Taxes in Syria, Episode One: The Big Picture

At the heart of any country’s political economy lies its taxation system, through which governments finance their operations, redistribute wealth, and influence and redirect economic activity. Following the downfall of the Assad regime, the Minister of Finance in the former Caretaker Government formed a committee under his chairmanship, aiming to overhaul and modernize the operations of the taxation system and to propose legislative changes to amend its structure. Interim President Ahmad al-Sharaa has also highlighted the ongoing tax policy reforms aimed at fostering an attractive investment environment and creating job opportunities. The review of the tax system was not bound by a deadline, but it’s likely to take a considerable amount of time.

This series of three articles in Syria in Figures will describe and analyze the tax and fee systems, focusing on how they have evolved during the conflict to help inform future policy formation.

Before we delve into the topic, it is important to note that the distinction between taxes and fees in Syria is not often clear, as some fees function like taxes—especially in being compulsory and not tied to a direct, identifiable benefit—such as “reconstruction fees” imposed even in restaurants.

Even before the conflict, efforts to improve tax compliance were hindered by complex exemptions and preferential treatment for certain industries, weak enforcement technology, corruption, and administrative inefficiencies. During the conflict, revenues from taxes and fees fell from USD 6.3 billion in 2010 to only USD 0.6 billion in 2023, according to calculations based on the government’s end-of-year audit accessed by our advisory.

To offset the decline, the government resorted to excessive and highly inflationary money printing, shifting taxes and fees from being the primary source of state revenue—constituting 42% of total government income in 2010—to just 31% in 2023.

As shown in the chart below, there has been a consistent gap between budgeted and actual revenues, indicating a pattern of unwarranted optimism by the government and a weakened ability to forecast. Note that the apparent increase in projected revenues for 2023 reflects a budget revision under Law 33 of 2023, which raised the estimate of overall revenue to SYP 25.5 trillion, as confirmed by our review of the end-of-year audit.

However, as the chart below shows, much of the tendency to over-forecast state revenues stems from non-tax and fee sources—indicating that tax and fee revenues have comparatively been more accurately projected.

The annual state budget classifies taxes and fees as either direct or indirect. The key distinction between the two lies in who bears the cost and how the payment is made. Direct taxes and fees, such as income taxes and business licensing fees, are paid straight to the government by individuals or entities, with the financial burden falling on the payer. In contrast, indirect taxes and fees (e.g. value-added tax and import duties) are embedded in the price of goods or services and are typically collected by intermediaries, who can then transfer the cost to end users. Indirect taxes are generally easier to collect and harder to evade, which may explain the government’s increasing relative reliance on them after 2011.

As shown in the chart below, the number of tax and fee items declined from 33 in 2010 to 28 in 2024. This reduction came primarily from a drop in direct fees (from 13 to 10) and direct taxes (from 6 to 5), while some indirect taxes on produced goods were abolished. The trend suggests an overall simplification of the tax and fee code, which will be explored further in our next issue.

While the number of taxes and fees changed only slightly over time, the composition of revenues from each of them shifted considerably. The relative reliance on fees increased—from 43% of total tax and fee revenues in 2010 to 62% in 2024, according to state budgets. Furthermore, although revenues from indirect taxes and fees fell in absolute terms during the conflict, they rose as a share of total revenue—from 20% in 2010 to 53% in 2024. These shifts likely reflect both administrative convenience—fees and indirect charges are harder to evade at the point of transaction—as well as political considerations. Unlike taxes, fees can often be adjusted without parliamentary approval, and greater reliance on them may help maintain the impression that Syria imposes fewer formal taxes. These compositional changes will be examined in more detail in the next two issues of Syria in Figures.

The General Commission for Taxes and Fees, regulated by Law 41 of 2004, serves as the backbone of Syria’s tax system. The Commission is responsible for developing and implementing tax policy in line with the state’s financial and economic strategy. Its duties include drafting legislation, estimating revenues, combating tax evasion, negotiating tax treaties, and coordinating with regulatory and customs authorities to ensure enforcement. Last month, the Caretaker Government’s Minister of Finance appointed the Tax Commission’s Director, Nasser al-Abdallah, as Vice Chairman of a new committee tasked with reviewing the national tax system. However, with the formation of a new ministerial cabinet under the Interim Government last month, the review committee’s status and operations remain unclear.

Mr. Abdallah announced that the review may lead to the cancellation or amendment of several taxes—including the Martyr’s Stamp, the War Effort stamp, the Reconstruction fee, and taxes on real estate rents—some of which were introduced after 2011. A draft resolution has also proposed either suspending taxes on wages and salaries in both the public and private sectors or increasing the minimum exemption thresholds. He further noted that the Ministry is advancing digital transformation to improve tax system efficiency and service delivery. The tax inquiry system, originally introduced to detect hidden tax bases and verify submitted declarations, is now being replaced by a new Anti-Tax Evasion Department, which will use entirely different mechanisms, tools, and technologies.

As Syria moves toward post-conflict recovery, tax and fee reforms will play a critical role in shaping the future. The outcomes of these reforms carry not only economic but also social and political implications in determining who benefits and who bears the cost. Reform efforts can be broadly categorized into operational and structural initiatives.

On the operational side, several low-hanging fruits can yield immediate results. Measures such as digitization, curbing informal economic activity, and combating corruption will quickly improve compliance and revenue generation. These efforts aim to broaden the effective tax base, improving the equity of the system by ensuring that a greater share of the population contributes to public finances—without increasing the burden on existing taxpayers.

At the structural and more strategic level, however, a full redesign of the tax and fee system will affect the future course of the entire country, not only economically but socially as well. Therefore, it should be approached methodically, incorporating input from subject-matter experts, technical assistance from international organizations, and consultation with the Syrian public. A considered, inclusive, and comprehensive process is the only way to ensure a positive impact on the entire country without social and political backlash.