Legal Briefing – February 2021
The People’s Assembly approved the new Microfinance Bill, which was subsequently ratified by President Bashar Al-Assad as Law 8/2021. It replaces previous legislation regulating microfinance institutions provided for in Legislative Decree 15/2007.
Microfinance institutions will all take the form of banks and 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.
For the first time in Syria, electronic payment services utilizing QR codes have been introduced via a mobile application created by Banque Bemo Saudi Fransi. Companies have been developing electronic payment processing and gateway products to cater to the Syrian market.
Verification of electronic invoices is set to be implemented in Syria, first in the tourism sector followed by supply chains in general. Vendors will register their invoices, which can then be verified by purchasers online through a code to curb acts of price manipulations.
While the unofficial rate of the Syrian Pound depreciated to SYP 3,000 to the US Dollar at the start of this year, its value dropped further by the end of February to reach approximately SYP 3,700 to the US Dollar.
Builders working to provide alternative housing units for former settlors of Basilia City just outside Damascus started pouring concrete in the first tower construction project. Like Marota City, Basilia City is being regenerated in accordance with Law 10/2018.
Residents of Basilia City objected to the valuation of their lands as per prices in 2012 given the currency depreciation but the authorities insisted that the law so requires and the decision cannot be appealed. The value of shares in the lands will be determined following zoning.
The General Housing Establishment informed former settlers of Marota City and Basilia City who are eligible for alternative housing in those areas after applying from October 18, 2020 to January 14, 2021 that they will start receiving their property documents on March 1, 2021. While subscribers were required to provide an initial deposit, they are committed to paying monthly installments to the state-owned developer beginning on April 1, 2021. Another round of subscriptions will take place this coming March. Alternative housing was meant to be delivered in 2016 as mandated by law. The former residents were granted annual rental allowance in the meantime amounting to five percent of the value of their former property but some have deemed it inadequate to lease at the current prices.
Prime Minister Hussein Arnous extended the time period to clear imports based on copies of original documents since the postings of the latter have been disrupted by the pandemic and must be submitted within two months later. Copies are similarly subject to consular attestation.
A regular maritime shipping line between Lattakia and the Iranian port at Bandar Abbas is set to be launched next month. It is expected to facilitate further trade between Syria and Iran, which do not share a common land border and have to rely on transit trade via Iraq.
Two patents were registered in all European Union countries on behalf of two Syrian individuals affiliated with the Syrian Virtual University based in Damascus who devised artificial intelligence technologies for the purposes of medical diagnosis and data analysis systems.
India dispatched 2,000 tons of rice to Syria as part of its food aid programme, with two more shipments expected soon. Syria reportedly consumes approximately 300,000 tons of rice annually, all of which are imported.
According to the World Food Programme, the number of Syrians who lack access to sufficient food has reached a record 12.4 million, or nearly 60% of the population. Economic crisis, spent savings, job losses stemming from the pandemic, and soaring food prices are the reasons.
The Council of State Administrative Court imposed a judicial custody order over MTN Syria, a temporary measure appointing its minority shareholder as receiver to manage its affairs under judicial supervision, following a claim that the mobile network operator violated its license agreement and owes money to the Public Treasury.
Businesses criticized Ministry of Finance Resolution 426/2021, which requires import declarations for 2020. It appears that if they imported at SYP 1,000 to the US Dollar at the start of the year, they will be presumed to have sold their goods at SYP 3,000 to the US Dollar and taxed accordingly.
Prime Minister Hussein Arnous approved the recommendation of the Economic Committee affiliated to the Council of Ministers to permit the exportation of face masks and sanitizers after several manufacturers converted their factories to produce them at the start of the pandemic.
Syrian authorities approved the registration of Russia’s Sputnik V Covid vaccine for inoculations throughout the country. Syria also signed up to the World Health Organization’s Covax initiative to procure vaccine jabs to initially cover three percent of the population and up to 20% by the end of 2021.
The Ministry of Health announced that it had commenced administering Covid vaccinations in the country, targeting first frontline healthcare professionals working within coronavirus isolation centres across the provinces. The vaccines were reportedly sent from a friendly country.
While the government adopted a light regulatory approach to the Covid pandemic in a bid to avoid further economic contraction, Syrians also found it challenging to take precautions due to an interactive work culture, unaffordable face masks and more pressing financial concerns.