Syria to implement VAT beginning 2009

The new date for the beginning of the implementation of the Value Added Tax in Syria is 2009, according to Mohammad Hussein, Minister of Finance.

The VAT was initially planned to be implemented at the beginning of this year but was delayed because of a lack of preparations.

The launch of the VAT is among the key priorities of the Ministry of Finance, which has to face dwindling proceeds from oil exports and from lower customs fees.

The Government’s 2008 budget projects a deficit of SYP 192 billion (USD 3.84 billion) on the back of a sharp decrease in oil revenues from SYP 246 billion in 2007 to SYP 100 billion this year, and in state-owned companies’ income, from SYP 227 billion last year to SYP 90 billion in 2008.

Mr Hussein was talking in a press conference on January 6, which was held a week after the establishment by law of a Tax Office, or Tax and Duties Authority, according to its official denomination. The Tax Office will take in charge the implementation of VAT.

According to Mr Hussein, 70 percent of all income tax revenues in Syria are currently generated by the Highest Tier of the population and companies, while the balance 30 percent is generated by the Middle and Lower Tier. As a consequence, the Tax Office will focus its activity on this higher tier. The total number of tax payers in Syria stands at 5.7 million while tax evasion is estimated at 4 percent of Gross Domestic product.

Mr Hussein also said that Treasury Bills will be launched before the end of this year. The issuance of T-Bills was made possible following a law passed last October. T-Bills will be used exclusively to finance Government investment projects, Mr Hussein said, in an attempt to allay fears that the Government will use these securities to finance its growing deficit or its subsidies schemes.