Syrian Kurd traders suffer from twin tax systems

Business owners are paying the Kurdish administration and Damascus

Employees of a currency exchange counter count banknotes at market street in the northeastern Syrian town of Qamishli. Delil souleiman / AFP

Many Kurds in Syria may dream of self-rule, but for business owners in the semi-autonomous region in the country's north, it now comes with a painful pinch: double taxes.

For several months, traders in the self-proclaimed "federal region" in northern Syria have had to pay dues to both Kurdish authorities and the central government in Damascus.

"We don't even know who we're paying anymore," said Afasta, a 29-year-old pharmacist who did not give her second name.

"We used to make a 50 per cent profit, but it's changed since we started paying two sets of taxes," she said, as she handed medicine to a client in her pharmacy in the Kurdish-majority town of Qamishli.

An employee of a currency exchange counter counts banknotes at a market street in the northeastern Syrian town of Qamishli. Delil souleiman / AFP

Syria's conflict broke out in 2011 and, in an effort to appease the country's Kurds, government troops withdrew from Kurdish-majority areas the following year.

Autonomous administrations were established there that steadily built up their own institutions: schools, police forces, and hospitals.

The central government maintained a limited security presence in two areas, Qamishli and the provincial capital of Hasakeh further south, but it continued to levy taxes.

Business owners were paying between 17,000 and 25,000 Syrian pounds (Dh121 and Dh178) yearly to the Damascus regime.

But late last year, the autonomous Kurdish administration also piled on its own progressive tax scale for businesses in their area of control.

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"This double taxation is weighing heavily on us, especially since our profits were already slim and with economic activity at a low," said Nabil Adam, 34, who sells women's clothes in Qamishli.

The taxes are calculated according to a gradual profit scale with 13 different categories.

Businesses making under 1.2 million Syrian pounds a year pay a symbolic 1,000 pounds.

Those bringing in a gross profit of between five and seven million pounds, or between $11,500 and $16,100, are taxed at seven percent.

The highest rate - 24 per cent - is for operations making a gross profit of more than 100 million pounds.

Since it was introduced in October and until April, the tax has already brought in 349 million Syrian pounds said Khaled Mahmud, who co-manages the autonomous region's financial affairs.

"The autonomous administration wants to improve its service provision, so it needs more revenues for the budget," he told Agence France-Presse.

With more resources, local authorities would be able to develop the quality of basic services like electricity and water, create jobs, and even provide healthcare, said Mr Mahmud.

Women walk in front of shops selling golden jewelry at a market street in the northeastern Syrian town of Qamishli. Delil souleiman / AFP

But Fayyez Abbas, 35, has been unimpressed by service provision and said he found little incentive to pay more.

"Water, electricity, healthcare, basic services like education - we don't have any of it," said Mr Abbas, who peddles beauty products in Qamishli's covered market.

"We would be prepared to pay even more - if the services were actually provided," he added.

"We have a right to know where the money goes."

Syria's Kurds control around a fourth of the country, but large parts of that land borders Turkey to the north, which has sealed off the border.

There is little trade with the rival Syrian rebels who are present to the west or with regime forces to the south.

The economy in northern Syria has always been rooted in agriculture, and Kurds have recently begun extracting and refining crude oil.

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Even local officials have criticised the hurried implementation of the new tax, which was originally meant to be introduced in 2019.

"The financial authority has rushed to implement the taxes to try to cover the cost of it twice increasing public salaries," said Dalbrin Mohammad, a member of the Kurdish legislative council.

"The level of economic activity and people's financial situations simply don't allow for its implementation," said Mr Mohammad.

But even lodging a formal complaint with Kurdish authorities has a price tag: precisely 5,000 Syrian pounds.

"We've been forced to pay a lot of taxes this year," said Rifaat Mohammad, who owns a shoe store in Qamishli.

"They said I have to pay 39,000 pounds, but it should be much less than that since we have lots of discounts and losses," he said.

"I don't know how they calculate these taxes. They don't appreciate the situation we're in."