INTRODUCTION

Out of the desire to direct the surplus of funds towards development and production, and within the framework of all potentials available to the private and joint sectors and encouraging them to build up the economic and development foundation of the country, and in harmony with the attitudes adopted by many countries in the world to create a convenient investment atmosphere that helps attract local and foreign capitals and invest them in channels of production that are bound to yield good and prosperity to the country, the unified law of investment was issued. It aims at encouraging Syrian Arab citizens, both residents and Arab and foreign nationals to invest their funds in development projects in the country, thus contributing to push ahead the economic development march of the country.

Following is the full text of Law No. (10) of 4 May 1991 and its amendments as per the Legislative Decree No.7 of 13 May 2000, issued in this regard:

Article 1:

This law bears effects on the money invested by Syrian Arab citizens, both residents and expatriates, and citizens of Arab and foreign countries, in investment projects within the framework of the State general socio-economic development plans and the general policy of the State.

Article 2:

Chapter I - Fields of Investment

Article 3:

Rules of this law shall be applied to economic and social development projects approved by the council in the following fields:

a.        Agricultural projects, both vegetation and livestock, including various agricultural products manufacturing projects.

b.        Industrial projects allowed to both private and joint sectors.

c.        transport projects

d.        Projects approved by the council to be governed by the rules of this law.

Article 4:

When approving projects, the following points shall be taken into consideration:

a.        to be in line with the aims of the State development plans

b.        to use as much as possible the local resources available for the national economy

c.        to contribute to increasing the gross national product and employment opportunities

d.        to lead to increasing exports and rationalizing imports

e.        To use up-to-date machines and technologies which, are suitable for the national economy needs.

f.         that the fixed assets which would be invested in the project, including machines, tools, equipment, apparatus, means of transport (non-tourist) and all other production means definitively imported to be used exclusively in the project, shall not be less than ten million Syrian Pounds. This amount can be modified by a decision passed by the Council of Ministers.

Chapter II - The Higher Council of Investment

Article 5:

a.        A higher council of investment shall be founded, comprising:

·         The Prime Minister as chairman

·         The Deputy Prime Minister for Economic Affairs as vice- chairman.

·         The Deputy Prime Minister for Services Affairs

·         The Minister of Agriculture and Agrarian Reform

·         The Minister of Transport

·         The Minister of Supply and Internal Trade

·         The Minister of Economy and Foreign Trade

·         The Minister of Industry

·         The Minister of State for Planning Affairs,

·         The Minister of Finance as members,

·         The Director of Investment Bureau as secretary

b.        The chairman of the council may invite to the council’s meetings experts and other people concerned with the subjects under discussion by the council, provided that they have no right to vote.

Article 6:

The council shall have the following powers:

a.        Approving for the natural and legal persons to initiate development projects governed by the rules of this law and the competent authority charge shall subsequently issue the relevant licenses.

b.        Specifying the state’s contribution to the capitals of the joint-stock companies.

c.        Issuing licenses for setting up joint stock, share holding and limited liability companies governed by the rules of paragraph (a) of this article, as per a decision passed by the prime minister.

d.        Entrusting concerned authorities with preparing initial economic feasibility studies for the development projects falling within the fields specified by this law.

e.        Adopting the assessment of foreign funds, prepared by the competent authority.

f.         To license for the Arab and foreign investor to own and lease the lands and real estates necessary for the establishment of the investment projects or expansion thereof within the limits of the area and period of lease estimated in light of the actual need of the project and excess of the ownership ceiling defined in the laws and regulations in force according to the proposal of the concerned authority contrary to any text in force.

Upon the cancellation of the project or its final liquidation, the investor shall have to relinquish to others, according to the laws and regulations in force, his property in excess of the ceiling defused legally. In this case, the Arab and foreign investor shall have to relinquish to others his ownership of the lands of the project and the buildings constructed thereon provided that he obtains a prior approval from the council if the relinquishment is for the interest of a non-Syrian person, period of two years shall be defined for this execution of said waiver process.

Article 7:

The council shall convene at a call by its chairman once every two months, at least, and whenever necessary.

Article 8:

By a decision by the prime minister, an investment bureau affiliated to the Deputy Prime Minister for Economic Affairs shall be set up and assigned with preparing and referring to the council the projects submitted to it by the concerned authorities. It shall also be assigned with following upon the implementation of decisions passed by the council, receiving the investor’s complaints and working to settle them. It shall also discharge all tasks entrusted to it by the council.

Article 9:

All statements and special data offered by the investors on their projects shall not be for publication or circulation

Chapter III - Exemptions, privileges and facilities

Article 10:

According to rules of this law, all projects approved enjoy exemptions, privileges, facilities and guarantees.

Article 11:

Projects approved to be set up according to the rules of this law may import:

a.        All requirements of machines, vehicles, apparatus, equipment, means of transport, buses and mini-buses, that are needed to serve the projects and other materials necessary for setting up, expanding and developing these projects.

b.        Cars.

c.        All materials and requirements necessary for running these projects.

The competent authority determines the quantity and sort of various means of transport mentioned in paragraphs (a) and (b) of this article and according to the rules determined by the council.
The import processes mentioned in the previous paragraphs are carried out irrespective of the rules prohibiting and restricting imports and irrespective of the rules of importing directly from the country of origin and the rules of hard currency regulations.

Article 12:

a.        Imports quoted in paragraph (a) of Article (11) of this law are exempted from all taxes and fiscal stamp, local and customs duties and otherwise, provided that they are exclusively used to serve the goals of the project, and that they cannot be relinquished to a third party except by the council’s consent and after paying the taxes and duties levied on them in their present condition.

b.        The project’s imports specified in paragraphs (b) and (c) of Article (11) of this law cannot be relinquished or used in service of other purposes than the project, except by an approval by the council.

Article 13:

a.        Joint-stock companies approved according to the rules of this law, together with their shares, funds, profits and dividends, are exempted from all taxes levied on income and real estates owned by the companies to achieve their purposes and fulfill their tasks, for seven years right from the date of actual production or investment according to the nature of the project.

b.        Projects related to individuals or non-joint stock companies licensed according to rules of this law, together with their profits and dividends, shall be exempted from all taxes imposed on income and from the real-estate taxes on the building owned for realizing the project’s objectives and tasks, for five years right from the date of actual production or investment, according to the nature of the project.

c.        The investment project licensed according to the provisions of this law, after the elapse of the two exemption periods stipulated in paragraphs a & b of this article, shall be subject to the taxation exemptions and other privileges stipulated in the laws and regulations relevant thereto which are applied to the non-licensed similar projects according to the provisions of this law, namely the following:

·         Provisions of the Legislative Decree No. 174 of 16 Feb. 1952# that exempt the natural persons and legal persons who deal with the marine transportation from the tax imposed on income of profits.

·         Paragraph No. /3/ of Article /4/ of the Legislative Decree No. 85 for the year 1949 and its amendments applied to the establishments, companies and the agriculture projects.

Article 14:

a.        In case the time spent on establishing the project approved according to the rules of this law exceeds three years, then this period shall be deducted from the duration of tax exemption quoted in paragraphs (a) and (b) of Article (13) of this law.

b.        The Higher Investment Council -in exceptional cases up to its discretion- may grant the investment projects a period or additional consecutive periods so that the initiation period of the project licensed under this law provisions does not exceed five years. Not be deducted from the original tax exemption period stipulated in Paragraph "a" & "b" of Article /13/ of this law.

Article 15:

By a decision from the Council, an additional exemption period shall be added to the two-tax exemption periods stipulated in paragraph. A& B of Article /13/ of this law for the new project that will be licensed by the Council according to the provisions of this law as follows:

a.        Two years if the total commodity or service project exports, the value of which actually transferred to SAR, whether in cash or in kind, exceeds 50% according to the currency regulations in force, of the total production value during the original exemption period.

b.        Two years if the project is one deemed by the Council that it is of basic importance to the national economy in light of its capital investments or the extent of its contribution to the development of the national product, export promotion, increasing work opportunities and its employment of a high standard of the scientific technology and technical one, or its contribution in the maintenance of environment as maritime transport projects, heavy industries, fine instruments of high technology, fertilizers, etc.

c.        Two years if the industrial or agricultural investment project is established in one of the developing governorates: Raqqa, Hassakah, Deir Ez-Zor.

Article 16:

a.        In addition to the facilities given by the rules and regulations in force on foreign currencies, the investor may open in favour of his project, which is approved according to the rules of this law, an account in foreign currency at the Commercial Bank of Syria, recording on the credit side:

1.        Payments made 100% in foreign currencies of the project’s capital and of the loans granted to the project in foreign currencies.

2.        75% of the total foreign currencies released from the revenues of exports and services of the project.
On the debit side of the afore- mentioned account, are recorded funds necessary for covering the project’s liabilities, requirements and needs of foreign currencies, including the payments allowed to be transferred to the favor of Syrian expatriates, citizens of Arab and foreign countries and non-Syrian persons or the like, working in the project, according to rules of this law.

b.        Regardless of any text in force, the investor may use his foreign currency funds in financing projects licensed to be set up according to the rules of this law, or contribute to the capital or buy shares of these projects.

c.        It shall be permissible, by a decision from the council, to exceed the percentage allowed for the exporter to retain from the outcome of foreign currencies generated from the export returns according to foreign currency regulations in force.

d.        It shall be permissible, by a decision from the council, according to the requirements of the project’s nature of activity, to allow the companies and projects licensed under this law to open banking accounts abroad to secure their requirements, settle their obligations and collect their dues provided that the amounts deposited in these accounts do not exceed 50% of the capital paid in foreign currency.

e.        It shall be permissible, by a decision from the council, to allow the projects and companies licensed under this law provisions to transfer upon need part of their assets in foreign currencies deposited duly at the Syrian banks to the Syrian currency to cover their needs and local liabilities through these banks at the prevailing exchange rate in the neighboring markets.

Article 17:

a.        The Bank shall put the investor’s funds deposited at it according to the rules of paragraph (a) of Article (16) of this law at the disposal and at the request of the investor, and the Bank shall take necessary procedures to achieve this.

b.        The Bank shall calculate interest for the foreign currency deposited at it in favor of the project’s account and in harmony with the current interest rates.

Article 18:

Investor may borrow local currency from the state’s banks in favour of his project and against guarantees of his own funds according to the rules in force at these banks.

Chapter IV - Joint – Ventures

Article 19:

a.        The joint projects licensed under this law, in which the public sector contributes by a percentage not less than 25% of their capital, shall take the form of a closed shareholding company or a company of limited liability. It shall be permissible when needed, upon a decision from the Council, to have the public sector participation either in cash, or in kind in the form of real estates, accessories, and equipment, new or second hand machinery.

b.        The founders shall set the charter of the joint company in a way consistent with the nature of its work and form of its structure. It shall he permissible to specify in this charter the nationality of the chairman, and board members, their number, ages, their bonuses, remuneration, method of their election or recruitment, ratio of the non-Syrian representation in the board of directors, mechanism of work in the board, defining the company’s capital, value of the share in the Syrian currency and its equivalent in foreign currency without abidance by the laws and regulations in force namely the Trade Law No. 149 for the year 1949. This charter shall be issued by a decision from the premier after the council’s approval thereof.

c.        It shall be permissible to the council, by a decision therefrom, to apply the provision of paragraph (b) of this Article on the shareholding or limited liability companies which are non-joint and crated under this law to execute projects licensed according to its provisions, in light of their importance in terms of its various objectives, projects, volume of their capital or the nationality of the founders.

Article 20:

a.        The joint-stock company will have a board of directors in which shareholders are represented according to the percentage of their subscription in the company’s capital; the concerned authority shall name the public sector representatives at the board of directors at the same percentage of this sector’s share in the capital.

b.        The board of directors shall appoint the company’s director-general, who cannot hold his post together with the chairmanship or membership of the board of directors.

Article 21:

a.        With exception from the rules of Law No. 134 of 1958 and the Legislative Decree No. 49 of 1962 and their amendments, the board of directors shall draw out the company’s personnel bylaws taking into account the rules of the Labour Law No. 91 of 1959 and its amendments. This bylaw is issued by a decision by the prime minister.

b.        The board of directors shall issue the financial bylaws and the accounting system for the company, according to the relevant models prepared by the minister of finance.

c.        The company’s other regulations shall be issued by a decision by the board of directors.

Article 22:

a.        The joint companies licensed under this law shall be exempted from the stamp fee due on the issue of the shares according to the provisions of Law No. 15 for 1993.

b.        The new non-joint closed shareholding companies that launch their shares for the public writing by a percentage of not less than 50% of their shares, which will be licensed under this law, shall be exempted from the stamp fee due on the issue of their shares according to Law No. 15 for 1993.

c.        The holding companies that launch stocks of their projects and companies for the public writing at the ratio of not less than 50% of their stocks and that will be licensed under this law, shall be exempted from the stamp fee due on the issue of their stocks according to the provisions of Law No. 15 for 1993.

Chapter V - External Funds

Article 23:

External funds shall include:

a.        Foreign currency transferred from abroad by Syrian citizens, Arabs or foreigners through Syrian Bank or in a way approved by the Foreign Currency Bureau.

b.        Machines, vehicles, equipment, means of transport, buses, mini-buses, and materials necessary for setting up or expanding, renewing or developing these projects, as well as materials imported from abroad, necessary for operating these projects.

c.        Profits, revenues and reserves realized from the investment of the external funds in investment projects, if they were added to the capitals of these projects or were invested in other projects approved according to the rules of this law.

d.        Moral rights utilized in projects, as well as patent rights and trade marks registered in a member state of the international federation for industrial property, or according to the international rules of registration included in international agreements concluded in this regard.

Article 24:

a.        Investors of Syrian expatriates and citizens of the Arab and foreign countries, after the elapse of five years of project investment, shall be permitted to retransfer the value of their net share in the project in foreign currency abroad, on basis of the actual project value on the date of relinquishment according to the executive instructions issued by council in this respect.

b.        External funds may be re-transferred abroad after six months from their entry and in the same way as they were brought in, should any difficulties or any circumstances beyond the control of the investor, and at the council discretion, stand hindrance against the investment of these funds. The council, in special cases, may approve the re-transfer abroad of external funds without consideration of the aforementioned period of time.

c.        Profits and revenues realized annually by the investment of the external funds may be transferred abroad according to the rules of this law.

Article 25:

According to rules of Article (23) of this law, the Central Bank of Syria shall allow the transfer abroad of the external funds invested in the project, together with the profits and revenues, in the same currencies brought in, or in any other transferable currency.

Article 26:

a.        Projects and investments licensed under the provisions of this law shall enjoy non-confiscation, expropriation or limitations in the disposal of the investment ownership or its returns unless it is for the purpose of the public interest for a fair indemnity. It shall also be impermissible to put them under seizure except by a jurisdictional decision. Disputes in all of these cases shall be settled by resorting to the competent Syrian jurisdiction.

b.        Investment disputes between investors of Arab and foreign countries citizens whose projects are covered under the provisions of this law and the public Syrian bodies and institutions shall be settled according to the following:

·         Through amicable solution

·         Should both parties fail to reach an amicable solution within six months of the data of submitting a written notice for the amicable settlement by either parties of the dispute, either of them shall have the right to resort to one of the following methods:

·         Resort to arbitration

·         Resort to the Syrian jurisdiction

·         Resort to Arab investment court formed under the corporate Agreement for the Investment of Arab Capitals in the Arab countries in 1980.

·         Alternatively, that dispute is settled according to the provisions of Investment Protection and Guarantee Agreement concluded between S.A.R. and country of the investor.

c.        Investors of the Arab or foreign countries’ citizens may insure their money invested in the approved projects with the Arab Establishment for Guarantee of Investment or with any other establishment through the approval of the competent authority.

Chapter VI – General Rules

Article 27:

a.        Investor shall apply to the competent ministry for approval of his project and get it covered under the rules of this law. Papers and documents that indicate the prerequisites, elements, aims of the project, its economic feasibility and the legal form it will take, shall accompany application form.

b.        The competent ministry shall study the project, give its opinion about it and refer it to the council within a period of 30 days from the date of application.

c.        The council’s decision on the project shall be issued within 30 days as of the application receipt from the competent authority.

d.        The council may cancel the decision of approval, if the project operator fails to take serious measures to initiate his project within one-year period from the date of issuance of decision of licensing, unless there are justifying reasons accepted by the council to extend the implementation period.

Article 28:

The operator of the approved project shall have to:

1.        Keep trade books stipulated as per the commercial law.

2.        Present an annual sheet and a statement of profit and loss ratified by a legal accountant, within a four- month period from the end of the fiscal year of the project.

3.        Keep a special register in which all details relating to the project funds, which, as per the rules of this law, enjoy exemptions, privileges or facilities, are taken down, together with the movement of these funds and competent actions taken thereon.

4.        At the request of the council and the concerned authority, the investor shall present all data and statements about the project.

Article 29:

By a decision taken by it, the council may suspend the validity of exemptions, privileges and facilities given to the project, wholly or partially, in case the project operator violates the rules of Article (28) of this law, and until these rules are implemented.

Article 30:

a.        Customs fees and fines, according to customs rules and regulations in force, shall be imposed on the project in case the materials mentioned in Article (11) of this law are used to serve purposes other than the project itself or were abandoned to a third party without the council’s consent.

b.        In case the offence quoted in the previous paragraph is repeated, the council may cease the project’s enjoyment of the exemptions, facilities and privileges specified in this law.

Article 31:

It shall be permissible, by a decision from the council, to grant the privileges and facilities stipulated in this law in the exemptions from the taxes and fees relieving to any of the projects existing prior to its date of effectiveness or those that are established after date of effectiveness and which are not licensed under it. All commitments stipulated therein shall be applicable to it including the tourist projects and Article /34/ of this law shall be considered amended ipso facto, in line with the provisions of this article.

Article 32:

In case the ownership of projects approved is transferred, wholly, or partially, to a new owner, then the new proprietor shall replace the old one in rights, obligations and duties he had to fulfill as per the rules of this law and the regulations and instructions issued in this regard. Capital profits ensued by the sale of the fixed assets are subject to profit income tax according to rules and regulations in force.

Article 33:

Rules of the Legislative Decree No. 10 of 1986 regarding joint- stock agricultural companies shall continue to be in force.

Article 34:

Tourist projects are governed by the rules and regulations in force and relating to them.

Article 35:

Rules of the Legislative Law No. 348 of 1969 shall remain in force as regards the projects affected by it before this law is put in effect.

Article 36:

Projects approved shall be subject to the rules of commercial law No. 149 of 1949 and its amendments, if these rules are not in contradiction with the rules of this law.

Article 37:

Experts and technicians of Arab and foreign nationals working in any of the approved projects are allowed to transfer abroad in foreign currencies 50% of their net wages, salaries, remunerations and 100% of their compensations at the end of their services.

Article 38:

The prime minister, chairman of the higher council of investment, shall issue the instructions necessary for the implementation of the rules of this law.

Article 39:

a.        The holding companies shall be added to the companies stipulated in the trade law. They shall be subject to the provisions applicable to the closed shareholding companies stipulated in said law, provisions of the amended article /19/ according to this law and provisions of article /21/ of Law No.10 for 1991.

b.        Projects created by the holding companies stated in paragraph. (a) of this article or in which they share in their capital by not less than 51% may be covered by Law No. 10 for 1991and according to its provisions, they shall also be subject to the provisions of paragraph (b) of Article 19, Article 21 of Law No. 10 for 1991.

c.        The license establishing these companies shall be issued through a decision from the premier.

d.        Net profits registered to the accounts of the holding companies from their newly created projects or from the companies they are contributing therein according to the provisions of this article shall not be subject to the tax of industrial profits, commercial and non-commercial profits.

Article 40:

a.        Provisions of items (1, 2, 3, 5, 8, 9, and 10) of first article of this law shall be applicable to the agricultural, industrial and marine transport investment projects licensed or shall be licensed under Law No. 10 for 1991.

b.        Provisions of the two items (4&7) of article one of this law shall be applicable to the new projects that will be licensed by the council as of the enforcement date of this law.

Article 41:

a.        Ratio of income tax on net profit realized by the shareholding companies that announce their shares for general writing in the private and joint sector that have their headquarters in Syria for all activities shall be determined for 25% inclusive contribution in the military effort. This tax shall be excluded from the addition to the interest of local administration.
Provisions of article 3 of Law No. 20 of 6 July 1991 concerning the definition of income tax ratio on profit of said companies shall be definitely amended according to the provisions of this article.

b.        Provisions of paragraph (a) of this article shall be applicable as of tax impositions of 2000 turnover.

Article 42:

This law shall he published in the Official Gazette.

13/05/2000

President of the Republic

Hafez al- Assad

Amendments and Ministerial Decisions

 Decision No.6423 Executive Instructions of Law No. 10 for 1991
amended as per Legislative Decree No. 7 for the year 2000