria Update 1 February 2021).

Sieges relaxed, what comes next?

The relaxation of restrictions brings welcome relief to nearly half a dozen besieged areas, but the affected populations are not out of the woods yet, and normalcy has not yet returned. Local sources indicate that neither side is in full compliance with the agreement. While both parties are allowing some goods, such as food and fuel, to enter the affected areas, they are also prohibiting the entry of motorcycles and flour, likely measures intended to prevent VBIED attacks and maintain pressure. Notably, local sources stressed that the text of the Russian-brokered agreement to lift the sieges is vague and filled with buzzwords like “goodwill” and “unity”, rather than substantive conditions for an incremental reduction in blockade conditions. As a result, it is still too early to form a clear idea of whether these partial relaxations will evolve into a return to normalcy, or whether the areas will slip back into siege if individual violations reach critical mass.

5. Defection from Syrian Army Has Accelerated in 2020

Idleb Governorate: On 30 January, the Syrian Center for Safety and Defection reported that 40 soldiers had defected from the Syrian Arab Army and relocated to Idleb Governorate. The organisation reported that the soldiers were from various governorates, but gave no details concerning the soldiers’ units or their hometowns, due to security considerations. On 19 January, the organisation had announced the defection of 10 soldiers from the Idleb frontlines who hailed from the governorates of Dar’a, Aleppo, Homs, Idleb, Damascus, and Rural Damascus.

Grievance and fear

Although the detected rate of defections and desertions is modest (see chart below), it has clearly been on an upward trajectory since early 2020. Previously — in 2012 and 2013, for instance — defection waves have prompted a sea change in overall conflict dynamics. At present, such a shift is not on the cards. Nonetheless, military desertions can be a bellwether of other drivers of discontent. For instance, many defectors or deserters come from governorates that have undergone reconciliation, a process that has seldom delivered on its promises of a return to normalcy. Many reported defectors had been members of the 5th Corps, whose uptake of reconciled opposition fighters was intended to impose order and regularity on reconciled areas. It may also be significant that Israeli airstrikes continue to target Iranian-backed militia groups that are interspersed with Government of Syria military units. These airstrikes, paired with the rising number and scale of IS attacks in eastern Syria, potentially create a perception of increased risk, even in settings far removed from frontlines. This perception may be a factor explaining desertions to northeast Syria. Combatants have also split off to join Russian-backed groups or have deserted to remain hidden within their local communities.

Open Source Annex

Key Readings

The Open Source Annex highlights key media reports, research, and primary documents that are not examined in the Syria Update. For a continuously updated collection of such records, searchable by geography, theme, and conflict actor, and curated to meet the needs of decision-makers, please see COAR’s comprehensive online search platform, Alexandrina, at the link below.
Note: These records are solely the responsibility of their creators. COAR does not necessarily endorse — or confirm — the viewpoints expressed by these sources.

How Global Jihad Relocalises and Where It Leads: The Case of HTS, the Former AQ Franchise in Syria

What Does it Say?: The study lays out how HTS is navigating the international political sphere and seeking acceptance abroad, including by silencing or marginalising its hardliners.

Reading Between the Lines: HTS leader Abu Muhammad al-Jolani’s latest — yet to be broadcast — interview with a Western journalist has revived discussion over the group’s ability to shed its radical label and strike a pragmatic accord with the international community. Profound barriers to such a manoeuvre exist.

Source: European University Institute              Language: English                 Date: 2021

Read More

In Syria’s Idlib, Washington’s Chance to Reimagine Counter-terrorism

What Does it Say?: Among other things, the article examines how labeling HTS a terror group has narrowed the space available for pragmatic and desperately needed aid operations in Idleb, complicating the region’s future.

Reading Between the Lines: The piece has reignited debate about HTS’s legal designation and the impact on aid delivery. While such debate is critically important, and more should be done to facilitate aid in the opposition enclave, the functional utility of normalising HTS is hotly contested.

Source: International Crisis Group             Language: English           Date: 3 February 2021

Read More

Lavrov Uses the Visit of His Jordanian Counterpart to Demand the Expulsion of the ‘White Helmets’

What Does it Say?: The Russian foreign minister has asked his Jordanian counterpart to expel the White Helmets from Jordanian soil.

Reading Between the Lines: The group has been the target of a coordinated and highly successful media campaign to discredit their work. Lavrov’s request reflects the fact that this campaign reaches the highest level.

Source: Enab Baladi                              Language: Arabic                      Date: 3 February 2021

Read More

The Regime’s Government: The Losses of the Oil Sector in Syria Are More Than $91 Billion

What Does it Say?: Through territorial control shifts, the Government of Syria has lost as much as $91 billion in oil revenues.

Reading Between the Lines: Western actors in particular view the oil reserves in eastern Syria as a key to regional stability, yet such arguments often overlook the reality that generating leverage against Damascus reduces state service capacity to cater to the needs of the civilian populations of Government-held areas.

Source: Syria TV            Language: Arabic           Date: 4 February 2021

Read More

The Wartime and Post-Conflict Syria project (WPCS) is funded by the European Union and implemented through a partnership between the European University Institute (Middle East Directions Programme) and the Center for Operational Analysis and Research (COAR). WPCS will provide operational and strategic analysis to policymakers and programmers concerning prospects, challenges, trends, and policy options with respect to a conflict and post-conflict Syria. WPCS also aims to stimulate new approaches and policy responses to the Syrian conflict through a regular dialogue between researchers, policymakers and donors, and implementers, as well as to build a new network of Syrian researchers that will contribute to research informing international policy and practice related to their country.

You May Also Like

Subscribe to Updates

    Connect With Us


    Get the latest updates from
    COAR and our staff online

    The content compiled and presented by COAR Global LTD is by no means exhaustive and does not reflect COAR’s formal position, political or otherwise, on the aforementioned topics. The information, assessments, and analysis provided by COAR are only to inform humanitarian and development programs and policy.

    Connect With Us



    Cookies Policy | Privacy PolicyCopyrights for COAR Global © 2020