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Syrian government responds to Rami Makhlouf: “The two companies are required to pay 233.8 billion SYP”

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Editing: Mohamad Alaa |
Translation: Nouha Salti
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Publication date: 2020/05/02 11:38

Damascus - SMART

On Friday night, the Syrian government responded to the businessman Rami Maklhouf, the maternal cousin of president Bashar al-Assad, saying that the two mobile network providers, Syriatel and MTN, are required to pay 233.8 billion Syrian pounds.  

The Syrian Telecommunications Regulatory Authority (SyTRA) said in a statement on its social media accounts that it had informed the two companies to provide them with a final answer by May 5, 2020, to accept the negotiations about payment mechanism for “the primary licensing fees".

The SyTRA indicated that, "the amounts required to be paid in two payments, the first according to the actual numbers during the first five operating years from 2015 to 2019 (according to the request of the two companies’ published financial data) and the second according to expected numbers presented by each company."

This statement came after Makhlouf published a video on social media on Thursday night, saying that the Syrian government is asking him to pay 130 billion SYP, confirming that he will pay "if this was rightful" and that his company, Syriatel, pays all its taxes and shares the returns with relevant authorities, in addition to what he described as charitable and humanitarian activities.

Makhlouf considered that the government was "unjust" by asking him to pay the amount, calling on his cousin, Bashar al-Assad, to resolve the issue, reminding him that he had "abdicated his business in favor of humanitarian activities" in 2011 after the start of the Syrian Revolution, noting that he took this step "so that he would not be a burden on Bashar al-Assad and embarrass him."

The SyTRA added that the required amounts from the two companies are amounts due to the Syrian government according to existing and palpable documents that were presented by committees specialized in financial, economic, technical and legal affairs.

The SyTRA elaborated, “In order keep the work of the two companies in providing services for customers, all the reservations of the companies were taken into consideration and given the deadlines requested by them, and then - despite their lack of logic - all the data and numbers provided by them were approved and after all of the above the actual value of the demanded amounts were calculated.”

The SyTRA stressed that it is will continue collecting public funding (the central treasury funds) in all legal ways", taking into account the continuation of the work of any company required to pay to provide full services to citizens. The SyTRA added that it will not be discouraged by any disrupt attempts from recovering the public funding.

The SyTRA mentioned that concerned authorities in the Ministry of Finance are working on the contracts included between the managements of the two companies and the offshore company.

In Dec. 2019, Syria’s Financial Ministry has frozen the assets of Makhlouf over claims Makhlouf imported smuggled goods.

“Based on the recommendations of the Anti-Smuggling Department, it was decided to reserve the moveable and immoveable assets of Makhlouf,” the ministry said.

It added: “This reserve of assets was conducted to guarantee the rights of the public treasury regarding the fees and fines related to the case of smuggling goods.

The SyTRA noted that "the amounts referred to and due are not related to the issue of tax evasion (which is another subject that is being worked on by its own authorities) but rather to amounts due on the two companies must be paid to achieve a balance in the licenses. The tax defect found in those contracts affect the value of the income tax and the value of the net profits of the shareholders themselves.”

Al-Assad relatives and people close to him control the economic activity and monopolize most of the natural resources in Syria. In April 2016, the Panama Papers revealed that the brothers Rami and Hafez Makhlouf took advantage of the kinship’s relationship with the President Bashar al-Assad for economic domination and intimidation of competitors. The two brothers were able to evade the economic sanctions by using the offshores’ system of commercial companies.

The offshore companies exist in countries with low taxes and financial institutions that are not subject to international control, as they provide advantages, the most important of which are the tax haven, easy access to deposits and protection from financial or political instability, in addition to bank privacy, at a time when these companies and banks are linked to money laundering, organized crime, and tax evasion.

The Syrian government is subject to sanctions by several countries and entities, including the European Union and the United States, whose sanctions include the freezing of bank accounts and the prohibition of dealing with institutions that support the Syrian government, in addition to sanctions on local and international companies and preventing exports from Syria or investing in Syria.