Ministry of Finance is developing new approaches to property taxation
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.