Property tax could result in increase in rent rates, tax rate could grow in future, say experts
Kyiv, April 17 (Interfax-Ukraine) – The introduction of a property tax in Ukraine could result in growth in housing rent rates, as landlords will try to lay small expenses on tax payments to leasers, Head of the Law Committee at the Association of Realtors of Ukraine (ASNU), Yuriy Pita, has said.
"I think that housing rent rates will increase proportionally to the sum of the tax," he said at a press conference at Interfax-Ukraine on Tuesday.
Pita said that landlords could include the sum of the annual tax payment into rent rates.
ASNU President Serhiy Zlyden said that it is unlikely that the increase in rent rates will be seen in 2013, as leasers are too sensitive to any changes in the prices. He said it is likely that landlords will not include the small sum of the tax in the rent rates this year.
Zlyden said that he believes that the low taxation rate for housing property today is only an attempt to study the reaction of the public and it is a rehearsal before it is increased.
"The state with the critics of the tax, that it goes to the wrong purposes and it is small for local budgets and that the administration of the tax could be more expensive than the tax rate, starts certain information probing into the reaction of consumers," he said.
Now the Cabinet of Ministers of Ukraine initiates changes to the Tax Code on taxation of residential property in part of the increase of the rate and include the gross space of apartments, not only living space, into the taxation base, Zlyden added.
"I think that this should put us on our guard and that this is a certain signal: it's likely that with improving the mechanism, taking into account all factors and not putting the public into a flutter, as these are small funds today, in the future [the government plans] to increase the tax rate," the expert said.
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 of Ministers has registered a draft law foreseeing the collection of property tax from the gross space of apartments and houses, not from living space. However, later it was decided that the bill on the calculation of the property tax using the gross space should be discussed by the parliament in connection with the bill on the introduction of wealth tax on individuals.
On January 15, 2013, the Finance Ministry published a bill on its Web site, foreseeing the amendments to the said article of the Tax Code, under which it is proposed that the property tax is to be collected from the gross space, not living space of apartments and houses.
Later the Finance Ministry posted a draft law on amendments to the Tax Code of Ukraine on wealth taxation, under which a tax on property other than land plots, which took effect from January 1, 2013, could be replaced by a wealth tax.