Tax Guide for US Expats Living and Working in Syria
Who Is Liable For Income Taxes in Syria
Syria has a territorial income tax system. As a result, income tax is imposed only on income derived from activities carried out in Syria.
Income subject to tax
Employment income. Individuals working in Syria are subject to Syrian individual tax on their Syrian-source income, beginning on the individual’s first workday in Syria.
Tax is withheld by the employer from salaries, wages, fringe benefits or any other remuneration earned by resident and nonresident employees in Syria. This tax must be paid twice a year, during 15-day periods beginning on 1 January and 1 July.
For expatriate employees working for foreign companies in Syria, the tax on salaries and wages is subject to special rules (see Nonresidents).
Income from movable capital. Tax is levied on income from movable capital, which includes the following types of income:
- Interest on bonds and loans issued by Syrian institutions. However, interest on governmental securities is exempt under Legislative Decree No. 23 of 2011.
- Dividends from non-Syrian companies.
- Interest from bonds issued by Syrian or foreign governments.
- Income derived from all types of deposits.
- Interest on guarantees and monetary bonds issued by legal entities.
- Lottery prizes exceeding SYP 1 million.
Tax is also imposed on mortgages to guarantee financial assets or debts. The tax is equal to a percentage of the value of the financial asset or debt.
Self-employment and business income. Tax is imposed on the real profits derived from the exercise of industrial, commercial and noncommercial professions, as well as on income not covered by provisions of any other tax measure, including the tax on real property. Real profits equal the difference between revenue and acceptable expenses.
Capital gains and losses. In general, capital gains are included in taxable income and taxed at the rates applicable to business income. However, a special tax rate applies to real estate.
Under Syrian law, capital losses may not offset ordinary income, and ordinary losses may not offset capital gains.
Deductions. Taxable income is calculated by deducting all legitimate and allowable costs and expenses from revenue. Deductions that may be claimed include the following:
- Rental fees for the work location, or the rental value, if the taxpayer owns the work location. These fees or value are the same as the tax base for the property tax (see Section B).
- The wages and salaries and incentives that are paid to the employees and workers for their services.
- Amounts paid by employers for social security.
- Provisions made for the payment of employees’ dismissal indemnities or the bonus at the end of the working period, or emergency allowances under the labor law.
- Acceptable depreciation under the technical rules applied in the industry, trade, profession or craft, except for depreciation of real property.
- Taxes and fees imposed in Syria in the year in which the profits are earned except for income tax imposed under the Syrian tax law.
- Donations, up to 3% of taxable income, paid to officially recognized public or private institutions engaged in activities related to public welfare, if the donor and donee maintain records approved by the income tax department.
Partners in general partnership companies, and general partners in limited partnership companies are entitled to an annual deduction of SYP 50,000 per partner.
Business income. Flat tax rates apply to Syrian joint stock and limited liability companies engaged in specified activities and to certain other companies, including the Syrian Petroleum Company and the Syrian Gas Company.
In addition, a municipality surcharge tax of 10% of the tax due is imposed.
Withholding taxes. Law 60 for 2004 introduced withholding taxes on Syrian natural and legal entities that engage in contracting, construction, the performance of services and supply work with or for the benefit of the Syrian public, joint, private and cooperative sectors and foreign companies. The following are the applicable tax rates:
- 1% of total value of food substances and feed supply (treated as income tax).
- 2% of total value of other material supply (treated as income tax).
- 3% of total value of construction work. If no clear split exists between services and supply, the tax is treated as income tax.
- 1% of total value of construction work. If no clear split exists between services and supply, the tax is treated as wages and salaries tax.
- 7% of total value of services provided to oil and gas companies (treated as income tax).
- 3% of total value of services provided to oil and gas companies (treated as wages and salaries tax).
- 5% of total value of services to companies and businesses other than oil and gas companies (treated as income tax).
- 2% of total value of services to companies and businesses other than oil and gas companies (treated as wages and salaries tax).
Tax is imposed at rates of 5% (treated as income tax) and 2% (treated as wages and salaries tax) of the total value of royalties and management fees received from companies and businesses other than oil and gas companies. These rates are increased to 7% (income tax) and 3% (wages and salaries tax) for royalties and management fees received from oil and gas companies.
Law No. 60 of 2004 requires that the taxes described above be remitted to the tax authorities within the first 15 days of the month following the month in which the payment to the recipient is made.
Legislative Decree No. 23 of 2011 differentiates between the following foreign entities:
- Foreign entities that have branches or temporary offices in Syria
- Foreign entities that do not have branches or temporary offices in Syria, but perform activities in Syria
Under Legislative Decree No. 23 of 2011, the first category is subject to Income Tax Law No. 60 of 2004 and the second category is subject to Income Tax Law No. 24 of 2003.
Credits. No tax credits are available under Syrian law.
Relief for losses. Losses may be carried forward five years. Losses may not be carried back.
Nonresidents. Syrian law provides special rules for the taxation of nonresident companies. These rules apply regardless of whether the nonresident company has a branch in Syria. The law states that contracts entered into by nonresidents before 2005 are subject to a tax treatment that differs from the contracts entered into in 2005 and subsequent years.
Contracts entered into before 2005. For contracts entered into before 2005, Wages and Salaries Tax and income tax are applied. The rates of these taxes are discussed below.
The following are the rates of Wages and Salaries Tax:
- One percent of the total value of turnkey projects. This is treated as the tax on salaries and wages for expatriates and local employees working for the nonresident company in the absence of a clear split between services and pure supplies.
- Two percent of the total value of turnkey projects. This is treated as the tax on salaries and wages for expatriates if only services are provided under the contract or if a clear split exists between services and pure supplies.
The following are the rates of income tax:
- 5% of the total value of turnkey contracts and contracts without a clear split between the value of services and pure supplies.
- 10% of the total value of services contracts and of fees paid for the exploitation of movies, equipment, patents, and commercial and industrial trademarks.
The taxes mentioned above must be withheld by the paying party and remitted to the tax authorities by the 15th day of the month following the month of the payments to the recipients.
Contracts entered into in 2005 and subsequent years. In 2004, Law No. 60 modified the above rates for all contracts concluded in 2005 and subsequent years. The following are the rates:
- 3% of total value of construction work. If no clear split exists between services and supply, the tax is treated as income tax.
- 1% of total value of construction work. If no clear split exists between services and supply, the tax is treated as wages and salaries tax.
- 7% of total value of services provided to oil and gas companies (treated as income tax).
- 3% of total value of services provided to oil and gas companies (treated as wages and salaries tax).
- 5% of total value of other services and of fees paid for the exploitation of films, equipment, patents, trademarks and industrial and commercial names (treated as income tax).
- 2% of total value of other services and of fees paid for the exploitation of films, equipment, patents, trademarks and industrial and commercial names (treated as wages and salaries tax).
Law No. 60 of 2004 states that the taxes due must be remitted to the tax authorities within the first 15 days of the month following the month in which the payments to the recipients are made.
B. Other taxes
Property tax. Income from real property is taxed at rates ranging from 14% to 60%. The tax base is the estimated rental value, which takes into account certain factors, including the property’s construction, location and total measured area.
Other presumptive taxes on real estate are also imposed.
A property registration fee is payable for the registration of real estate on the sale, transfer, assignment or inheritance of real estate. The fee is 15% of the value of the property as estimated by the Ministry of Finance.
Inheritance and gift tax. Legislative Decree No. 56 of 2004 eliminated the inheritance tax and gift tax and imposes transference duty on donations. Transference duty is the tax imposed on capital gains derived from the transfer or ownership of property other than by sale or inheritance.
Stamp duty. Stamp duties are imposed on contracts signed by two parties or any documents that include legal obligations between two parties. Stamp duty may be imposed at a fixed rate, which varies according to the type of the transaction, or at a proportional rate based on the value of the document subject to the duty.
Stamp duty must be paid to the tax authorities within five days after the day following the date of signing the contract. Any delay is subject to a penalty equaling twice the amount of stamp duty due. The following are the rates of the stamp duty:
- Contracts that do not mention the amount: SYP 300 for each copy
- Contracts with a fixed amount: 0.4% for each copy
- Loan contracts: 0.3%
- Payment receipts: SYP 20
Air travel taxes. The following taxes are levied on air travel in Syria:
- Departure tax
- Exit tax on Syrian nationals
- Luxury tax
Departure tax. Departure tax is levied on non-Syrian passengers on international flights departing from Syrian airports. The tax is levied at a flat rate of SYP 200. Children under 10 and passengers in transit are exempt.
Exit tax. Exit tax is levied on all Syrian national passengers on international flights at a fixed rate of SYP 1,500. Children under 10 and passengers in transit are exempt.
Luxury tax. Luxury tax is levied on first class tickets bought by passengers on domestic or international flights. The tax is charged at a rate of 10% of the applicable fare.
Under Legislative Decree No. 34 of 2009, the taxes mentioned above must be added to the price of the air ticket to facilitate the exit procedures at the airport.
C. Social security
Social security contributions apply to all employees working in Syria, including expatriates, regardless of whether they are working for a local or foreign company in Syria. The contribution rates for old age, disability and death are applied to the basic salary portion of the payroll. The rates are 14% for the employer and 7% for the employee.
Employers must also pay contributions for work injuries and insurance. The rates, which are also applied to the basic salary portion of the payroll, are 3% and 0.1%, respectively.
Employers are responsible for withholding the employees’ contributions and paying the contributions on a monthly basis.
Under Law No. 34 of 2008, non-Syrian employees whose employment contracts were entered into outside Syria do not need to be registered at the Establishment of Social Security.
Double tax relief and tax treaties
Syria has entered into double tax treaties with the following countries.
Algeria
Jordan
Romania
Armenia
Korea (North)
Russian Federation
Bahrain
Kuwait
Belarus
Lebanon
Saudi Arabia
Bulgaria
Libya
Slovak Republic
Croatia
Malaysia
Sudan
Cyprus
Malta
Tunisia
Egypt
Morocco
Turkey
France
Oman
Ukraine
India
Pakistan
United Arab Emirates
Indonesia
Poland
Iran
Qatar
Yemen
Italy
Syria has entered into limited tax treaties for sea and/or air transportation with Cyprus, France, Greece, Italy and the Netherlands.
To learn more about the history, culture, economy and other information about Syria
We have been preparing US income tax returns for US Citizens and permanent residents living in Syria for over 15 years. As a US Citizen or permanent resident (green card holder) you are required to file a US return each year regardless of the fact that you file and pay taxes in your residence country. The expatriate earned income exemption ($100,800 for 2015) can only be claimed if you file a timely tax return. It is not automatic if you fail to file.
We have scores of clients located in Syria and know how to integrate your US taxes into the local income taxes you pay. Any income tax you pay there can be claimed as a dollar for dollar credit against the tax on your US return on the same income.
As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end. (You cannot file using the tax fiscal year for US tax purposes). You must pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.
There are other forms which must be filed if you have foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership. If you do not file these forms or file them late, the IRS can impose penalties of $10,000 or more per form. These penalties are due regardless of whether you owe income taxes or not.
There are certain times you may wish to make elections with respect to your Corporation or Investment Company which will give you US tax benefits. There are other situations where forming a US corporation to receive your business income may be more advantageous than using a corporation in your resident country. We can help you with these decisions.
If you are self-employed, you will have to pay US self-employment taxes (social security). If you are a bona-fide employee you do not have to worry about paying US social security on your wages earned in Syria.
We have helped hundreds of expats around the world catch up because they have failed to file US returns for many years. Unfortunately, unlike India, Canada, UK, etc. you must also file so long as you are a US citizen or resident. You can if you follow proper IRS and State Department procedures surrender your US Citizenship and therefore cut off your obligation to pay US taxes in the future. You must surrender that Citizenship for non-tax avoidance reasons and then can usually not return to the US for more than 30 days per year for the subsequent ten years.
Let us help you with your US tax returns, US tax planning and other US tax and legal concerns. Download our expat tax questionnaire or request a request a consultation by phone, skype or email