| STOCK UPDATE |
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| FINANCE INFO. |
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| INVESTMENT
INFO. |
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| Trade Laws
and Regulations in Syria |
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Syrian commercial
law recognizes all the usual corporate entities found
in the Western world. The
principal forms are limited liability companies, Partnerships
and joint stock or shareholding companies. Joint ventures
between the government and the private sector may
be incorporated under Syria’s investment law. Many
of the largest are however established by decree and
thus governed by rules and regulations outside the
standard commercial law. In principle, foreign firms
or individuals are permitted to participate in all
types of corporate entities. Foreign ownership is,
however restricted to projects under Investment Law
No 10. (See section 5.4.1 below).
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Corporate
Entities: The legal basis for shareholding
companies is the Syrian Commercial Law as contained
in Legislative Decree No 149 of 1949. Shareholding
companies have become more common in recent years.
Since the late 1980’s a number of joint ventures between
the government and private sector have been established
as shareholding companies. It has been particularly
common form of incorporation for entities established
under Investment Law No 10.
Registration
should occur within one month of the establishment
of the business and a license to operate must be obtained
from the Ministry of Industry. Companies should have
five founders and a minimum capital of 50.000 Syrian
pounds. Applications should be made to the Ministry
of Supply and Interior Trade. A memorandum of association
must be submitted: On receiving approval to incorporate
from the Ministry of Supply and Interior Trade, the
company’s articles of association are published the
Official Gazette. Companies founded by foreigners,
or with foreign participation, require permission
from the Ministry of the Economy and Foreign Trade.
Public share offers must be announced in at least
two national newspapers.
Subscriptions
are carried out through local and foreign banks authorized
by the Commercial Bank of Syria. Founders are given
60 days to raise 75% of the total capital offered.
If subscriptions do not reach this target then an
additional 60 days may be given by ministerial decree.
Subscribers must pay a minimum of 5% of the total
value of the shares in advance. The balance is paid
according to the memorandum of association.
Reserves
of 10% of annual profits must be set aside. They may
cease when the reserves reach 50% of the company’s
total share capital. Additional reserves of no more
than 25% of annual profits up to a 100% of the value
of the share capital may also be set aside.
The
management or board of directors of a shareholding
company is elected by the annual general meeting.
The number of directors (no more than seven, no less
than three), their tenure and procedures for elections
and dismissal, are to be specified in the articles
of association. Within a week of election the board
must elect a chairman and deputy. Any limits to the
board’s authority are to be laid down in the articles
of association. The board must meet on a monthly basis.
Public shareholding companies must have at least two
company employees on the board. In companies with
state participation, public sector representative
obtain seats on the board in proportion to the state’s
holding of share capital.
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Limited
Liability Companies: These are similar
in structure to their Western counterparts. Management
may be separate from the partners, although they are
usually chosen from among them. Minimum capital is
25.000 Syrian pounds. The liability of individual
partners is restricted to their share of total capital.
Companies are required to submit their constitution
to the Court of First Instance within a month of their
formation. The constitution should contain the company’s
name and address a description of its purpose, information
regarding its directors and partners, their shares
and responsibilities.
Applications
for official registration are made to the Ministry
of Supply and Interior Trade. Applications should
be signed and authorized by the partners and include
a copy of the constitution, lease agreements and industrial
licenses as applicable. Once approval is obtained
from the ministry, the company is added to the commercial
register.
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Partnerships:
Partnerships may be general or limited. Foreign companies
and individuals may participate in Syrian partnerships.
There is no upper limit on the number of partners,
but there must be a minimum of two. Registration procedures
are similar to that of limited liability companies.
An application must be submitted to the Ministry of
Supply and Interior Trade and is to include general
information about the partnership. On receipt of the
Ministry’s approval, the partnership is added to the
commercial register. Agreements are deposited with
a Court of First Instance.
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| Investor
support and Promotion Organizations: The
EU has recently set up an organization to promote European
Syrian Trade, it is known as the SEBC (Syrian European
Business Center) and is based in Damascus.
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| Double
Taxation Treaties:
Syria’s tax system is territorial. If a foreign company
is taxed both in Syria and in its home country then
tax relief should be sought in the home country. Syria
has double tax treaties with Cyprus, Romania, the Czech
Republic and India. As an exception to the territorial
principle. A regional agreement for the prevention of
double taxation exists between Syria, Jordan, Sudan,
the United Arab Emirates, Egypt, Iraq and Yemen.
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Land
and Property Taxes:
Income tax on the rental of real property is levied
on a sliding scale form 17 to 60%, and payable by
the owners, be they individuals or legal entities.
If the rental contract is with non-Syrians the base
used is the value of the lease contract and maximum
rate payable is 40%. The payment of all tax is the
responsibility of the owner. Non-Arab foreigners are
not permitted to own real estate.
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Taxation
of Foreign Firms: Resident foreign firms
are taxed as has been outlined above. Non-resident
firms are charged a withholding tax. Foreign firms
are considered resident if they have concluded more
than one supply or service contract in the course
of one year, of if they have concluded a contract
which has taken one year or more to execute. Income
tax is also chargeable if foreign firms.
- Maintain
a local branch office
- Have registered
with the Ministry of Economy and Foreign Trade
- Are party
to a civil works contract
- Have assigned
part of their activities under a sub-contract to
another firm
- Carry out
their business at the office of another company
- Undertake
certain administrative steps such as the
hiring of employees, rental of premises and registration
of a PO Box.
This
tax also applies to the royalty income of foreign
trade-mark holders form production under license
in Syria.
Taxation
consists of:
- A non-resident
income tax levied at 17% off 75% of the contract
value or profits realized
- Local administrative
tax (5-10%)
- War Effort
Tax surcharge at 30% of the income tax For the purpose
of tax assessments, the value of the income in foreign
currency is converted into Syrian products at the
NCR rate.
Information
taken from the Federation
of the Syrian Chambers of Commerce website.
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