Finance minister says no timetable set for VAT

Hussein said in press statements that the tax would not be implemented 'before 2010' and that the Ministry was 'thinking' of exempting a wide variety of products including food, drugs, health services, education, real estate and banking operations.

Hussein also said that the implementation of VAT required a receptive environment and in particular the introduction of invoicing in all trade activities.

'Without invoicing there will be no VAT,' Hussein said. 'We are not committed to any specific timetable,' he added.

The launch of VAT has been delayed several times. Earlier this year, Hussein had said that the tax would be launched in 2009 with a flat rate of 10%.

The rate, scope and deadline for the implementation of the tax have been debated for many years in Syria. Although its implementation is considered a necessity, many have argued that Syria lacked the proper environment, in particular with regards to the lack of use of invoices in daily trade operations, to implement the tax.

Other obstacles include the lack of trained personal in the Tax office as a well as an economy that is over-reliant on cash.

The Syrian government is searching for new sources of income as revenues from oil are falling rapidly and the budget deficit is increasing regularly. Hussein said that VAT would replace 12 other taxes currently imposed, including the consumers tax.

The International Monetary Fund has regularly called on the Syrian Government to rapidly apply VAT 'with a single rate and few exemptions'. 'A broad-based value-added tax would have a strong revenue raising potential with only a limited impact on production and investment,' the IMF also said in its 2007 report under Article IV of the IMF's Articles of Agreement.