Syria’s new draft tax system: capital over social equity?

A simpler tax system proposed by Syrian authorities—aimed at boosting investment and growth—will help the wealthy, but will it make the economy more productive and help the poor?

LOUAI BESHARA / AFP

Umm Walid sits near her grandchildren in a room of an unfinished building where she lives with her five children and their families in the Daf al-Sakhr neighbourhood of Jaramana on the outskirts of the Syrian capital Damascus.

Syria’s new draft tax system: capital over social equity?

Joseph Daher

last update on 22 Sep 2025

In September 2025, Syrian Finance Minister Mohammad Yusr Barniyeh announced the completion of the draft income tax law due to take effect in 2026. The aim is to promote economic development, facilitate trade, stimulate investments, and support private sector leadership. He added that he wanted to transform his ministry from one of taxation and coercion to one of development, construction, and partnership.

Barniyeh has said he wants the new and simplified tax system to be fair and transparent, reduce administrative complexity, and promote modernisation through technology. The burden of proof will shift to the tax authority, and final appeals will be referred to the Tax Court. For non-compliance, financial penalties will replace prison sentences, and out-of-court settlements will be allowed in certain cases. The ministry is hearing public comments on the proposed new tax system until 27 September.

A unified system

One of the main characteristics of the new tax system is its unified and non-categorical tax structure, along with a similar corporate tax applied equally across all business entities, regardless of their size. The corporate tax will differ by sector.

There will be no tax to pay for agriculture, bank deposit returns, and stock trading. A 2% rate will apply to supplies and services by non-residents. There will be a 10% rate in the health, technology, education, and industrial sectors, while other sectors—including trade and services—will pay 15%. Income tax will only kick in after the first SYP 60mn (around $5,455 for an official dollar exchange rate of SYP 11,000). Thereafter, a 6% rate will apply to the first SYP 5mn and an 8% rate will apply to amounts exceeding SYP 5mn.

Yamam al Shaar / Reuters — Workers package medicines at a pharmaceutical factory producing medicines, in Damascus, Syria May 19, 2025.

Exemptions are envisaged on transfers of company shares, revaluation of fixed assets, returns and interest on bank deposits, local exports of goods and services, the agricultural sector and its associations, children’s medical expenses, education, rent, and interest on housing loans. For corporate donations to good causes, there will be a special tax deduction.

In June, Barniyeh formed a committee of industrialists, academics, and experts to draft a new tax system. In recent weeks, debate over the new tax law has been notably mute, with the exception of a conference in Aleppo with industrialists and one at the University of Damascus with Syrian officials, when they presented the new tax system.

Early criticisms

Some analysts have raised eyebrows at the perceived lack of participation, arguing that civil society organisations—including trade unions and professional associations—as well as opposition parties would normally be involved in the consultations on important matters such as tax reform. Others criticise the content. Some say a unified and non-categorical tax structure, alongside a low corporate tax applied equally across all businesses, big and small, will make it harder to expand the state’s revenue base.

More than 95% of Syria’s private sector is comprised of small- and medium-sized enterprises (SMEs), most of which need to invest in modernisation, have access to financial assistance and diminish the cost of production. In this framework, the flat-rate corporate tax will not help to tackle these structural problems, and moreover, it is fundamentally unfair, as large companies accumulating vast profits should not be taxed the same as a small family enterprise with modest revenue.

The draft tax system prioritises investment from large foreign companies and high-net-worth individuals, rather than strengthening Syria's productive capacities

Likewise, big landowners employing large workforces will pay no tax owing to the agricultural exemption granted to encourage production. In reality, soaring costs are still expected to force many small farmers to abandon their land and cultivation and seek city jobs, which will increase Syria's dependency on imports, increasing the price of goods such as bread.

The accelerated trade liberalisation pursued by Damascus has also resulted in ongoing threats to Syrian national production, both in agriculture and the manufacturing industry. Tax exemptions on capital (such as the revaluation of fixed assets, returns and interest on bank deposits, and on local exports of goods and services) favour individuals and companies with large financial capacities, but state resources are restricted, meaning a lack of reinvestment in the public sector.

Syria's proposed new tax system reflects the new authorities' prioritisation of investment from large foreign companies and high-net-worth individuals, as well as promoting dynamic consumption, rather than strengthening the country's productive capacities.

This dynamic is also reflected in the reliance on foreign capital and assistance, as well as local businessmen, to promote Syrian reconstruction and economic recovery through foreign donations or donation campaigns, such as the Syrian Development Fund and other initiatives for specific regions and cities.

Moreover, it relies on donations of well-known businessmen, such as Hamsho's family and others, who have benefited from their close collaborations with the former Assad regime to accumulate large amounts of capital and wealth.

LOUAI BESHARA / AFP — Syrian children look on from inside an unfinished building where they live with their families in the Daf al-Sakhr neighbourhood of Jaramana on the outskirts of the Syrian capital Damascus.

Social dimension needed

Instead, what state authorities should be doing is promoting a comprehensive transitional justice mechanism and accountability process. In other words, it should include a social dimension by integrating efforts to recover state assets and hold accountable those responsible for serious economic and financial crimes, such as the privatisation of state and public assets, or the distribution of public land to businessmen linked to the former regime, at the expense of the public state's interests.

With huge numbers of Syrians currently living in poverty, the Syrian government should make funding effective social policies a priority. It should provide basic and efficient public goods and services, while also addressing socio-economic inequalities. Already, there are calls for a more equitable taxation system to redistribute wealth, reduce socio-economic disparities, and promote social reforms, such as the establishment of universal health coverage.

Instead of a tax system favouring a small and wealthy minority and deepening the country's dependence on capital, whether local and foreign, and external financial assistance, Syria needs a tax system able to redistribute wealth, strengthen public services and productive capacities, and protect the common good to promote a life with dignity for the majority of the Syrian population.

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