Bill No. 836670-8 has reached the Federation Council. Under it, the powers of "Roskadastr" are widened, and for the first time the regions will have access to tax secrecy in respect of real estate.
Under agreements with Roskadastr, the constituent entities of the Russian Federation and municipalities will now be able not only to identify and formalise buildings, premises and land plots that were not previously recorded, but also to obtain promptly from the Federal Tax Service information on the amounts of tax paid on each property. This gives the authorities new tools for control, for filling the budget and for bringing previously unrecorded real estate into legal circulation, and gives owners, at the same time, new opportunities to formalise rights quickly, together with a risk that the tax burden will rise.
Until now the authorities saw only aggregated data on property taxes and could not obtain a breakdown by individual properties. The new bill changes the rules: the regions [after the law is signed] will be able to request from the Federal Tax Service full information on any building, premises or plot. This strengthens control by the state and makes it possible to compile the fullest possible lists of assets for taxation.
For owners of non-residential property this means that the tax burden will be harder to forecast. At any moment your asset may be included in the list for taxation on cadastral value, if the tax on the average annual (book) value turns out to be lower and, conversely, removed from that list if the average annual (book) value exceeds the cadastral value. This is especially relevant to new, reconstructed or recently acquired assets, whose book value is often substantially higher than the cadastral value, and for which the tax rate is higher (2.2% as against 2%). The most unpleasant point is that the base used to calculate the tax may change during the year, and the owner will then have to pay additional tax "retrospectively", because the advance payments were calculated on the lower base. Almost no one follows these changes, and in practice it is impossible to control how the lists are drawn up. The level of trust in these procedures, as experience shows, is fairly low.
Owners of non-residential property should therefore be prepared in advance for the tax burden to rise substantially. It is better to budget for the tax with a margin, so as not to be in a position where money has to be found urgently in order to pay an increased tax following a decision of the regional authorities.
• Sergei Pivovarchik, managing partner of Consul Group, comments
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