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IMF Reports On Syria

by Lorys Charalambous,, Cyprus

31 March 2010

The International Monetary Fund (IMF) has commended Syria for its fiscal policy approach during the economic crisis.

In its observations, the IMF noted in particular that strong non-oil revenue receipts - from improvements in tax administration and the introduction of incentives to settle arrears – partly offset the 5% increase in expenditure in 2009.

Discussing measures that have been proposed or introduced by the Syrian authorities, the IMF said that Syria’s fiscal position going forward will be bolstered by the introduction of a value-added tax in 2011, combined with further deepening of subsidies reform, and expenditure restraint. The fund also welcomed other steps taken to simplify investment procedures, modernize accounting standards, and streamline the tax system. The IMF also noted the introduction, in June 2009, of increases to the minimum thresholds for exemption from wages taxes and a hike to the top income tax rate from 20% to 22%. The IMF delegation was however critical of the introduction of reference prices and customs duties that vary by country of origin to protect Syria against unfair trade practices.

The Executive Board, while welcoming the streamlining of the tax system, advised against a further increase in the personal income tax rates. They supported the emphasis on making progress in reorganizing tax administration, including by shifting more responsibilities to the General Commission for Taxes and Fees. They encouraged the authorities to streamline excise taxes in line with the recommendations of past technical assistance missions.

Concluding the Board recommended that the Syrian authorities reverse the recent introduction of customs duties that vary by country of origin, and address suspected unfair trade practices by other measures such as enhancing customs’ capacity to examine invoices through computerization and cross border cooperation.

TAGS: tax | value added tax (VAT) | Syria | fiscal policy

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