A tax on property other than land plots, which took effect from January 1, 2013, could be replaced by a wealth and luxury tax.

The initiative is stipulated in a draft law on amendments to the Tax Code of Ukraine regarding taxation of wealth and luxury drawn up by the Finance Ministry and posted on its Web site.

The ministry proposes that Article 265 of the Tax Code "Tax on property other than land plots" be amended.

According to the document, the ministry said that the tax will be imposed on apartments that cost over 1,000 of minimum wages (the minimum wage is UAH 1,147) set in Ukrainian law as of January 1 of the reporting year and which gross area exceeds 200 square meters, and dachas, garden houses, cottages and estates that cost over 2,500 minimum wages and which have a gross area exceeding 500 square meters.

If taxpayers have several pieces of property, property that costs over 3,000 minimum wages and that have a gross area exceeding 600 square meters will be taxed.

The draft also says that the tax will be collected from nonresidential buildings, in particular, buildings owned by one taxpayer that cost over 2,000 minimum wages and that have a gross area exceeding 500 square meters will be taxed.

The body said that a tax of 0.5% of the assessed value of property will be set, and it cannot be smaller than the sum of the tax calculated using the tax rate of 2% of minimum wage (today UAH 22.94) per square meter of the gross area of property.

The tax will not be levied from property in state ownership and the ownership of territorial communities located in buffer zones and zones of involuntary resettlement and housing property, where family-type orphanages operate and where the families of tutors live, dormitories, etc.

As reported, from January 1, 2013, Article 265 of the Tax Code of Ukraine took effect, according to which a tax on property other than land plots was introduced. The size of the tax on housing was based on living space, but not the gross area of the house.

Earlier the cabinet registered a draft law foreseeing the collection of the property tax from the gross area of an apartment, and not from the housing area, in parliament to execute the order of Ukrainian President Viktor Yanukovych. However, later it was decided that parliament should discuss the said draft law linked to the draft law on the introduction of a luxury tax for individuals.

On January 15, 2013, the Finance Ministry posted a draft law foreseeing the amendments to Article 265 of the Tax Code, under which it is proposed that the property tax is collected from gross area of an apartment, not from housing area.