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Ministry of Finance is developing new approaches to property taxation

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31.05.2019
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The Ministry of Finance of Armenia is working on a legislative initiative involving the revision of property tax. New adjustments are likely to take effect not from  January 2020, as planned earlier, but from January 1, 2021.  Meanwhile, the Tax Code of 2016 envisaged a transition to a new order  from 2019.

Armenian Deputy Finance Minister Arman Poghosyan told ArmInfo  correspondent that in order to bring the document into final form and  submit it to the government, it will be necessary to wait for  information from the State Real Estate Cadastre Committee of Armenia.

In particular, until the end of June of this year. The State  Committee will have to prepare a new methodology for estimating the  value of one unit of real estate on the republican account, as close  as possible to market value. Currently, according to Pogosyan, the  existing methodology and price zoning inappropriate to reality do not  allow to calculate the real value of the property, despite the fact  that the buildings are evaluated (revalued) every three years by the  real estate cadastre authority, according to on July 1, the year of  evaluation (revaluation).

Thus, according to Pogosyan, the State Committee will use the actual  prices applied in the purchase and sale of similar property in the  new calculations. At the same time, as the representative of the  Ministry of Finance assured, in order to avoid unreasonable and  spontaneous assessments, the State Committee for statistical purposes  will use not fresh data obtained, for example, after the "velvet  revolution" and forecasts about the possible repatriation of  Armenians to their homeland, but for the last some years.

Only on the basis of calculations, assumptions and methodology of  estimates obtained from the inventory, the Ministry of Finance,  having calculated the degree of increase of the taxable base, will be  able to orient as to whether it is necessary to revise the  non-taxable threshold (now this property up to 3 million drams  inclusively - Ed.), The tax rate, or both together.

In any case, the Ministry of Finance assured that they would try to  avoid jumps, or the "perverted form" of this type of tax, in order to  collect more taxes from high-value assets. "For example, if we find  out that out of 600-700 thousand units of real estate, 100 thousand  are above the 30 million drams price threshold, and 50 thousand are  50 million, we will decide on the" luxury "property and establish new  thresholds and progressive tax rates "- explained Pogosyan.

At this stage, the Ministry of Finance refrains from specifying even  the range of possible tax rates, as well as the potential charges  from property tax. Responsible for policy in the field promised to  share information only after summarizing all the necessary  information.

According to the plan, these works should be completed by the 3rd  decade of January 2020 and submitted for approval by the government,  and then the parliament. And, given the fact that the new norm is  obliged to enter into force after 6 months, most likely, the changes  will become a reality not from January 2020, as planned, but from  2021. Especially as within the framework of the memorandum with the  IMF, its introduction is planned from January 1, 2021.

It should be noted that property tax is levied at the level of  municipal budgets and makes up about 15-20% of total revenues to  local budgets. The main replenishment of local budgets comes from the   state budget.

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