The New Investment Law in Syria

The new Investment Law 18/2021 enacted in Syria and its executive regulations provide exemptions from locally legislated restrictive practices faced by Syrian businesses in most sectors of the economy. They touch on areas including taxes in general, import controls, foreign exchange regulations, profit transfers, certain limits on the foreign ownership of real estate property, caps on foreign workers, and so forth.

The size of the proposed investment projects should meet a certain threshold in terms of a minimum value so that they are considered of national economic importance. They should create a sufficient number of jobs and potential for exports, like factories for example. Furthermore, special economic zones will be created to cater for the development of designated sectors of the economy deemed strategic.

The Investment Law 18/2021 was promulgated by the President of Syria on May 19, 2021 after its passage by the People’s Assembly, the Syrian Parliament, a month earlier. It replaces the previous law contained in Legislative Decree 8/2007, which itself succeeded the original Investment Law 10/1991. The institutional framework for the current Law has its origins in its predecessors.

There is a licensing regime whereby local and foreign investors who obtain such investment licenses are afforded a number of incentives, including exemptions from the aforementioned restrictive measures. All applications by investors are submitted to the Investors Service Centre, a one-stop shop that handles the paperwork. A procedural manual was recently issued to guide investors through the application process.

The authority to approve a project is ultimately vested in the Supreme Investment Council (SIC), which is chaired by the Prime Minister. The SIC reviews all potential projects before giving the green light to the Syrian Investment Agency (SIA) to license an investment within a period of 15 days. The bulk of the administrative work is carried out by the SIA.

Once they obtain an investment license, investors can enjoy an array of benefits. The tax and customs duty incentives in certain cases reach the level of a complete tax exemption for a project. Agricultural projects will not be taxed on profits. Touristic, hospitality and recreational investments are also covered 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 will benefit from exemptions ranging from 50% to 75% on income taxes, including those pertaining to technology, medicine, pharmaceuticals, renewable energy, waste recycling and crafts. Imports of equipment, machinery, assembly lines and transport systems will be processed free of duties and tariffs, and exempt from any such import controls.

Both Syrian and foreign investors 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 can be transferred abroad, which is an exception to the current rule. 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 can also purchase and lease as much land as necessary, though this objective could also have been achieved through incorporating a company outside of the scope of the Investment Law framework. Moreover, investors, their families and employees have the right to obtain residence permits if they are not Syrian.

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 and provided that they are remedied within 90 days. It is no longer possible for the Minister of Finance to impose an administrative provisional attachment order on a licensed project, as this prerogative and the right to impose guardianship belong exclusively to the judiciary. Any civil or commercial disputes arising from the investment license will be settled by a new dedicated arbitration centre hosted by the Federation of Syrian Chambers of Commerce, which will be governed by its own rules and with the participation of either local or foreign arbitrators as the parties so desire.