Awara Russian Tax Guide: Individual Property Tax in Russia

Awara Russian Tax Guide: Individual Property Tax in Russia

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The following article is an excerpt from Awara Russian Tax Guide, the first comprehensive book offering a full overview of all Russian taxation laws and rules. Awara Russian Tax Guide provides insight into the general framework of the Russian tax laws, the Tax Code and its principles. It describes the general rules of the Tax Code Part I and each type of tax and tax regime of Tax Code Part II, among them: Profit Tax, VAT, Personal Income Tax, Property Tax, Employer’s Social Contributions. The book also covers the now so important case law and taxation principles set by court precedents.

 

To differentiate from the corporate property tax we refer to the property tax levied on individuals as individual property tax. The rules on Individual Property Tax are unlike to most tax rules not found in the Tax Code but in a special law dating back to 9 December 1991, the very day the Soviet Union was dissolved (Law “On Tax on Property of Individuals”, N 2003-1 of 09.12.1991). In addition to the law, a number of instructions and letters have been issued by Ministry of Finance in order to clarify the details.

The Individual Property Tax is a local tax.

The objects of taxation are residential premises, (including apartments and separate rooms), cottages, garages, and other buildings, premises and facilities.

In case of coownership to the objects of taxation, each owner pays his appropriate share of tax.

If a taxable asset is held in joint ownership of two or more persons, then they have joint liability for the tax.

Tax Base and Rates

The tax base is calculated on the basis of the total inventory value of the asset, which normally is much less than the actual market value. This inventory value is determined by the state inventory agencies. Each year by March 1, the agency must submit the relevant data to the tax offices, which calculate the actual amount of tax due and issues to the taxpayer a corresponding payment order. The tax is due by November 1 of the year following the tax year.

Presently the effective tax rates are insignificant although charged with a progressively higher rate for higher inventory values. If the inventory value is less than RUR 300,000, the rate may not exceed 0.1%. When property value is between RUR 300,000 and RUR 500,000, the property is taxed at a rate between 0.1% and 0.3%. More expensive properties are taxed at a rate between 0.3% and 2.0%. The local governing bodies may set the rates within the established limits.