Explained: Real Estate and Building Plots Income Taxes

Syria’s Real Estate and Building Plots Income Tax Law, issued as part of Decree No. 53 of 2006, imposed an annual tax on real estate and buildings of all kinds, whether partially or fully constructed, for residential, commercial, or industrial purposes.

Real estate income is rental income calculated in accordance with the provisions of Decree No. 53. Building Plots (referred to in the Arabic text of the law as “al-aarsat”) are defined in the 2006 law as any plot of land set aside for construction or other similar uses and not owned by any public institution or charitable organisation. Such properties are located within the zoning plans of local administrative units. In short, the real estate and building plots income tax targets profits or income generated by real estate or land used for construction. Under Decree No. 53, the annual tax is collected once at the beginning of each year.

The 2006 law and its executive instructions set various rates for the annual tax, calculated theoretically from the supposed income each liable individual earns by charging their tenants rent. Taxes range from 3.5 percent to 60 percent of the rent allowance, according to Decree No. 53.

Under the law, certain types of properties, such as public properties, are permanently exempt from the tax.

In 2013, the Parliament passed Law No. 15, which updated the Tax. Under the new 2013 law, 10 percent of the value of such properties were added to the annual tax to be collected starting in 2014.

So-called “initial committees” are responsible for assessing the value of real estate properties and determining their proceeds in order to set the tax. The committees are formed from the various governorate and regional centres and are each headed by an employee of the Ministry of Finance’s local Financial Directorate. Members include an engineer, assistant engineer or technician from the local Cadastral Affairs office or local council, as well as an approved real estate expert. The committees publish their work in the Official Gazette after basing their appraisals on the location, surface area, and building materials of the properties to be taxed.

The taxpayer and Financial Directorates may request a review of the initial assessments within 30 days of their notification or publication, with the objection taking place before a non-judicial appeals committee formed within the relevant governorate centre. The appeals committee’s decisions are final. The Minister of Finance appoints the members of a governorate’s initial committee and appeals committee based on a proposal from that governorate’s Director of Finance.

The real estate and building plots income tax is imposed on those who use a given property that is listed within the Land Registry, as well as on the actual owner and the person in possession of any buildings constructed on a piece of publicly owned property. In areas that are not covered by the Land Registry that lists ownership and certain transactions, the tax is imposed on all people who can prove their ownership of buildings via documents accepted by the Financial Directorates. A real estate income tax document itself is not considered sufficient proof of ownership.

The value of a given person’s real estate or building plot income may be re-assessed in several different scenarios: subdividing the property, merging the property with other properties, changing the basic description/category of the property, adding the property to an approved zoning plan, or changing the official usage of the property at the wish of the tenant or owner. A general 25 percent increase or decrease in the prices of local real estate may also trigger a re-assessment.

The tax includes any uncompleted facilities used for commercial or industrial purposes. Such facilities include those that are not yet fully constructed but have a roof, walls, columns, and support pillars. Also included are any commonly used parts of buildings, such as basements, stairways, and roofs, provided that they are occupied for residential or commercial purposes.