Armenia`s opposition forces propose suspending property tax increase 

ArmInfo.  The opposition faction "Armenia" of the National Assembly of the Republic of Armenia has proposed a draft amendment to the Tax Code, according to which it is envisaged to suspend the process of increasing the property tax.

Presenting the amendments, NA MP Tadevos Avetisyan noted that the  faction's initiative is aimed at ensuring that the phased  implementation of the new property tax calculation system does not  lead to a 30% increase in tax deductions for citizens' real estate  with a taxable base of less than 200 million drams from January 1,  2026. The opposition proposes to establish that the real estate tax  calculation rates provided for in Part 7 of Article 233 of the Tax  Code of the Republic of Armenia, at 75% for the reporting year 2025  and 100% for the reporting year 2026 and subsequent reporting years,  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 shall  be calculated at 75% of the tax amount. As the parliamentarian  stated, 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, are already subject to tax. In  addition, 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,  Avetisya noted, 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.

However, as Deputy Finance Minister of the Republic of Armenia Arman  Poghosyan noted in his speech, the potential of this type of tax as  an important source of income for community budgets is practically  not used, and therefore the Cabinet rejected this proposal of the  Armenia faction. The Deputy Minister emphasized that the property was  assessed based on the cadastral value established in 200-2002, and  agricultural land - even earlier. The government believes 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%. A lower figure was recorded only in Moldova and  Indonesia (0.1%), while in neighboring Georgia this figure is 5.5  times higher than in Armenia (1.1%). In terms of the ratio of real  estate transactions to taxes, this figure is 0.74% of the country's  GDP. In Georgia, this figure is 6 times higher (4.2%).

Poghosyan 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 the options were selected that ensure the  fairest and most proportional taxation from the point of view of  taxation. "Real estate tax is a property tax, and the amount of the  tax liability should directly depend on the value of the property.  That is, as a type of tax, its size should not depend on the social  or other status of the person who owns the property. In this regard,  the purpose of the proposal presented in the draft does not follow  from the general logic and principles of the real estate tax," the  Deputy Minister of Finance said, adding that the main goal of the  current law is to establish a fair tax rate on almost 1.3 million  types of real estate studied, including 432 thousand apartments and  429 thousand houses. At the same time, the cost of 49% of apartments  is less than 10 million drams, for which the annual increase in tax  deductions will be a minimum of 3 thousand drams, and a maximum of 5  thousand drams. In the case of private houses, 51% of them cost less  than 7 million drams, and the annual average growth of tax deductions  was a minimum of only 600 drams, and a maximum of 3.5 thousand drams.  Based on the above, the Cabinet of Ministers opposed the amendments  to the Tax Code submitted by the Armenia faction.