Legal Briefing- May 2017

Property

  • According to a judicial source, cases of real estate fraud in Damascus have declined by 80%. The fraudsters were targeting properties in the upscale Damascus district of Malki where many homes are owned by expatriate Syrians who live overseas, especially those who left the country due to the current conflict. The fraudsters would sell one property to more than one buyer. They would also sell a property for less than its market value and take advantage of expatriates who just wanted to sell and settle abroad. A number of expatriates who were victims of these fraudulent practices began filing claims to nullify the illegal real estate transactions. The criminals in question were connected to a network engaged in illegal real estate transactions throughout the Syrian provinces. The decrease in fraudulent activities was due to an increased awareness of the practice by the concerned authorities. According to a judicial source in 2016, 150 lawsuits are filed a month, half of which relate to fraudulent real estate transactions.
  • The Council of Ministers set the new requirements and conditions for granting building permits.

Taxation

  • The Ministry of Finance clarified that the new Real Estate Sales Tax Bill will not impose any new taxes but rather correct current ones in the 2005 Law. The Bill is motivated by the need to use actual market valuations, not predetermined and outdated real estate figures. The current Law imposes nominal fees for real estate sales taxes that nowhere near resemble what they should be in reality. The Public Treasury has been losing out on much needed revenue due to the outdated Real Estate Sales Tax Law.
  • The Real Estate Sales Tax Bill seeks to divide regions into three categories of good, medium and weak with further subdivisions to determine real estate prices. The prices will then be used to calculate the real estate sales tax that is payable. The tax is expected to be one percent of the market valuations. Foreign exchange rate fluctuations and their effects on property prices will be regulated when necessary by the government if there is instability in the markets. Furthermore, automated data will be a new feature of the tax regime. It will have an emphasis on updated and modern technological advances.
  • Holding companies that engage in profit-making activities will also be subject to the real estate sales tax. However, holding companies that merely own shares in subsidiaries and only make profits because of capital contributions to subsidiaries will be exempt. In addition, holding companies that engage in profit-making activities may be exempted from the tax according to their specific sector, if applicable.
  • The real estate sales tax will not be imposed on real estate developers who are subject to the Income Tax Law as per the Property Investment Law.
  • There are fears that the new Real Estate Sales Tax Bill will increase real estate prices, corruption and informal settlements.
  • Legislative Decree 19/2017 makes some revisions to the Income Tax Law with respect to touristic facilities.
  • The government continues to pass legislation to stimulate industrial production and the new Customs Bill should be enacted soon. The new Customs Bill, once passed, will have a modern look to it especially after the deletion of 50 articles.
  • The Council of Ministers discussed a bill reducing customs duties on raw materials and production requirements for local industries by 50%. The bill specifically deals with the importation of machinery and production lines for the industrial sector. As part of these plans, a measure to exempt consumption taxes on the exportation of manufactured goods was also offered. The bill was then referred to the concerned authorities for issuance.
  • The Directorate of Finance in Damascus is pursuing commercial companies that are evading their tax liabilities.
  • Unverified reports suggested that the Ministry of Finance is withdrawing limited liability protections for limited liability companies whenever their shareholders are personally indebted.
  • Aleppo’s merchants called for exemptions on tax and fee obligations accumulated during the current conflict.

Finance

  • The Minister of Justice discussed with managers of public and private banks and the Governor of the Central Bank ways to treat non-performing loans.

Commerce

  • The Minister of Economy and Foreign Trade studied a request to expand the list of permissible imports. Generally, the Ministry permits the importation of goods that are not produced locally in Syria.
  • The Ministry of Internal Trade and Consumer Protection amended Article 3 of Regulation 2072 concerning the preparation of a statement of costs of local and imported garments.
  • The Ministry of Internal Trade and Consumer Protection received an unprecedented amount of objections to the Draft Rules of Procedure of the Federation of Syrian Chambers of Commerce. The objections covered 70% of the paragraphs of the Rules of Procedure.

Investments

  • The Minister of Internal Trade and Consumer Protection unveiled to the Economic Committee a bill requiring any Arab investor to be guaranteed by a Syrian sponsor. Thus, the government is studying proposals to impose the ‘Gulf Sponsorship System’ on Arab investors who may consider investing in Syria in the future. As of now, Lebanese investors would be mainly affected by this proposal since they are the main ones investing in Syria by establishing dormant companies to be operated in the future.

Maritime

  • Legislative Decree 18/2017 amends Law 27/2008 with respect to shipping fees.

Tourism

  • Contrary to their licenses issued by the Ministry of Tourism, some restaurants in Damascus are converting their premises to nightclubs. Nightclubs are subject to a 20% consumption tax while restaurants pay five percent. Thus, the remaining 15% is evaded. Businesses are responsible for collecting the consumption tax and forwarding it to the authorities but some are falsifying records to avoid paying.

Public Procurement

  • Legislative Decree 21/2017 introduces some procedural adjustments to the Public-Private Partnership Law.

Employment

  • The government continues to study a bill regulating the recruitment of public sector employees and their level of qualification.
  • Legislative Decree 22/2017 amends the Martyrs’ Families Employment Law. According to the Law, 50% of job vacancies in the public sector are reserved for the families of martyrs.

Media

  • There was continued controversy over a statement from the Ministry of Justice that suggested that journalists could face legal challenges if their articles were deemed harmful to Syria. The statement was a response to a query from the Prime Minister. The Minister of Justice asserted that it was misinterpreted and that nobody can challenge the constitutional protections afforded to the press.

Local Councils

  • President Bashar Al-Assad dissolved Homs City Council by virtue of Decree 129/2017 in accordance with the Local Administration Law.

Judiciary

  • Judicial reforms are to be carried out throughout the Syrian provinces with Damascus being the first. Changes within the Ministry of Justice will reach a number of public defenders throughout the provinces. The Ministry itself will face structural and administrative changes in line with a new systematic reorganization.
  • Judicial restructuring is underway in Syria in a bid to speed up the litigation of lawsuits help up by old cases. A personnel shift is also part of the strategy. The restructuring coincides with the appointment of Hisham Al-Shaar, a judge, as the new Minister of Justice.
  • The civil courts are expected to return to the Palace of Justice in Old Damascus in the coming months following renovation works.
  • New customs courts were established in Hama province by virtue of Decree 139/2017.
  • Decree 143/2017 carries out a court structuring plan in Jableh in Lattakia province.
  • There are calls to develop a judiciary capable of tacking cybercrimes since there is a lack of training in this sector. Judges, investigative judges and prosecutors are needed to deal specifically with cybercrimes.
  • Certain statements suggested that the courts are applying repealed legislation whenever new laws are silent on a previously regulated provision.

Syndicates

  • Customs agents and customs clearance officials proposed to the government to form a committee headed by the Minister of Finance to prepare a bill for a syndicate. If established, the syndicate would look after the interests of customs agents and customs clearance officials.

Military

  • President Bashar Al-Assad issued Decree 128/2017, which deals with situations involving students who graduated high school between 2011 and 2016 and have outstanding military service obligations. The Decree applies to students obliged to undertake military service between 2011 and 2016 and who have not been enrolled in university during this time. Military service may either be mandatory or reservist. As a result, these high school graduates are now entitled to enroll in university in a specialization of their choice as long as they obtained the required grades. Furthermore, they must enroll in the academic year following their discharge from the Armed Forces. The Decree applies to anyone else discharged from the Armed Forces before the issuance of this Decree and as long as they meet its two conditions.
  • A group of activists called on the government to study legislation to consider Syrian women above 18 years of age for active military duty.
  • A government study is looking at raising license fees for weapons of war and hunting rifles.

Immigration

  • The Council of Ministers studied a bill determining the fees for Syrian consulates overseas and collecting them in foreign currencies. It was then referred to the concerned authorities.
  • The Director of Immigration and Passports confirmed that all Syrian consulates stopped extending the validity of passports, not just in Jordan and Turkey. The decision was taken due to an increased demand for passport extensions, a lack of recognition by foreign passport authorities of Syrian travel documents and as a result of cases of forgeries. The renewals of passports are not affected by this decision as it only targets extensions of passports. Passports can still be renewed at any consulate, including by Syrians who left Syria illegally. Nevertheless, it is significantly cheaper to renew a passport in Syria as opposed to a consulate abroad. In the absence of Syrian diplomatic missions overseas, Syrians can grant a power of attorney to a family member or another person inside Syria to obtain the passport.

Family Law

  • Fraudulent marital contracts became a major problem in Syria due to the current crisis. Although there are a variety of reasons, fraudulent marriages are also taking place due to stolen identity cards which are used as fake ones. As a result, courts then have to nullify the marriage. Such problems are prevalent in conflict areas where the state’s authority along with law and order has collapsed.
  • Due to the war and emigration, many young Syrians are getting married through powers of attorney according to a leading Sharia judge. The marital contracts concluded by proxies through powers of attorney are permissible under the Personal Status Law. Any Syrian citizen inside or outside the country can authorize another individual through a power of attorney to conclude a marital contract. Syrians overseas can grant powers of attorney at their nearest Syrian consulate, which then has to be ratified by Syria’s Ministry of Foreign Affairs and Expatriates. After the power of attorney is ratified by the Ministry, the marital contract can be registered with the Sharia Court. It is important to bear in mind that Christians, Druze and other religious sects have their own spiritual courts for personal status affairs.
  • There are calls to speed up the issuance of marriage licenses to military personnel because sometimes it is taking a full year. Such delays cause legal problems if marriages then have to be concluded customarily and children are born before marriage licenses are issued. Pregnancy or childbirth before the religious courts register the marriage and issue the license lead to legal complications. Couples are being advised against opting for customary marriages, which are difficult to prove and allow husbands to deny the marriage exists. It is therefore advisable to opt for court-registered marriages.
  • A new marriage bill, which is causing a stir among Syrians, could see customary marriages given more importance under Syrian law. The amendments to the Personal Status Law are to consider customary marriages as a suitable alternative to the current situation where court validation is difficult. The problem is that the ongoing conflict has made it difficult for displaced Syrians and others to access all official documents to get married under the law and pursue court validation. Marriages have to be validated before the Sharia Court for followers of the Muslim faith and the spiritual courts for other religious groups. Hence, customary marriages are seen as a remedy to solve this problem. They are not illegal but the only difference is that they are not validated by the courts. Customary marriages concluded outside of the courts or without official certification may require parental consent and the presence of witnesses. Some jurists even say that the current Personal Status Law violates the secular nature of the country and the state.
  • Conflict zones are experiencing problems associated with the loss of civil status documents, which are making it difficult to prove an individual’s identity. Marital documents are also being lost in conflict areas thereby making it difficult to prove that a marriage exists in the eyes of the law.
  • Proposed amendments to the Personal Status Law touch on marriage, divorce, custody, maintenance, inheritance and consent for children to travel. The proposals were sent to the People’s Assembly for consideration but no response was yet given. The current Law is considered outdated and the proposed amendments seek to achieve a balance between men, women and children.
  • The civil status of children born in areas outside of government control remains uncertain.

Religion

  • Pope Francis accepted the resignation of the Melkite Greek Patriarch of Antioch, Gregory III Laham, from his pastoral office.

Government

  • Legislative Decree 20/2017 establishes a new system for the Rules of Procedure of the Council of Ministers.

Constitution

  • Constitutional experts from the Syrian delegation met with representatives of UN Special Envoy for Syria Staffan De Mistura in Geneva. All parties involved in Syria’s conflict agreed to participate in expert talks in order to prepare the ground for a new constitution. The focus was on constitutional and legal issues to avoid a vacuum in Syria before, during or after any potential transitional political process. According to De Mistura, the UN is not seeking to draft a new constitution for Syria as such a process must remain the right of the Syrian people. Rather, he said that they are laying the foundations for the time when the Syrians can do so.

International

  • The European Union extended its sanctions regime against Syria by one year until June 1, 2018 through Decision (CFSP) 2017/917 taken by the European Council on May 29th. The European Council also imposed sanctions against three Syrian ministers and updated certain existing entries previously sanctioned. The European Union sanctions against Syria include embargoes on arms, oil, restrictions on certain investments and technological exports, asset freezes and so forth.
  • The Trump Administration extended US sanctions against Syria provided for in Executive Order 13338/2004, which blocks the property of certain designated Syrians and prohibits the exportation or re-exportation of certain goods to Syria, for another year. The additional sanctions by the US against Syria are not significant in terms of substance but lead to an increase in compliance costs for businesses. Such an increase means businesses shy away from doing business with Syria even if the transaction in question is not affected by the sanctions.
  • The US also sanctioned five Syrian individuals and five companies, including the Cham Islamic Bank.
  • After the Federal Court of Appeal in the US upheld the block on the Trump travel ban affecting Syrian nationals, the case was headed for the Supreme Court.
  • Israeli authorities issued a 14-year prison term against Syrian detainee Sudqi Al-Maqt.
  • A former Syrian rebel leader faced trial in Germany for war crimes perpetrated in the course of the Syrian conflict against civilians.

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