Armenia`s parliamentary opposition calls for refraining from further property tax rise, government rejects proposal

ArmInfo. The parliamentary opposition proposes that the Armenian authorities refrain from another increase in real estate tax by approximately 30% from January 1, 2026 for real estate with a taxable base of less than 200 million drams.

The government, meanwhile, believes that the potential of this type of tax, as an important source of income for community budgets, is practically not used, and therefore rejected this proposal of the Hayastan faction on March 13.

As stated in the explanatory note to the document, the parliamentary opposition proposes to establish that the rates for calculating the real estate tax provided for in Part 7 of Article 233 of the Tax Code of the Republic of Armenia, in the amount of 75% for the reporting year 2025 and 100% for the reporting year 2026 and subsequent reporting years, shall apply only to real estate (except for agricultural land) with a taxable base of more than 200 million drams.

For real estate with a taxable base of up to 200 million drams, the amount of real estate tax for the reporting year 2025 and subsequent reporting years is calculated at 75% of the tax amount.

As stated in , the tax is already levied on socially vulnerable citizens who are owners of low- value apartments or residential buildings, who previously had the privilege of not being subject to property tax. In addition, it is noted that as a result of the adoption of the bill, it is expected to stop the growth of the tax burden on real estate for individuals, which has been significantly increasing from year to year since 2021, which is antisocial and unfair and has already become unbearable, especially for citizens from the vulnerable class. In other words, the adoption of the bill implies the elimination of the legislative norm providing for another increase in the tax burden on real estate by about 30% from January 1, 2026.

Meanwhile, the government notes that as a result of the reforms, the potential of the real estate tax in 2026 is estimated at approximately 0.35% of the projected GDP in 2026, which means that the tax burden on real estate in the Republic of Armenia remains relatively low (according to public finance statistics maintained by the International Monetary Fund, the ratio of real estate tax to GDP in the Republic of Armenia previously amounted to 0.2%).

It is also noted that in the course of the work carried out within the framework of the reform of the real estate taxation system, numerous combinations of tax scales and rates were considered and assessed, from which options were selected that ensure the fairest and most proportional taxation from the point of view of taxation. 

In this regard, we inform you that the purpose of the proposal presented in the draft does not follow from the general logic and principles of real estate tax>, - the Cabinet of Ministers stated, rejecting the opposition's initiative.

Recall that from January 1, 2021, residents of Armenia began to pay real estate tax several times more, since the procedure for calculating it has changed: it is calculated based on the cadastral value close to the market value. In addition, from January 1, 2021, real estate tax became mandatory for all owners, regardless of the value of the property. Previously, owners of real estate worth up to 3 million drams (more than 6 thousand dollars) were exempt from taxes. In addition, if earlier land plots and buildings were assessed separately (buildings were subject to property tax, plots - land tax), now a single property tax is levied.

And to sweeten the bitter pill, the government announced that the implementation of the tax innovation will be carried out in stages, over 6 years. Thus, in 2021, citizens will be charged only 25% of the stipulated tax, in 2022 - 30%, in 2023 - 35%, in 2024 - 50%, and in 2025 - 75%, and finally, from 2026, the tax will have to be paid in full. It was noted that as a result, the potential for collecting real estate tax will increase by an average of 4.3 times. According to the authorities themselves, fees will increase from the initial 9 billion drams to 40 billion drams already in the 4th year of the implementation of the new tax system, and from 2026, when the tax amount fully comes into force, the fiscal effect will be up to 37-38 billion drams every year. It was also reported that at least once every two years, the Cadastre Committee will review real estate prices in Armenia in order to determine the amount of real estate tax on this property on this basis.

In September 2024, Suren Tovmasyan said that a political decision was made at this stage not to revise cadastral prices close to market prices, which are supposed to be used for taxation. According to Tovmasyan, despite the rise in prices on the real estate market after 2021, as well as despite the requirement for revaluation in 2023, which was supposed to become the new tax base as early as 2024, the authorities decided to take a break. Perhaps a new revaluation of real estate necessary for determining the tax base will be carried out by 2026, the head of the Committee said.