Investment Laws

Investment Law

• The Investment Law aims to simplify the procedures to obtain a license from the Syrian Investment Authority, whose main feature is tax exemptions for projects of national interest.
• Various sectors of the economy continue to be targeted for private capital investments from both local and foreign businesses, thereby entitling investors to purchase and lease as much land as necessary.
• Special economic zones will be created to cater for the development of certain sectors of the economy deemed strategic.
• The terms of a licensed investment must remain consistent without any surprise amendments. An investment license cannot be revoked unless the investor is notified of any breaches they commit.
• The tax and customs duty incentives in certain cases reach the level of complete tax exemption for a project. Imports of equipment, machinery, assembly lines and transport systems will be processed free of duties and tariffs. Agricultural projects will not be taxed on profits.
• Touristic, hospitality and recreational investments will also be covered in the new Law as opposed to their hitherto standalone legislation and will be exempt from customs duties and other fees. Development projects will benefit from a 75% discount on income taxes for 10 years.
• Some industrial projects benefit from exemptions ranging from 50% to 75% on income taxes, including those pertaining to technology, medicine, pharmaceuticals, renewable energy, waste recycling, and crafts. Emphasis is also placed on local labor and the promotion of exports.
• Syrian and foreign investors both benefit from facilities, including the right to open a bank account and obtain credit for their project in Syrian Pounds and foreign currencies from local banks. Profits, interests and proceeds from sales of shares can be transferred abroad.
• If the investment license is not issued within the legal deadline, any capital transferred to Syria in anticipation of a project can be repatriated overseas by applicants. Investors, their families and employees have the right to obtain residence permits if they are not Syrian.
• It is no longer possible for the Minister of Finance to impose an administrative provisional attachment order on a licensed project, as this prerogative belongs solely to the judiciary.
• Any civil or commercial disputes arising from the investment contract or license will be settled by a new dedicated arbitration center hosted by the Federation of Syrian Chambers of Commerce governed by its rules and with either local or foreign arbitrators as the parties desire.

• The Investment Law 18/2021 repeals and replaces Legislative Decree 8/2007.

• The Investment Law 18/2021 was issued during a severe economic crisis in Syria.

Tourism Investment Rules

• Invites local and foreign investors to invest in touristic projects.
• Incentives include tax exemptions for up to seven years from the start of the project.
• Import restrictions are reduced.
• Capital and profits may be exchanged into a convertible currency and transferred abroad.

• This piece of legislation was followed by STC Regulation 198/1987, which lays down conditions for the establishment of touristic projects on lands not subject to planning restrictions.

• STC Regulation 186/1985 was issued at a time when the economic situation in the country was in decline due to a shortage in the state’s foreign currency reserves.
• In an effort to attract private capital into the economy, the touristic sector was opened up for investment.
• These rules preceded the economic crisis of 1986 the following year.

Agricultural Investment Law

• Provides for investment projects in the agricultural sector carried out by a joint stock company jointly owned by the state and private partners.
• Incentives include tax exemptions for up to seven years after the first profitable year.
• Import restrictions are reduced.

• While it remains in effect, this law has been overtaken to a certain extent by Investment Law 10/1991 initially and subsequently by Legislative Decree 8/2007.
• The investment structures and exemptions granted in this law are different to those provided for in Legislative Decree 8/2007.

• This law was issued at a time when the economic situation in the country was in decline due to a shortage in the state’s foreign currency reserves.
• In an effort to attract private capital into the economy, the agricultural sector was opened up for investment.
• This law coincided with the economic crisis of 1986.

Electricity Law

• Invites local and foreign investors to participate in the electricity sector either on their own or in partnership with the public sector.
• Private investors are allowed to generate and distribute electricity to consumers.
• Promotes investments in renewable resources.

• With the changes in economic policy towards a social market economy taking place, this Law sought to promote the Syrian market as a potential base for local and foreign investors.
• This Law was also enacted after the government formally adopted the concept of public-private partnerships in the late 2000s to procure major infrastructure projects.

Private Education Law

• Allows private schools to be established under the supervision of the Ministry of Education.

• Repeals a 40-year old policy, which witnessed the nationalization of the private education system by virtue of Legislative Decree 127/1963.
• Preceded by Legislative Decree 36/2001 pertaining to private universities.

• This law came in response to plans for education reform, which sought to reduce state control over schools.
• This change in policy also fits in with the economic reform plans underway since the start of the decade, which sought to promote private investment in this sector.

Private Universities Law

• Allows private universities to be established under the supervision of the Ministry of Higher Education.

• Followed by Legislative Decree 55/2004 pertaining to private schools.

• This law came in response to plans for higher education reform, which sought to reduce state control over universities.
• This change in policy also fits in with the economic reform plans underway since the start of the decade, which sought to promote private investment in this sector.

Free Zones Law

• Sets up the General Establishment for Free Zones (GEFZ), which regulates work inside these designated areas.

• Decree 40/2003, which replaces Decree 84/1972, governs investments by businesses in the free zones and regulates their practices.

• The GEFZ was set up just before President Hafez Al-Assad took over formally though he was at this point the most influential figure in the government where he served as the Prime Minister.
• The GEFZ represents a part of President Assad’s policies to allow a certain degree of economic freedom to the commercial classes while at the same time maintaining socialism as state policy.

Industrial Cities Law

• Establishes three industrial cities in the provinces of Rural Damascus, Aleppo and Homs.
• A fourth industrial city was established in Deir Ez-Zor province in 2007.

• Investors are free to set up their businesses in these industrial cities in accordance with investment legislation contained in Legislative Decree 8/2007.
• According to Law 32/2007, foreign industrial investors licensed under Law 21/1958 to execute industrial projects are permitted to purchase and rent as much land as is necessary in the industrial cities.

• The establishment of these industrial cities follows measures to expand Syrian industrial capabilities and promote private sector participation as part of the economic reform plans underway since the start of the decade.

Syrian Investment Company Law

• Intends to create a state-owned investment company to be named the ‘Syrian Investment Company’.
• The investments that this company is envisioned to make both inside and outside Syria include establishing financial institutions, making property investments and engaging in other businesses.

• With the changes in economic policy towards a social market economy taking place, the state also sought to become a business player.