New property tax rates in Armenia will increase revenues to the  budgets of local authorities 4.3-fold

ArmInfo.The application of new property tax rates in Armenia will increase revenues to the budgets of local governments 4.3-fold, Minister of Finance of the Republic of  Armenia Atom Janjughazyan, announced this on May 27 introducing  amendments to the Tax Code.

According to the Minister, of the 38 countries of the world, Armenia  is among the "leaders" in terms of property tax, especially in terms  of tax-GDP and the share of property tax in total tax revenues. In  the first case, the country is in the 2nd " place of honor", in the  second case - in the 3rd.

The reason for this is the system formed over decades, in which  property tax was compared with the cadastral value of property, which  is really much lower than the market price. The presented document,  which is more characterized as "wealth tax", is part of the general  package to reform the general taxation system. It is envisaged, in  particular, to include in the taxation system housing worth up to 3  million drams, which was not previously taxed on property. This  measure, according to the minister, will be symbolic, as the owner of  this property will act not only as a beneficiary, but also as a  requester. The Minister emphasized that for each category of property  new rates are set that are close to market and which will be within  the previously established rates. The application of new income tax  rates will be carried out in stages over three years. The new bill  will apply the rest property except for agricultural lands.

In his turn, Prime Minister of the Republic of Armenia Nikol  Pashinyan noted that the presented document is the most important  stage of reforms in this sector. According to him, for 450 thousand  citizens of the country, the application of new rates will not have a  significant impact. In this matter, the head of government continued,  it is important that citizens participate in the formation of the  state budget and the budget of local self-government bodies. He also  noted that once every two years the Real Estate Cadastre would  recalculate the value of the property, on the basis of which the  property tax will be calculated.

Earlier, Arminfo reported that real estate tax in Yerevan will  increase at least 2-3-fold. As part of the requirements of the Tax  Code of 2016, an increase in real estate tax has been planned since  2019. But for this it was necessary to change the procedure for  calculating it - to accrue tax at an approximate market cadastral  value.

The Cadastre said that the current cadastral value of real estate is  outdated, since the last time the assessment was carried out in 2002.  As a result, it does not reflect the real situation in the real  estate market and is very different from the current market value.  Independent appraisers conducted new calculations, covering about 51  thousand units of real estate throughout the country, they were  supplemented with reliable data from the Cadastre database. As a  result, today the Cadastre Committee proposes to introduce a new  concept instead of the current property tax and separate land tax in  Armenia - real estate tax, which will combine both of these taxes.  Studies have not touched agricultural land.  It turned out that today  one square meter of land in the center of Yerevan, according to its  cadastral value, fluctuates within 60 thousand drams, while in the  new realities the market price reaches 330 thousand drams. The  cadastral value of housing in this area has increased several fold-  up to 700 thousand drams per square meter. In parallel, a new zoning  system was compiled, consisting of 22 zones throughout Armenia,  instead of the previous 17. The center of Yerevan topped the list,  where the cadastral value of real estate turned out to be the most  expensive. In the "top" were the streets of Abovyan, Sayat-Nova,  Tumanyan, Republic Square, the territory of the "Cascade".