According to Vedomosti, MinEconomy and MinFin have agreed on a graduated property tax based on the cadastral valuation, which is expected to be implemented in 2014 (but no later than 2018). It assumes only one type of tax relief: a unified withholding for 20sqm for every property unit. The maximum standard tax rate for residential property is planned to be set at 0.1%, which will likely imply a doubled tax burden for regular Russian flats (around RUB 1,466, according to the Federal Tax Service). For a property with a valuation above RUB 300mn, the property rate is planned at 0.5%, and a tax rate of about 2% is under consideration for the high-end, luxury properties (of over 1,000sqm). The State Duma must pass the bill by June. It is worth noting that the regions are set to decide on additional reliefs for this tax.
Stagnating oil prices are pushing the government to look for new sources of revenues to finance increased social spending at the regional level, in our view.
Mykyta Mykhaylychenko, Dmitri Fedotkin, Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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