Doing Business In... 2021

Last Updated July 13, 2021


Law and Practice


Sarkis & Associates was established in 1960 and is one of the oldest and largest integrated law firms in Syria, providing a comprehensive range of specialist legal and consulting services to meet the needs of both domestic and international clients. The firm’s broad-based practice includes banking and financial regulation, commercial arbitration, energy, gas and oil-related projects, customs and corporate law, foreign investment, transportation and aviation, constitutional and administrative law, and telecommunications. The firm has also established a wide network of local, regional and international firms/lawyers for handling local matters under the direct supervision of the Damascus offices.

Syria has a civil law legal system, whereby Syrian law derives basically from the French Civil Code and from Islamic jurisprudence, as a second level. The Syrian judicial system distinguishes between ordinary jurisdiction and administrative jurisdiction.

Ordinary jurisdiction consists of civil and criminal courts of first instance, courts of appeal, distributed in all governorates in Syria, and the Court of Cassation, with its seat in Damascus. Legal proceedings at the ordinary courts are governed by the Syrian Codes of Civil Procedure and Criminal Procedure, and the Judicial Authority Law.

The administrative jurisdiction is represented by the Council of State, which is a two-tier judicial body established by Law No 55/1959. The first-instance court within the Council of State is the Administrative Court, the decisions of which are appealed for final judicial determination to the High Administrative Court, equivalent to the Court of Cassation in administrative law matters. The Council of State also serves as an advisory body to public sector bodies.

In principle, foreign investments do not require approval from the authorities, unless they are interested in obtaining an investment licence under the applicable investment promotion laws or in the event the investment is made in a regulated sector.

Investment Licences

Investment licences are special licences granted by application to the relevant investment authority that entitle the investor to certain incentives and benefits not otherwise available to non-licensed investments.

Syria has adopted this policy of promoting foreign direct investment since the early 1990s with the enactment of the famous Investment Law No 10, which granted generous tax and duty incentives to licensed investment projects as well as easing foreign control restrictions. Law No 10 was replaced by Law 8 in 2007, which applied to all sectors equally, while other sector-specific investment laws, including tourism and real estate, were also enacted in this period. These were all recently replaced by Law 18 of 2021 that repealed Investment Law 8/2007 and tourism sector investment regulations and is applicable across all sectors, except the banking and financial sectors.

Investment in Regulated Sectors

On the other hand, foreign investments in the banking and financial sectors regulated by the Central Bank of Syria, the Syrian Insurance Supervisory Commission or the Syrian Commission on Financial Markets and Securities (SCFMS) require prior approval from the Cabinet pursuant to the recommendation of the relevant regulator and are subject to foreign ownership ceilings and due diligence requirements.

As mentioned earlier, beyond investing in a regulated sector or seeking a special investment licence to benefit from incentives, no regulatory approvals are needed for foreign investors. There are also no restrictions applicable to foreign ownership in non-regulated sectors, where foreign investors can fully own their investment projects without ownership ceilings or a need for a local sponsor.

However, if an investor wishes to benefit from the incentives granted by the investment promotion law, an application must be made to the Syrian Investment Authority prior to incorporating the company. In this application, the investor must provide a feasibility study and action plan of the project to be implemented. If approved, the investor will be granted an investment licence and will be asked to complete the incorporation process of the company, as described in 2.3 Commitments Required from Foreign Investors.

The authorities do not condition their approval on certain commitments from investors. However, if an investor is granted an investment licence, they should commit to the feasibility study and action plan of the project in terms of capital, type of investment, duration of set-up, etc.

According to the provisions of the new Investment Law, in the event that an investor’s application is rejected, the rejection should be justified. The investor has the right to challenge the decision before the Ministry of Economy and Foreign Trade within 30 days starting from the day following their notification of the rejection decision. The Ministry of Economy and Foreign Trade, on the other hand, must decide on the objection within 15 days of submission.

Due to the novelty of the law, the way this will work in practice and its effectiveness are yet to be assessed.

The types of legal forms allowed are described in the Companies Law issued by Legislative Decree No 29 of 2011. In addition to the joint liability partnership, simple sleeping partnership (Société en Commandite Simple), limited liability company, joint-stock company and holding company, the law allows the registration of the one-person limited liability company. The choice of the legal form relies greatly on the business model or business objectives of the company. However, the forms most commonly used are private joint-stock companies and limited liability companies. The applicable laws in Syria provide for full foreign ownership of all forms of companies, except for the one-person limited liability company, which is confined to Syrian natural persons or Syrian legal entities wholly owned by Syrian natural persons. Foreign ownership of a one-person limited liability company is allowed if the company is granted an investment licence under the investment promotion laws.

The company capital is designated in Syrian pounds, but payment of foreign shareholders’ contributions should be made in foreign currency at a local Syrian bank. A company should always maintain the minimum capital requirement. If losses exceed 50% of the declared capital, the company has to hold a general assembly meeting to rectify the losses. Capital is released to the elected management after submission of the commercial register to the bank.

Joint-Stock Companies (JSCs)

Legislative Decree No 29 of 2011 defines a JSC as “consisting of at least ten shareholders, with its capital divided into equal value shares that are tradable”. At least three founders are needed to register a JSC. In the event that the founders chose to fully subscribe in the company capital, without a public offering, then the company shall have the form of a “private joint-stock company”. If, however, the founders wish to offer shares to the public through an IPO process, then the company is deemed a “public joint-stock company”, in which case the founders shall subscribe in at least 10% but no more than 75% of the company’s declared capital. IPOs are regulated by the SCFMS and require a special approval. In all cases, founders should pay at least 40% of the nominal value of their shareholdings upon ratification of the company’s articles of association.

The minimum nominal value for issuing shares is set in the law at SYP100 and the minimum capital requirement is set by a decision of the minister of internal trade and consumer protection, which is currently SYP15 million. The liability of shareholders in a JSC is limited to the value of their shares in the company.

Holding companies are subject to the same rules that are applicable to private joint-stock companies, but the minimum capital requirement is currently set at SYP1 billion.

Limited Liability Companies (LLCs)

The minimum number of shareholders required for setting up an LLC in Syria is two partners, with no restrictions on the maximum number of shareholders. The minimum capital requirement is not stipulated in the law, it was rather determined by a ministerial decision that is subject to change according to market requirements. Currently, the minimum capital required for setting up an LLC is SYP5 million distributed over a number of equal-value indivisible shares (SYP10 million for the one-person LLC company). The par value of a share is not set in the law and can be decided by the founders.

Founders are allowed to pay 40% of the nominal value of the shares upon ratification of the company’s articles of association, provided that the remaining 60% is paid within one year from that date. Like JSCs, the liability of shareholders in LLCs is limited to the value of their shares in the company.

There may be a sole director of the company or up to five directors (a board of directors) from among the shareholders or outside. If there are more than 25 partners in the company, a maximum of seven directors is permitted.

While the transfer of shares among shareholders is unrestricted, unless otherwise provided in the law, a statutory pre-emptive right exists on any share transfer to third parties.

Registration requirements are generally the same for all types of companies.

An application is made to the Ministry of Internal Trade and Consumer Protection (MoITCP) by the founders or their legal representatives. The application is appended with the articles of incorporation and supporting documents of the founders – legal entity founders should submit legalised true copies of their articles and trade licences. The MoITCP studies the application and issues a decision of incorporation referred to the Commercial Registrar. The founders should then deposit the capital at a local bank account opened for this purpose and pay the capital stamp duty. The capital deposit receipt together with supporting documents is then presented to the Commercial Registrar, which refers the company to the tax authorities to obtain a tax number. Founders should present a deed of ownership or a rental agreement of a commercial property for registration with the Commercial Registrar. More recently, this can be replaced by presenting a flexi-desk agreement. The registrar then issues a temporary certificate and refers the company for registration at the Chamber of Commerce and registration of an employee at the Social Security Establishment. Once these are presented to the Commercial Registrar, the company is granted a final commercial register certificate valid for one calendar year.

Companies are required to renew their certificates annually by submitting proofs of renewal of registration at the Chamber of Commerce as well as clearances from the tax authorities and the Social Security Establishment.

Obtaining a commercial register certificate does not waive the need for obtaining further licences needed if the company is pursuing a regulated activity.

Public JSCs and listed companies are subject to a special set of reporting and disclosure obligations imposed by the SCFMS as well as the Damascus Stock Exchange.

Private joint-stock companies and LLCs should annually hold general assembly meetings, where copies of the audited financial statements and management reports should be presented to shareholders for approval, which should also be sent to the shareholders together with the meeting notice at least 15 days prior to the date of the meeting. Shareholders should also elect an external certified auditor and resolve on remuneration of the directors in their annual meetings.

In JSCs, attendance of a representative from the MoITCP is obligatory in all meetings to watch the quorum. General assembly notices with clear agendas and supporting documents to be discussed and resolved should be sent to all shareholders and the Ministry 15 days before the meeting. Minutes and resolutions should be filed at the Ministry within a maximum of seven days from the date of the meeting.

Any amendments to the articles of incorporation and changes to the management resolved by the general assembly of stakeholders should be registered at the MoITCP for ratification and then registration at the Commercial Registrar to become effective vis-à-vis third parties.

Share transfers should also be notified to the Ministry but are effective vis-à-vis third parties from the date of registration in the shareholders' register kept by the company at the responsibility of its directors, who should duly maintain an accurate and correct shareholders’ register, a copy of which should annually be submitted to the Ministry.

A shareholder has the right to review company records and to receive printed copies of the company financial statements, audit report and management report at any time.

The highest governance authority in a company is the general assembly of shareholders, which elects (or appoints, as the case may be) the directors of the company. Depending on the legal form of the company, it may have a board of directors or a sole director.

Joint-Stock and Holding Companies

JSCs are managed by a board of directors composed of at least three directors in a private JSC and at least five directors in the case of a public JSC. In all cases, a JSC should not have more than 13 directors on its board.

The by-laws should specify the minimum number of shares required to be held to sit on the board. The by-laws may also provide for electing directors from outside the ranks of the shareholders, provided they do not exceed one third of the seats. The majority of directors should be Syrian nationals unless a special exemption is given by the MoITCP. The by-laws should also specify board remuneration, which should not exceed 5% of annual net profits. This will be resolved by the annual general assembly meeting.

Limited Liability Companies

An LLC can be managed by a sole director or a board of directors composed of a maximum of five directors. In the latter case, the rules applicable on a board of a JSC are applicable. Directors can be elected (or appointed) by the shareholders from among the ranks of shareholders or from third parties. Unlike JSCs, the law provides that the Labour Law governs the relationship of a director with an LLC; therefore, taxes on salaries and wages are imposed on their remuneration and non-Syrian directors are required to obtain work permits before having their names registered at the Commercial Register. They are also not permitted to sign on behalf of the company before obtaining the work permit.

To qualify as a director, a person should satisfy a number of conditions, including:

  • they should be of legal age and enjoying their civil rights;
  • they must not have been sentenced in any criminal case or convicted of any felony related to honesty and integrity;
  • they shall not be (in person or as a representative of a legal entity) a director of more than five JSCs governed by Syrian law;
  • the chairman of the board shall not (in person or as a representative of a legal entity) be a chairman of more than two JSCs governed by Syrian law; and
  • they should not be a civil servant.

For the above purposes, a police clearance record and non-employment certificate should be submitted to the Commercial Register.

Directors' Duties

The by-laws of the company should specify the responsibilities of the board of directors and their authority – or limitations to their authority – specifically in relation to borrowing in the name of the company, selling and pledging its assets, transferring projects, licences and concessions, and providing guarantees. The board should follow the instructions and resolutions of the shareholders. Within one week from elections, the board should meet to elect a chairman and deputy, and define signatory powers on behalf of the company. These must be registered at the Commercial Register to be enforceable vis-à-vis third parties. The board should hold at least one meeting every three months. Quorums of attendance and voting should be specified in the by-laws. Board meetings should be minuted and a record of the minutes and resolutions should be kept at the company.

Directors should call for holding shareholders’ meetings. Shareholders' meetings should be held by the end of April of each year for JSCs and the end of June of each year for LLCs to resolve on an annual agenda, including audited financial statements, management reports, profits/losses, reserves, management plan for the coming year, and election of an auditor.

Directors' Liabilities

Directors and company representatives (officers) are liable towards the company, its shareholders and third parties for breaches committed by any or all of them, to:

  • the company's by-laws;
  • shareholders’ resolutions; and/or
  • any applicable law or regulation.

A director whose objection to the breaches is recorded in writing in the company minutes shall not be held liable.

They are also liable towards the company and shareholders for mismanagement of the company's affairs. The liability is either individual or joint. In the latter case, liability shall be distributed proportionally according to the contribution to the breach. To defend themselves, directors must provide evidence that they had cared for the company business as hired agents.

Each director or company representative may initiate a liability lawsuit in accordance with the above, and if it is not filed by directors, it may be filed by a shareholder on behalf of the company. Such lawsuits have a limitation period of three years commencing on the date of the last shareholders' meeting looking into the management report, unless the breach was intentionally not presented to the shareholders’ meeting. Limitations for breaches representing crimes are as set in public rules.

Governance and Conflict of Interest

Company directors are prohibited from voting on the approval of related-party transactions. The law also prohibits the granting of loans, grants, securities or advances by the company to its directors. Directors are further not allowed to participate in the management of similar or competitive companies or pursue similar or competitive business activities unless they obtain an approval from the general assembly of shareholders, where such approval is to be renewed annually.

Labour laws and regulations pertaining to the private sector in Syria are contained in Law No 17 of 2010 (the Private Sector Labour Law) and Legislative Decree No 49 of 1962 (Restricting Labour Dismissal), in addition to Law No 92 of 1959 (the Social Security Law) amended by Law No 78 of 2001. The Ministry of Labour and Social Affairs issues secondary regulations for implementation of the Labour Law.

Article 4(b) of the Syrian Labour Law provides that, in the absence of a contractual arrangement granting better conditions, the rights stipulated in the Labour Law represent the minimum right of an employee that cannot be waived by contractual agreement.

Furthermore, any employer employing 15 or more employees is obliged by the Law to maintain an employment/HR policy that is to be drafted in line with the provisions of the Labour Law and that should be duly ratified by the Ministry of Labour and Social Affairs. The employment policy shall govern all signed and non-signed employment contracts. Such policies should include general work conditions, conditions of work contracts, leaves, promotions and salary increases, as well as the rights and responsibilities of both employers and employees. Any amendment to the employment/HR policy needs to be approved by the Ministry to be effective.

The Labour Law distinguishes between temporary and permanent employment contracts. Whereas the Labour Law does not distinguish between national and foreign employers, it stipulates some further requirements for foreign employees.

Employment contracts should be in writing in three copies (one copy for each of the parties and a third copy to be registered at the Social Security Establishment within three months of signing the contract). The law provides for the following minimum information to be included in the employment contract:

  • name, nationality and address of each party;
  • place of work;
  • nature and type of work;
  • type and duration of contract;
  • agreed salary; and type and method of payment, in addition to any other in-cash or in-kind benefits agreed between the parties;
  • working hours; and
  • any other benefits granted to the employee and not mentioned in the Labour Law.

An employment contract is not a precondition to the validity and the applicability of the Labour Law. Workers who do not have a written employment contract may use any evidence to prove that they are being employed. As a result, even employees who have not signed an agreement are protected by and benefit from the advantages of the Labour Law.

There is no maximum duration and the contract may be concluded for a fixed period, for the duration of the execution of a specific project, or indefinitely. A fixed-term contract is automatically terminated at the end of its term. However, its term can be extended by the mutual consent of its parties. If the original and extended terms of the contract exceed the total duration of five years, the contract is deemed a permanent employment contract provided the periods of suspension of work do not exceed the total of four months. If the parties of a limited-term contract continue its implementation after its expiry, then it is considered an implicit agreement to convert it into a permanent employment contract.

Working hours are set by the Labour Law at seven hours per day or 48 hours per week excluding breaks, where the employer should allow one or two breaks totalling together not more than an hour, provided that the employee should not work more than five consecutive hours without having a break. Working hours and rest breaks should also be organised in a manner so that the employee is not required to be present at the workplace for more than ten hours per day.

Notwithstanding the above, working hours can be increased to nine per day for certain categories of workers or in certain industries and businesses to be defined by a decision issued by the minster of labour. Working hours can also be reduced to seven hours per day for certain categories of workers or in certain industries and businesses that are perilous or harmful to health.

The employer should compensate for overtime work by paying the employee 25% in addition to the hour’s wage in respect of daytime working hours and 50% in respect of night shifts. This percentage is doubled if overtime is worked during the weekends, holidays or official days off.

The law requires that an employee obtains a weekend rest of not less than 24 continuous hours with full pay after six continuous working days at most. If the employer needs the employee’s services during the weekly rest day, it should pay them in addition to their daily wage double such wage and allow them another rest day during the following week. If the worker is required to work during holidays and official days off, they will be entitled to receive in addition to their daily wage double such wage.

Termination of an employment contract entitles an employee to an end-of-service compensation calculated as part of the social security payment instalments and is paid by the Social Security Establishment to the employee at the end of their employment contractual relationship.

The Labour Law provides for certain cases where compensation is paid upon termination of the contract according to the following.

Termination of an Employment Contract by the Employee

Termination by the employee is possible upon giving the employer two months’ notice. The employer is under no obligation to pay service compensation, unless such right is included in the HR policy of the employer approved by the Ministry of Labour and Social Affairs.

Termination of an Employment Contract by the Employer

  • Unlimited-term contract – in the event that the employer terminates the employment contract before the end of its term for reasons other than major fault on the part of the employee (as listed in Article 64, including breach of confidentiality, theft and negligence), then the employee is entitled to compensation calculated as a two-month salary for each year of service, plus the pro rata amounts for any fraction of the year, provided that such amount does not exceed the sum of 150 times the legal minimum wage (currently around SYP50,000). The compensation is calculated based on the amount paid as the last monthly salary for the employee.
  • Limited-term contract – the employee will be entitled to an amount equal to the sum of their salaries for the remaining period of the contract.
  • In the event that the employment contract is terminated by the mutual consent of both parties or due to retirement, death, work injury, sickness or force majeure and the employee is not covered by the social security provisions, they are entitled to compensation calculated as a one-month salary for each year of service in addition to pro rata amounts for fractions of the year. The compensation is calculated based on the amount paid as the last monthly salary for the employee.

There are no rules governing employee representation in Syria.

The salaries and wages tax is levied on all individuals earning a salary or a wage from a private treasury for services rendered by Syrian residents or for services rendered in Syria and from the public treasury for services rendered in Syria or abroad.

The tax is applicable on net pay, which consists of gross pay minus the following deductions:

  • the employee’s share of the social security payment;
  • any allowances paid in fulfilment of the services required by the job; and
  • representation expenses not exceeding 25% of the salary.

Salaries and wages are taxed using a progressive rate that depends on the salary brackets specified in the law. Taxes on salaries and wages were reduced by the issuance of Legislative Decree 24/2020 amending Articles 68 and 69 of the Income Tax Law 24/2003. The minimum tax-exempt limit has been amended to SYP50,000, which is now set as the minimum wage. Tax rates start at 4% and go up to 18%, where each progressive tax bracket is increased by SYP30,000 and a two-points tax rate.

It is the employer’s responsibility to withhold the salaries and wages tax and make payment to the treasury on the employee’s behalf. The salaries and wages tax is paid biannually, on January 15 and June 15 of every year.

All employees must be registered at the Syrian Social Security Establishment and employers are required to make social insurance contributions amounting to 14% of their payroll costs to cover old age, disability and death benefits. Additionally, employers must contribute 3% of their payroll to the work injury benefits scheme and 0.1% to a lump-sum disability benefits fund. Hence, the overall employer contribution to social security is 17.1%. An employee's share of the social security contribution is 7% of basic salary.

A person/entity is liable for Syrian tax on income arising from Syrian sources or activities, regardless of residence status. Income derived from non-Syrian sources or activities is not taxable in Syria. For tax purposes, an entity whose principal activities are administered through Syria, an entity that adopts the Syrian Arab Republic as its headquarters and branches or offices of foreign companies that operate in Syria are considered resident in Syria for tax purposes.

Business income is taxed using a progressive rate that varies from 10% to 28%. Special reduced rates and exemptions exist for JSCs, private banks and insurance companies, projects licensed under the investment promotion laws, industrial enterprises and JSCs that have 51% of their shares offered to the public. Tax rates vary according to source of revenue (income, capital gains, interest, dividends, etc).

Non-resident individuals or corporate entities and their foreign subcontractors are subject to a tax on income generated by rendering services or supplying goods in Syria. Syrian counterparts from the public, mixed, private or co-operative sectors are obliged to withhold the income tax due on the services rendered by the non-resident entity. The tax rates vary between 3 and 7% depending on the type of services/goods delivered and are not subject to any surcharges (ie, sustainable development tax or local administration tax). The withholding party is obliged to pay the taxes it withheld to the treasury within the first 15 days of the month following the date of payment.

A tax exemption applies to the first SYP50,000 of annual business income. This minimum income exemption level applies to each partner in a general partnership. Private banks and insurance companies are subject to a flat tax rate of 25%. However, JSCs and insurance companies that have 51% of their shares offered to the public are subject to a flat tax rate of 14% including all tax surcharges and are also exempted from local administration tax. This rule does not apply to private banks.

JSCs and LLCs as well as projects licensed under the investment promotion laws are subject to a flat tax rate of 22% including all tax surcharges. However, they are not exempted from local administration tax.

The above tax rates are also reduced in the following cases.

  • Two points for industrial enterprises located in remote areas. The remote areas are defined pursuant to a decision of the Cabinet based on the recommendation of the minister of finance.
  • One point for industrial enterprises that employ 25 or more employees duly registered at the Social Security Establishment, two points if they employee 75 or more employees, and three points for industrial enterprises that employ 150 or more employees.
  • One point for industrial enterprises located in industrial cities.

The new Investment Law 18/2021 provides for additional tax incentives to projects and companies granted an investment licence, in certain cases reaching a complete exemption from taxes and customs duties. Imports of equipment, machinery, assembly lines and transport systems of licensed projects are also exempt from taxes and duties.

Projects granted an investment licence in the agricultural and animal production sector are granted a permanent, full tax exemption on income. Manufacturing projects in the technology, healthcare, pharmaceutical, renewable energy, recycling and crafts sectors can benefit from a 50% exemption on income tax for a period of ten years, when granted an investment licence. Additional incentives are also granted to projects with local value add, export potential and job creation. Projects in development-oriented areas benefit from a 75% reduction on income tax for a period of ten years starting from the year of operation. The same applies to projects in the tourism sector and to industrial projects that export more than 50% of their output.

Consolidated returns are not permitted. Each company must do its own separate filing.

Thin capitalisation rules are not applicable in Syria.

Transfer pricing rules are not applicable in Syria.

Definition of Tax Evasion

Tax evasion in Syria is governed by Law 25/2003, which defines tax evasion as any act breaching the provisions of the tax laws, committed by the taxpayer, or any person who replaces or represents them or is duly authorised by them with the intention of evading the payment of taxes or financial duties, wholly or partially, through the submission, to the financial authorities, of records, data or documents containing information contrary to reality; concealing or denying same; non-submission of same on the legally specified dates, excluding force majeure; destroying the same in an untimely manner; exercising any taxable activity without informing the financial authorities; or concealing an activity that should be revealed.

Tax Evasion Penalties

Contrary to the provisions of the tax laws, violators in matters of tax evasion stipulated in Law 25/2003 are punished by imprisonment for a period of one month and a fine of 200% of the annual tax or duty for one year of the taxation, related to evasion, or a part thereof, as the case might be, and this penalty shall be doubled in the case of repetition. Further, Article 9 of the Tax Evasion Law considers tax evasion a public trust violation crime that is penalised by virtue of a public penalty law. A public lawsuit is filed against the tax or duty evader whether a natural or legal entity, including the apparent partner in partnership companies. Where the evader is a legal person, the lawsuit shall be filed against the legal entity, its representatives or those authorised to sign on its behalf in accordance with the provisions of the commercial law or its relevant regulations, as the case might be. The legal person's shareholders shall be jointly and severally liable for any violation of these law provisions.

Acts that Fall inside/outside Tax Evasion

It is important to note that, according to the implementation regulations of Law 25/2003, considering an act as a “tax evasion act” and subsequently applying the sanctions stipulated in Law 25/2003 require:

  • having such act investigated and recognised by the tax evasion officials, who shall organise a legal tax evasion report and submit it to the relevant authorities; and
  • having the act documented and the allegation based on true documents and papers, and not only as a matter of doubt or estimation.

According to Law 7 of 2008 on Competition and Preventing Monopoly ("Law 7") and its executive list, a prior consent from the Competition and Antitrust Council is required to conclude an “economic concentration” that will influence competition in the market. Any action that leads to a total or partial transfer of a title, usufruct, shares or equities from a firm’s properties to another firm, which would enable a firm or group of firms to control directly or indirectly another firm or group of firms, is considered as an economic concentration.

A concentration that would result in a dominant position or strengthening an existing dominant position is considered as influencing competition in the market. The threshold for market concentration in this regard is anything above 30% of the total market operations.

Although Article 3(d) of Law 7 can be interpreted to mean that the Law has an extraterritorial reach being applicable on “economic activities performed overseas and having a damaging effect inside the Syrian Arab Republic on competition”; however, it is unlikely that the Competition Commission will be interested, except if the party(ies) to the transaction have activities that affect competition in the local market.

Establishments that would like to complete an economic concentration transaction must submit an application to the Council within 30 days from concluding the draft/final agreement of the economic concentration process. The Council will issue its decision within 100 days of its acknowledgement of receipt of all relevant documents.

The establishments concerned with the economic concentration process must not do anything that would lead to consolidating the economic concentration process or changing the market structure before a decision is made concerning the filing, otherwise these acts or procedures would be null pursuant to a resolution by the Council.

Law 7 and its executive list set three categories of activities that are in breach of competition:

  • anti-competitive agreements;
  • abuse of market dominance; and
  • practices that are in breach of commercial impartiality.

Law 7 defines a "Dominating Situation" as a situation in which an establishment can control and affect market activity whether by itself or by working with other establishments. An establishment can be deemed dominating in a market based on (i) its ability to have a material effect on prices or amount of supply in the market and (ii) the inability of competitors to limit its material effect on supply in the market.

An establishment is deemed to have a material effect on prices or amount of supply if it unilaterally can set the prices or the amount of supply in the market without the ability of the competitors to prevent such practices, after taking some market conditions listed in the law into consideration, including the existence of vertical or horizontal arrangements.

However, an increase of the establishment’s share in the market based on demand and preference of the consumers with respect to prices and specifications in light of applicable rules and regulations is not deemed a dominating position.

The abuse of market dominance occurs (Article 6 of Law 7) when the unilateral practice of the establishment (or in agreement with others) leads to limiting access to the market or prejudicing, limiting or preventing competition, which will have, or is likely to have, harmful effects on the market, the consumers and economic development.

A non-exhaustive list of prohibited abusive practices is included in the executive list of Law 7, including:

  • refraining from concluding deals to sell or buy a product or service with any person or stop dealing with them in a manner that limits their freedom to enter the market or excludes them from it at any time, including imposing financial conditions, obligations or contractual terms that are arbitrary or unfamiliar to the nature of the commercial transaction, except when the other party is unable to meet their contractual obligations;
  • any act that would lead to limiting the distribution of a product exclusively on the basis of geographical areas, distribution centres, customers, seasons, or periods of time, between persons with a vertical relationship, where "vertical relationship" means the relationship between a Dominant Establishment and any of its suppliers or between it and any of its clients; and
  • discriminating between sellers, buyers and service providers whose commercial centres are similar in terms of sale or purchase prices or in terms of dealings in a manner that weakens their competitiveness vis-à-vis each other or before others, or leads to excluding some of them from the market.

Patents are governed by Patent Law 18/2012, repealing the previous Patent Law contained in Legislative Decree 47/1946. The Law differentiates between patents of invention and patents of benefit.

To qualify as a patent of invention – whether the invention is related to a product, a manufacturing method, or to both, or to a new application of a known manufacturing method – the invention must have industrial applicability, novelty and be innovative. The benefit model patent is granted to every new industrially implementable invention that lacks the innovative element sufficient to grant it an invention patent. An invention patent licence is valid for a non-renewable period of 20 years starting from the date of filing, while the benefit patent licence is valid for ten non-renewable years only.

Patent applications must be made to the Patent Office, supported with the required papers and documents. Supportive documents should be translated into Arabic by a local sworn translator and should be authenticated in Syria. If not submitted in person, applications must be submitted by an approved agent who acts pursuant to a power of attorney. The application is forwarded to a special authority for examination that will recommend to the Patent Office whether to accept or reject the invention. A first publication of an accepted patent application is made for six months to allow for opposition. Once granted, a second publication of the registered patent certificate is made, and registration fees of a patent should be paid. Thereafter, the applicant receives a patent certificate. The process takes at least 24 months for a patent to be granted.

An application for one type of patenting may be transferred to another type at the applicant’s request, but registration is effective from the date of the first application. The Patent Office is also entitled, at its own discretion, to change a benefit model patent request into an invention patent request and vice versa, when the conditions are met. Appeals by an interested party may be lodged against decisions made by the Patent Office.

Syria is party to the Paris Convention for the Protection of Industrial Property of 20 March 1883, to which it acceded in 1939, and which was amended by the Stockholm Document of 1967, to which Syria acceded by Legislative Decree 47 of 2002. A national application under the Paris Convention is possible within one year from the priority date.

Syria is also party to the Patent Cooperation Treaty (PCT) by Legislative Decree No 11 of 2003 and it is possible to file a national application of PCT international application in Syria by the 31-month period.

Trade marks are governed by Law 8 of 2007 on Trademarks, Geographical Indications, Industrial Drawings and Designs and Unfair Competition. As mentioned earlier, Syria is a member of the Paris Convention for the Protection of Industrial Property and follows the International Classification of Goods and Services for the Purposes of the Registration of Marks under the Nice Agreement.

A distinguishing mark (which may be a trade mark, an industrial or service mark) is defined as any sign that distinguishes a product or service of a natural or legal person. A distinguishing mark may consist of names, designations, seals, symbols, words, letters, features, inscriptions, figures, drawings, images, numbers, signatures, stamps, the names of stores, a group of colours and their arrangements and degrees, shapes of products and packaging that has a special distinctive shape, as well as any combination of these elements. In all cases, the distinguishing mark must be visible.

Trade mark applications must be submitted to the Industrial and Commercial Protection Directorate according to an approved form and appended with all the required documents. After filing, the relevant committee at the Directorate will examine the application and the appended documents to confirm the conformity of the application with the Law. This process of examination customarily takes around two to three months. Once the application is accepted and cleared by the committee, the trade mark must be published in a special trade mark periodical publication. A statutory waiting period of 90 days after this publication will have to be counted as the purpose of the application is to make sure that no third party has objection or claims to have rights before such registration. By the end of the 90 days, the Directorate issues the certificate of registration, which is handed over after providing proof of the second publication and payment of fees.

A trade mark licence is valid for a renewable period of ten years starting from the date of filing the application. A competent court may, at the request of any interested party, pass a decision to strike off the registration of a trade mark if it is proved that it had not been seriously used for three successive years on all products or services for which it was registered, or any part thereof, unless the owner of the mark justifies the reason for non-use of the trade mark during this period.

Law 8 of 2007 also governs industrial designs and industrial drawings.

Industrial drawings are defined as the combination, harmonisation or colours of stripes or lines, or colours appearing on products in a new and distinct manner different from the drawings known before that may give the product a style or a special form that distinguishes it from other similar products either handmade or made through using a computer or machine, including the designs of textiles and other materials. Industrial designs, on the other hand, are defined as any external shape of drawing, whether associated with lines or colours or not, provided they should be new and distinct from previously known designs and give a special shape that can be used for an industrial, professional or handmade product.

Such industrial drawings and designs shall include, for example, textile prints or coloured paper used to cover the walls or packaging materials and goods, new designs of dresses and coats, hats and headgear, and accessories such as suspender hangers, shoes, bottles and container covers, wine and alcoholic bottles and containers, drinks and food containers, perfume types and cardboard boxes used for pharmaceuticals, and any external shape of goods or other products.

Only industrial drawings and designs having the element of novelty and distinction and including the external characteristics making them of special nature and distinguishing them from known drawings and designs are deemed registrable and protectable under Law 8/2007.

The protection period of an industrial drawing or design is five years from the date of application for registration and expires after five years from the last day of the month in which the application for registration was filed. It is renewable for two successive periods of five years each, provided that the renewal is applied for during the last year of the term of protection against payment of a fixed fee and publication in the Industrial and Commercial Protection Directorate Journal.

Copyrights are governed by Legislative Decree 62/2013, which covers a variety of works and extends protection to the moral and economic rights of authors to exploit their works. The Directorate for the Protection of Copyright and Related Rights is mandated with overseeing the implementation of this law. Syria is also a member of the Berne Convention for the Protection of Literary and Artistic Works under copyright.

Legislative Decree 62 protects the economic rights of the author throughout their life and for a period of 50 years after the end of the year of their death, unless provided otherwise. Similarly, the economic rights of authors of joint works are protected for the rest of their lives and for 50 years after the end of the year of death of the last surviving person unless the law provides otherwise. On the other hand, audio-visual works and collective works are protected for 50 years from the first calendar year following their publication for the first time and in the event they were not published within 50 years from the date of completion of the work, the period is calculated from the first calendar year following the date of the completion of the work. Works published without mentioning the name of the author or under a pseudonym are protected for 50 years from the date of their publication for the first time, unless the identity of the author becomes known in this period. Works of applied arts are protected for 25 years from the first calendar year following the year in which the work was completed.

On the other hand, Legislative Decree 62 excludes ideas, procedures, methods of work, mathematical concepts, principles, abstract facts, discoveries and data from protection, but applies protection to the innovative expression of any of them. News and other events that are characterised as mere press information are also excluded from copyright protection.

The protection of trade secrets is governed by Chapter 6 of Law 8 of 2007, which prohibits any act of unfair competition, including disclosure of trade secrets or industrial secrets in a manner that is contrary to honest commercial practices. Confidentiality is attained when:

  • the information at large, or its components, is unknown or circulated among the concerned industrial or commercial actors in the field;
  • the commercial value of the information is derived from its confidentiality; and
  • if measures to preserve secrecy were utilised by the legal owner.

Any concerned person may file a civil lawsuit to demand compensation for damages inflicted as a result of acts of illegal competition – including disclosure of trade secrets – and to suspend any such acts. Such a person is entitled to demand undertaking seizure measures.

Software and databases, on the other hand, are protected under Legislative Decree 62/2013 (the Copyright Law) for a period of 15 years commencing from the first calendar year following the year in which they were completed.

Syria does not have a general data privacy law. This being said, the Syrian 2012 Constitution guarantees privacy of postal correspondence, telecommunications and radio, and other forms of communication in accordance with the law.

Other laws also provide for confidentiality, non-compete and non-disclosure rules applicable to employees and executives who have access to trade secrets and information on the confidential nature of the company/employer. These rules can be found in the Labour Law (governing the employer-employee relationship), the Companies Law (governing the director-company relationship) and the Civil Law (a law of general application on contracts).

Additional confidentiality, non-compete and non-disclosure undertakings, beyond those provided for in the laws, can also be contractually agreed. For example, the Syrian Civil Code allows the employer to conclude a non-compete agreement with the employee, if the employee holds a position that allows them to have access to confidential information and client data. However, its validity is conditional on having it defined by the time, place and nature of work necessary to protect the interest of the employer.

Furthermore, there are certain confidentiality rules under specific pieces of legislation related to banking secrets (the Banking Secrecy Laws) and professions, such as public auditors and lawyers.

These regulations may apply to international parties that have a residence in Syria, whose activities are implemented in Syria or in the event that the agreement is governed by Syrian law, but this should be assessed on a case-by-case basis.

Syria does not have a dedicated data protection agency in charge of enforcing data protection rules. The rules applicable on the confidentiality of certain types of confidential information stipulated in the corporate, banking and auditors laws are enforced by the corresponding regulatory bodies, such as the Central Bank of Syria and the SCFMS.

The start of 2021 has seen several major legislative reforms, including the enactment of a new investment promotion law, as detailed in 2. Restrictions to Foreign Investments and the replacement of the microfinance legislative decree No 15 of 2007 with a new Microfinance Law (Law 8 of 2021), which gave microfinance banks a five-year corporate tax holiday, after which they will be taxed at a flat rate of 10% if they are public shareholdings and at 14% if they are in the form of a private joint-stock company (as opposed to the 25% tax rate applicable to banks in general).

With the aim of increasing revenues, two legislative changes, including a new Real Estate Sales Tax Law (Law No 15/2021) and Real Estate Fees Law (Law No 17/2021), were enacted. Law 15/2021 came into force on 3 May 2021 and levies real estate taxes based on the property market value that is to be appraised by special government committees. Similarly, Law 17/2021 determines the fees payable for the registration of real estate transactions based on valuations commissioned by the Ministry of Finance.

Also noteworthy is Law 16/2021, passed in April 2021 (the Ride-Sharing Law), permitting owners of private cars and minibuses to utilise mobile technology applications for Uber-style services supervised by the Telecommunications Regulatory Authority, provided they have registered companies and obtained the relevant licences from the Ministry of Transport.

Sarkis & Associates


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Sarkis & Associates was established in 1960 and is one of the oldest and largest integrated law firms in Syria, providing a comprehensive range of specialist legal and consulting services to meet the needs of both domestic and international clients. The firm’s broad-based practice includes banking and financial regulation, commercial arbitration, energy, gas and oil-related projects, customs and corporate law, foreign investment, transportation and aviation, constitutional and administrative law, and telecommunications. The firm has also established a wide network of local, regional and international firms/lawyers for handling local matters under the direct supervision of the Damascus offices.

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