Ministry of Finance clarifies new procedure for calculating property tax

The tax base of the tax on buildings and structures cannot be lower than the minimum value established in absolute terms for 1 square meter. Jokarga Kenes of Karakalpakstan and the councils of people’s deputies of the regions have been granted the right to introduce a reduction factor of up to 0.5 to the established minimum cost in the regions, depending on their economic development, Buxgalter reports.

This calculation procedure applies only to buildings and structures subject to registration with the bodies that carry out state registration of rights to real estate.

The minimum tax does not apply to:

ꞏ objects of construction in progress, railway tracks, main pipelines, communication and power lines, as well as structures that are an integral technological part of these objects, residential real estate objects of construction organizations or developers intended for subsequent sale;
ꞏ real estate not considered as an object of taxation;
ꞏ water towers, reservoirs, sheds, gazebos, concrete platforms and walls (curbs) and other similar objects subject to registration (registered) in the cadastre.

The tax base, taking into account the minimum value, is determined for buildings and structures, the average annual residual value of which is lower than the tax base calculated on the basis of the minimum value.

Taxpayers have the right to engage appraisers to assess the value of real estate objects if the average annual residual value of 1 square meter of an object is below the established minimum value.

If the assessment results are less than the established minimum value of 1 square meter, taxpayers have the right to apply the estimated value for tax purposes. The assessment should be completed by October 1, 2022.

The results of an independent assessment conducted in 2020-2021 will be used to determine the tax base for property tax in 2022, regardless of the purpose of such an assessment. They must be submitted to the tax authorities before April 1, 2022 – simultaneously with an updated certificate of the amount of property tax for 2022. In this case, no penalty is charged.