Russian authorities have proposed a mechanism for stimulating private individuals and business representatives to register their property rights and pay taxes. Head of RD Group’s Representative Office in Russia Roman Tkachenko commented on this topic in an article in CRE magazine.
According to the Federal Tax Service, the state real state registry is lacking information on the owners of a substantial portion of properties – 39% of the total property tax base for individuals. In 2013 Russian officials found 24,554 buildings and land parcels without registered owners.
The proposed amendments to the Law on the State Property Registry are intended to stimulate private individuals and businessmen to register their real estate and pay property taxes.
According to Roman Tkachenko, Head of the Representative Office of RD Group in Russia, the development business has always been associated with great risks: prior to making a profit, the investor must acquire land for development, obtain the necessary permits and then carry out the project planning and construction work. “It shouldn’t be forgotten that at each stage of a project additional problems emerge which impact the financial result and completion schedule,” Tkachenko emphasized. “In the final analysis, the market price of a square meter that the end buyer or tenant pays is formed in consideration of a multitude of factors, and taxes are among the most significant of them.”
Roman Tkachenko noted that the lack of information about owners is a result of technical flaws in the database. “Each asset has a rightful owner – a legal entity or individual. The only thing necessary to do is to formulate the correct procedure for collecting this information within the Ministry of Economic Development and other state bodies,” the expert said. “It is a little bit surprising that the lack of information in a database could lead to such a harsh measure as the procedure for confiscating property.”