03.06.09

The Bureau of Technical Inventory will calculate and levy taxes on a property held by organizations and individuals. For organizations the tax will be levied at the property’s market value at regional rates, with a 2.2% maximum. Individual property tax rates will be determined by their respective municipality, ranging from 0.1-2%. Agricultural value will be the basis for the property tax. Under the supervision of the Federal Housing Fund, which oversees all housing structures in the Russian Federation, municipalities will fix rates for taxing farmland at a maximum of 0.3%. All other plots will receive a rate of 1.5%. The tax will be introduced gradually in accordance with regional preparation. The tax will be calculated on the basis of the market value of land and buildings and paid to municipal authorities.

Sergei Razgulin, the Deputy Director of the Finance Ministry, announced yesterday that it is doubtful the property tax system will be introduced before 2012.

At the end of April, Prime Minister Vladimir Putin called for more active work on preparations for the introduction of the new tax. The government’s Budget Committee reiterated the sentiments of the Prime Minister.

Sergei Belyakov, the Assistant to the Minister of Economic Development, says that while discussion continues on a universal personal property tax, the possibility of a future tax on industrial property is also being considered.
 

But there is still much to be done before the introduction of the new tax. Razgulin reports that work on the necessary legislation for the tax’s introduction, including property appraisals (according to their market value rather than BTE norms) will take at least two years. “An adequate assessment will be ready no sooner than 2012,” Belyakov agrees. In 2010, the Ministry of Economic Development intends to coordinate property assessments along with the size and scope of the tax minimums, which will leave about a year for the bill’s passage and the verification of the appraisals.

Nadezhda Kosareva, the president of the City Economic Institute, recalls an analogous bill discussed in 2004, where the main problem was the method of mass housing appraisals, the same method proposed in the new bill. This time, the tax on physical property and land is less than 1% of the city’s budget (around 6 million rubles), says Viktor Sidnev, the mayor of Troitsk, a town outside of Moscow. The market value property tax could become the city’s main source of income. Nonetheless, Sidnev agrees with federal officials that the likelihood of the tax being introduced before 2012 is doubtful.

Translated by Alinga Consulting Group.

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Source: "Vedomosti"