Syria's Finance Ministry Develops New Tax Framework in Cooperation with IMF

Outline of the Proposed Tax System

Syria's Ministry of Finance has put forward a framework for a new tax system built on four core principles: simplicity, equity, competitiveness and neutrality. The framework aims to establish a different relationship between the state and taxpayers, grounded in transparency and trust rather than revenue collection as an end in itself. The Ministry organised a closed workshop in cooperation with the International Monetary Fund, bringing together IMF experts, representatives of the General Authority for Taxes and Fees, business sector participants and academics.

Finance Minister Mohammad Yasser Barnieh stated that the approach targets a system that serves the economy, takes into account low-income earners and industrialists, and stimulates production, alongside procedural re-engineering, digital transformation and legislative development.

Process Re-engineering Before Digitalisation

Economic researcher Ihab Ismandar described the announced direction as an ambitious framework, particularly regarding its focus on simplicity, equity and competitiveness. He noted that the Business Process Re-engineering (BPR) methodology requires improving procedural efficiency first before moving to digitalisation, since transferring complex procedures to an electronic system does not automatically produce a more efficient tax administration.

Ismandar added that digital transformation can be a decisive factor in reducing administrative costs, broadening the tax base and curbing corruption and evasion, but it requires stable infrastructure, qualified personnel and genuine institutional capacity to manage the new system.

Balancing Revenue Collection and Equity

Ismandar noted that the primary function of any tax system remains securing the revenues needed to finance public services, and that the problem lies not in the existence of a revenue-collection function but in how it is exercised. He argued that genuine reform must shift tax collection from being an opaque burden on taxpayers to a process that is fairer, more transparent and more closely tied to economic capacity and activity.

He cautioned that rhetoric that entirely denies the revenue function may create expectations among taxpayers that are difficult to meet, and that what is needed is a clear balance between the state's right to revenues and the taxpayer's right to a comprehensible and fair system.

Structural Challenges Facing Reform

Ismandar identified several structural questions that require clear answers, including:

• The structure of proposed rates and the types of taxes targeted, whether income, consumption or wealth taxes.
• Addressing the informal economy, which poses a primary challenge to broadening the tax base without increasing burdens on formal taxpayers.
• Establishing clear transfer-pricing rules for related-party transactions within family businesses, and separating the financial liability of the company from that of the owner.
• Removing bureaucratic overlaps among the government bodies involved in tax procedures.

Implementation Gap and IMF Technical Role

Ismandar placed the implementation gap at the centre of the challenges facing reform, explaining that digital transformation and procedural re-engineering require a minimum level of stability in infrastructure, financing and human resources, against a backdrop of additional pressures including inflation, damaged infrastructure and a drain of skilled professionals.

He considered the IMF's participation in the workshop a positive indicator in terms of accessing technical assistance and international best practices, while stressing the need to adapt those practices to Syria's specific circumstances.