For U.S. citizens and green-card holders in Syria, U.S. tax compliance operates without the simplifications of a tax treaty or a social security agreement. Double taxation on earned income is primarily managed through domestic U.S. law, specifically the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC).
A critical issue for tax year 2025 is the status of the FTC. While U.S. sanctions were lifted in mid-2025, the IRS has not yet formally removed Syria from the list of countries under Internal Revenue Code Section 901(j), which would be required to allow U.S. taxpayers to claim credits for Syrian income taxes.
US filing basics every American abroad must know
US citizens and green-card holders are taxed on worldwide income wherever they live, and usually must file Form 1040 once gross income exceeds the IRS threshold ($15,750 for single filers, $31,500 for married filing jointly, and $23,625 for head of household for 2025), even when no tax is ultimately due. The tools that prevent double taxation are the Foreign Earned Income Exclusion (FEIE, up to $130,000 for 2025 under IRC §911) and the Foreign Tax Credit.
Two reporting rules catch most filers in Syria: the FBAR (FinCEN Form 114), required when foreign financial accounts exceed $10,000 in aggregate at any point in the year, and Form 8938 (FATCA) for specified foreign assets above the applicable threshold. Both can carry penalties even when no tax is owed. If you are behind, the Streamlined Filing Compliance Procedures are the usual penalty-free path back for non-willful taxpayers.
US tax treaty with Syria
There is no comprehensive income tax treaty between the United States and Syria. Consequently, U.S. citizens cannot use treaty provisions to reduce withholding rates, determine tax residency, or exempt specific types of income from U.S. tax.
All mechanisms for preventing double taxation rely on U.S. domestic tax law. The primary tools are the Foreign Earned Income Exclusion (FEIE) to exclude wages or self-employment income from U.S. income tax, and the Foreign Tax Credit (FTC) to offset U.S. tax liability with income taxes paid to Syria. However, the ability to claim the FTC for Syrian taxes for the 2025 tax year is uncertain pending official guidance from the IRS following the lifting of OFAC sanctions.
Syrian Social Security and U.S. Tax
Syria's social security system is administered by the General Establishment for Social Insurance (GESI) for private-sector workers. Participation is mandatory.
- Employee contributions: 7% of earnings.
- Employer contributions: 14.1% of earnings.
- Self-employed contributions: 21.1% of declared earnings.
For U.S. tax purposes, contributions made by a U.S. citizen to the GESI system are generally not deductible on a U.S. tax return. The U.S. tax treatment of the plan itself is unverified, but government-mandated social security plans are typically not considered foreign trusts and do not trigger reporting on Form 3520. An interest in such a plan is also generally not reportable on the FBAR (FinCEN Form 114) or Form 8938.
Distributions from the GESI system are typically fully taxable by the United States. Without a tax treaty to specify otherwise, these payments are treated as foreign pension income on a U.S. tax return, and any foreign tax paid on the distributions may be eligible for the Foreign Tax Credit, subject to the limitations regarding Syria.
Investments, property, and capital gains in Syria
The most significant issue for investors is the uncertainty surrounding the Foreign Tax Credit (FTC). In 2025, the U.S. Treasury's Office of Foreign Assets Control (OFAC) lifted the comprehensive sanctions regime against Syria. However, for taxpayers to claim a credit for Syrian income taxes, the IRS must formally remove Syria from the list of sanctioned countries under IRC Section 901(j). Until such guidance is issued, claiming an FTC for Syrian taxes is risky and taxpayers should monitor IRS publications for a definitive ruling.
For U.S. persons owning a Syrian business, such as a Limited Liability Company (LLC) or a Joint Stock Company (JSC), a controlling interest (more than 50% ownership) classifies the entity as a Controlled Foreign Corporation (CFC). This requires the U.S. owner to file Form 5471 annually. Furthermore, the owner may have a current U.S. tax liability on the company's profits under the GILTI (Global Intangible Low-Taxed Income) rules, even if no distributions are made.
While the Damascus Securities Exchange (DSE) does not feature many retail investment funds, any investment in a non-U.S. pooled investment vehicle (like a mutual fund or ETF) should be presumed to be a Passive Foreign Investment Company (PFIC). This triggers complex reporting on Form 8621 and can result in punitive U.S. tax treatment unless specific and timely elections are made.
Syria's proposed 2026 tax reform includes a general capital gains tax rate of 10%, but U.S. citizens remain subject to U.S. tax on their worldwide capital gains at applicable U.S. rates.
Self-employment and companies in Syria
A critical point for self-employed U.S. citizens in Syria is that there is no U.S.-Syria totalization agreement. This has a major financial consequence: you are required to pay the full U.S. self-employment tax on your net earnings from self-employment, in addition to any mandatory social security contributions in Syria.
The U.S. self-employment tax rate is 15.3% on the first $176,100 (for 2025) of net self-employment income. This tax is composed of 12.4% for Social Security and 2.9% for Medicare. While the 15.3% rate applies up to $176,100, the 2.9% Medicare tax continues to apply to all net self-employment income above that threshold. The Foreign Earned Income Exclusion (FEIE) cannot be used to reduce your income for self-employment tax purposes. You cannot obtain a Certificate of Coverage to claim an exemption from U.S. self-employment tax, meaning you will likely be subject to social security taxes in both countries simultaneously.
Worked examples
Salaried employee at an NGO in Damascus (2025)
Anna is a U.S. citizen working for an international NGO in Damascus, earning a salary of $95,000. She meets the requirements for the Foreign Earned Income Exclusion (FEIE). For 2025, the maximum FEIE is $130,000. Anna can file Form 2555 to exclude her entire $95,000 salary from U.S. income tax, resulting in a zero U.S. income tax liability on her earnings.
She will still need to file a U.S. tax return to claim the exclusion. She must also file an FBAR (FinCEN Form 114) if the aggregate value of her foreign financial accounts exceeds $10,000 at any point during the year. If she paid Syrian income tax, she could consider using the Foreign Tax Credit (FTC) instead of the FEIE, but she must first confirm that the IRS has issued guidance permitting the FTC for taxes paid to Syria for tax year 2025.
Self-employed IT consultant (2025)
Ben is a U.S. citizen living in Aleppo and working as a freelance IT consultant. His net self-employment income for 2025 is $80,000. Because there is no U.S.-Syria totalization agreement, Ben is liable for U.S. self-employment tax.
For U.S. income tax, Ben can use the FEIE to exclude the $80,000, resulting in no U.S. income tax. However, the FEIE does not affect self-employment tax. His U.S. self-employment tax is calculated as follows:
- Net earnings: $80,000
- Base for SE tax: $80,000 * 0.9235 = $73,880
- SE tax due: $73,880 * 0.153 = $11,303.64
Ben must file a U.S. tax return, including Schedule C and Schedule SE, and pay $11,303.64 in U.S. self-employment tax. This is in addition to the 21.1% he may be required to contribute to Syria's GESI social security system on his declared earnings.
Business owner of a Syrian LLC (2025)
Carlos, a U.S. citizen, is the sole owner of a Syrian Limited Liability Company (LLC) that provides logistics services. In 2025, the LLC earns a profit of $150,000 and does not pay Carlos a salary or dividend.
Because Carlos owns more than 50% of the company, it is a Controlled Foreign Corporation (CFC). He must file Form 5471, an extensive information return about the foreign corporation, with his U.S. tax return. Even though he took no money out of the company, the company's profit may be considered GILTI (Global Intangible Low-Taxed Income). A portion of this $150,000 profit will likely be included as income on Carlos's personal U.S. tax return (Form 1040) and taxed at his individual rates. This demonstrates that owning a foreign company can create a U.S. tax liability even without receiving any direct payments.
Common mistakes for Americans in Syria
- Assuming a U.S.-Syria tax treaty exists to reduce or eliminate U.S. tax.
- Believing that the Foreign Earned Income Exclusion (FEIE) eliminates U.S. self-employment tax liability.
- Failing to pay U.S. self-employment tax, incorrectly assuming that paying into the Syrian social security system provides an exemption.
- Claiming the Foreign Tax Credit for Syrian taxes without verifying that the IRS has lifted the prohibition under IRC Section 901(j) for the 2025 tax year.
- Not filing Form 5471 for a controlled Syrian company, which can lead to significant penalties.
- Ignoring potential GILTI income from a profitable Syrian corporation, even when no dividends are paid out.
- Thinking that because no retail investment funds are widely available, the PFIC rules (Form 8621) are irrelevant, when they apply to any non-U.S. pooled fund.
- Believing that earning below the FEIE threshold means there is no requirement to file a U.S. tax return.
Syria tax FAQ
Is there a U.S.-Syria tax treaty?
No. There is no income tax treaty between the United States and Syria. U.S. citizens must rely on domestic U.S. tax provisions, such as the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC), to mitigate double taxation.
As a self-employed American in Syria, do I have to pay U.S. Social Security and Medicare taxes?
Yes. Because there is no totalization agreement between the U.S. and Syria, you are required to pay the full 15.3% U.S. self-employment tax on your net earnings. You cannot get a Certificate of Coverage to avoid this, and you may be required to pay into both the U.S. and Syrian social security systems.
Can I claim a Foreign Tax Credit for income taxes I pay to Syria?
It is uncertain for the 2025 tax year. Historically, Syria has been on a list of sanctioned countries under IRC Section 901(j), which prohibits claiming a credit for taxes paid to it. While OFAC sanctions were lifted in 2025, the FTC is not automatically available until the IRS issues formal guidance removing Syria from the 901(j) list. You must check for the latest IRS announcements before claiming this credit.
I own a small business in Syria. What are my U.S. reporting obligations?
If you have a controlling interest (typically over 50%) in a Syrian company like an LLC or JSC, it is likely a Controlled Foreign Corporation (CFC). This requires you to file Form 5471 annually. You may also have to recognize and pay U.S. tax on the company's earnings under the GILTI rules, even if you don't take a distribution.
Is my Syrian social security pension taxable in the U.S.?
Yes, most likely. Without a tax treaty provision to exempt it, distributions from Syria's GESI social security system are generally considered taxable income by the IRS and must be reported on your U.S. tax return.
Do I need to report my interest in the Syrian GESI on my FBAR or Form 8938?
Generally, no. An interest in a foreign government-mandated social security system like GESI is typically not considered a reportable financial account for FBAR (FinCEN Form 114) or Form 8938 purposes.
What is a PFIC and should I be concerned about it in Syria?
A PFIC is a Passive Foreign Investment Company, which includes most non-U.S. mutual funds or pooled investments. While Syria may not have a developed market for such funds, the rule applies to any investment that fits the definition. If you invest in any non-U.S. fund, you should assume it is a PFIC and that you must file Form 8621, unless you can prove otherwise.
If my income is fully excluded by the FEIE, do I still need to file a U.S. tax return?
Yes, in most cases. You must file a return to claim the FEIE. Furthermore, the filing threshold for taxpayers abroad is very low. If you have net self-employment earnings of $400 or more, you must file to report and pay self-employment tax, even if your income tax is zero.
Sources and last reviewed
- U.S. Department of the Treasury (OFAC) (verified 2026-06-07)
- U.S. Social Security Administration, International Agreements (verified 2026-06-07)
- IRS, International Taxpayers (verified 2026-06-07)
Last reviewed .
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